The National Electricity Market (NEM) is undergoing a once-in-a-lifetime transition from thermal generation to renewables (such as wind and solar), complemented by firming generation (such as pumped hydro). By 2035, significant investment will be needed in renewable and firming generation and associated transmission to continue providing affordable, reliable and secure energy for users.
By 2040, over 60 gigawatts (GW) of large-scale renewable energy, backed up with approximately 45 GW of new dispatchable resources, will be required to replace retiring coal-fired generation.
To ensure an orderly and cost-efficient transition, the transmission grid will need augmentation to balance generation resources and connect Renewable Energy Zones (REZs). Over 20 GW of new connection capacity is required in REZs by 2040 to meet this growing need.
During this transition, the NEM will need to deliver greater volumes of generated and stored energy to meet changing patterns of consumer demand, balance intermittency, and increase system reliability and resilience by transmitting energy across and within regions. The Australian Energy Market Operator (AEMO), which operates the NEM, released an update to its 2020 Integrated System Plan (ISP) in December 2021.