AEMO has published its annual reliability outlook for Western Australia’s South West Interconnected System (SWIS), which presents a significantly improved near-term outlook compared to last year’s report.
While the near-term outlook has substantially improved, the Wholesale Electricity Market (WEM) Electricity Statement of Opportunities (ESOO) also highlights the need for continued capacity investment – particularly from 2027 onwards.
Developed following modelling and consultation, the 2024 WEM ESOO is designed to identify investment opportunities in generation, storage and demand-side management to maintain a secure and reliable electricity supply for the SWIS. This 2024 ESOO covers the 10-year period from 2024-25 through to 2033-34.
AEMO Executive General Manager WA & Strategy Kate Ryan said the significantly improved near-term capacity outlook in the report showcases the substantial investment that is currently underway in the SWIS, which is on a scale not seen in decades.
As well as identifying investment opportunities over the 10-year outlook period, the WEM ESOO also plays a specific role in the Reserve Capacity Mechanism (RCM) process in Western Australia.
The 2024 WEM ESOO sets the Reserve Capacity Requirement for the year starting 1 October 2026, which AEMO seeks to procure from existing and new market participants via the RCM.
This 2024 WEM ESOO sets the capacity target for 2026-27 at 5,696 MW. This is a slight reduction of 20 MW compared to the forecast in 2023 WEM ESOO, reflecting a more moderate economic outlook.
“Since the 2023 WEM ESOO, there has been a significant improvement in available capacity with the supply-demand situation now expected to be largely balanced for 2026-27,” Ms Ryan said.
“The improved forecast for 2026-27 is primarily due to AEMO procuring more than 1,000 MW in additional capacity for the SWIS through its Non-Co-Optimised Essential System Services (NCESS) tenders.
“Synergy is also constructing a 500 MW battery in Collie that is expected to be operational during 2026-27, which will further improve the reliability outlook,” she said.
All-up, there is more than 1,400 MW of committed generation and storage capacity in the pipeline that is expected to be available for 2026-27, if delivered on time.
Additionally, the report anticipates rooftop solar uptake will continue rising – at a faster rate than previously forecast. The expected higher rooftop solar uptake is primarily a result of consumers installing larger systems with more capacity.
“As the energy transition progresses and adoption of rooftop solar and other distributed energy resources grows, coordination of these resources can play an important role in delivering value for individual customers and supporting a secure and reliable electricity supply for all consumers,” Ms Ryan said.
However, retiring coal-fired power stations combined with increasing demand will see a forecast 391 MW shortfall emerge in 2027-28, growing to 2,880 MW by 2033-34.
“This highlights that critical investment in power generation, storage, demand-side response and transmission will be needed to meet demand and replace retiring coal-fired power stations by 2030 and beyond.”
To address shortfall risks in the later years of the outlook, the Western Australian Government has introduced reforms to the RCM to enhance investment signals in the WEM. Additionally, the Australian Federal Government’s Capacity Investment Scheme is expected further incentivise investment in the SWIS.
Meanwhile, a small residual capacity shortfall this summer will be managed by an upcoming supplementary reserve capacity tender.
“Significant opportunities exist for investment in the SWIS over the next decade as AEMO works with governments and industry to navigate the power system through a complex energy transition,” Ms Ryan said.
“It is also critical that there is timely delivery of existing and committed capacity within the project pipeline, along with transmission to enable the connection of new generation and storage projects as well as meet growing customer demand.”
ENDS