The Australian Energy Market Operator (AEMO) has provided words of wisdom as Australia transitions to a new-look energy grid.
In releasing its 2025 Transition Plan for System Security, AEMO said it’s not a matter of energy access but energy security that will define a grid powered increasingly by renewables.
The market operator has detailed three key technologies that require investment ahead of the closure of baseload coal plants such as Eraring and Yallourn in the years to come.
AEMO suggests synchronous condensers fitted with flywheels will play a critical role, providing both “system strength and inertia”. Synchronous condensers mimic the grid-stabilising role of coal generators, either absorbing or supplying reactive power to regulate voltage.
The market operator also encourages investment in gas turbines fitted with clutches, enabling them to act as synchronous condensers, while grid-forming BESS (battery energy storage systems) will be increasingly important, providing “frequency control, voltage stability and some aspects of system strength”.
System strength and inertia solutions must be delivered in tandem, AEMO said, and investments are necessary sooner rather than later for various reasons.
“Many assets capable of providing system security services are progressing but have long lead times (five or more years) for approvals, procurement and installation,” the market operator said.
“Readiness is required for when coal generators commercially implement more flexible operating profiles such as going offline during the middle of the day or seasonally, which may occur many years before retirement.”
AEMO said the market must ultimately “decouple” reliance on coal generators for system security to ensure a sustainable grid for years to come.
CER
The market operator also acknowledged the increased role consumer energy resources (CER) but said greater stability measures are required to contain the rise of rooftop solar.
AEMO said it was monitoring minimum system load (MSL) conditions created by higher rooftop solar contributions, with the need to ensure “supply-demand balance across all elements of the power system”, while warning of the potential of emergency backstop situations.
“In the near term, if replacement sources of system security services are delivered on time, the system can continue to support higher contributions of rooftop solar, and emergency backstop capability, which pauses or restricts rooftop solar exports to
the grid, will remain rare,” AEMO said.
“If delayed, costs and interventions (including the possibility of using emergency backstop mechanisms) are likely to rise.”
Market response
AEMO said industry and governments were “already acting to resolve risks”, including Transgrid progressing the procurement of new synchronous condensers to provide support once the Eraring coal-fired power station closes in 2027.
The market operator flagged that if synchronous condensers aren’t operational in time, there are circumstances where it could operationally intervene “30 per cent of the time, at significant cost to consumers, to avoid potential consequences of greater severity”.
The New South Wales power system could face “last-resort operational actions” as a result.
Queensland requires increased emergency distributed PV backstop capacity to support system security, while Victoria also requires synchronous condensers with the closure of the Yallourn power station coming in mid-2028.
“If gas generators need to be directed online to maintain system strength (in Victoria), adequate fuel supplies would be essential,” AEMO said.
AEMO’s Transition Plan for System Security clearly details the action points for each state and their respective utilities on page 9, while the market operator has indicated the 2026 edition of the report will include “greater detail on future system restart requirements, grid-forming inverter capability, and integration of CER”.
AEMO is also committed to working with international peers to future-proof the National Electricity Market, acknowledging the importance of coordinated action.
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