The Australian Energy Market Operator (AEMO) has released its 2025 Electricity Statement of Opportunities (ESOO), outlining a 10-year investment roadmap to maintain reliability in the National Electricity Market (NEM) amid rising demand and the retirement of coal-fired generation.
The report points to a positive reliability outlook, contingent on the timely delivery of more than 50 gigawatts (GW) of new generation and storage projects, supported by government schemes, state initiatives, and actionable transmission developments.
AEMO CEO Daniel Westerman said the delivery of projects in the pipeline – across generation, storage, transmission, and consumer energy resources – will be critical to maintaining reliability standards.
“The 10-year investment pipeline to manage energy reliability is healthy,” Mr. Westerman said. “Considering the large volume of generation retirements over the next decade, the timely delivery of new generation, storage and transmission, along with the operation of consumer energy resources, remain critical.”
Demand Outlook
Electricity consumption is forecast to rise by 28% over the next decade, from 178 terawatt hours (TWh) in 2024-25 to 229 TWh by 2034-35. Growth is expected to be driven largely by data centre expansion, accelerating business electrification, and the entry of new industrial users.
Investment Pipeline and Retirements
A record 4.4 GW of new generation and storage was added to the grid last financial year. Over the next five years, between 5.2 GW and 10.1 GW annually is expected to come online, often underpinned by government-backed schemes.
This growth is intended to offset the scheduled retirement of 11 GW of coal generation over the next decade, including major facilities such as Eraring, Bayswater and Vales Point (NSW), Yallourn (VIC), and Callide B (QLD).
Reliability Assessments
The ESOO includes two scenarios:
Government Schemes and Actionable Developments, factoring in over 50 GW of new projects and policy-driven initiatives.
Committed and Anticipated Developments, covering only projects advanced enough to meet AEMO’s investment criteria.
Under the broader government schemes outlook, only a minor reliability gap of 25 MW is forecast in South Australia in 2026-27, coinciding with the retirement of Torrens Island B and delays in the full commissioning of Project EnergyConnect (Stage 2).
In the stricter committed/anticipated outlook, however, reliability challenges are more pronounced. An 80 MW gap is projected in Queensland in 2025-26, while South Australia faces a 390 MW gap in 2026-27 linked to the closure of Torrens Island B.
The report noted that AGL’s recent in-principle agreement with the South Australian Government to potentially extend Torrens Island B by two years could eliminate this gap if formalised.
Long-Term Reliability Risks
Beyond the mid-2020s, AEMO forecasts reliability gaps across all mainland NEM regions, which may be managed as additional projects reach commitment stage. In response to the South Australian gap, AEMO said it will ask the Australian Energy Regulator to consider invoking the Retailer Reliability Obligation (RRO) for 2026-27.
AEMO also highlighted system security challenges, including the impacts of planned generation outages, gas shortfalls, and drought conditions. A dedicated system security report will be published in December to outline the investments required for stable grid operation.
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