Frank assessment by Aemo says it has been taking ‘reactive action’ to prevent summer blackouts, but that has come at a high cost

The energy market operator has used its latest 10-year forecast of reliability in Australia’s power supply to highlight the urgent need for more investment in dispatchable energy and in transmission infrastructure.

In a frank assessment, the chief executive of Aemo, Audrey Zibelman, says the energy market operator has been engaged in “reactive action” to ensure the risks of blackouts are reduced during the summer peaks.

But she points out current methods of securing additional resources are imposing higher costs on consumers. Zibelman says while the actions Aemo has taken to shore up power supply are allowed for under the energy market rules, the higher costs they are imposing, as well as the ongoing risks to reliability, “are not sustainable over the longer term”.

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In a statement to be issued on Thursday, Zibelman says it is time for “deliberate actions that address the challenges of our ageing coal fleet and which meet the need for secure and dispatchable supply, whilst also taking advantage of Australia’s natural resources”.

“We need to harness all the resources we have in the system, together with the opportunities that come with the technological advances occurring in the industry to meet current and future energy demands at the lowest cost possible.”

In May, the treasurer, Josh Frydenberg, indicated in an interview with Guardian Australia that the Morrison government intended to pursue new infrastructure to support renewable energy zones in line with advice from Aemo.

But the future direction of energy policy is uncertain. The national energy guarantee policy, which would have established a policy framework for grid security and emissions reduction, was dumped after the Liberals moved against Malcolm Turnbull last year.

Under pressure from stakeholders impatient with the prolonged policy uncertainty, some of the Liberal states have signalled they want Scott Morrison to revive the policy to help kickstart investment. A meeting of federal and state energy ministers is expected next month.

The new assessment from Aemo says compared to the reliability forecast it produced this time last year, there is a greater risk of load shedding “due to uncontrollable, but increasingly likely, high impact tail risk events such as simultaneous unplanned outages during hot days”.

It says in Victoria, ageing thermal generators are increasingly unreliable. The risks of problems in New South Wales increase after the closure of the Liddell power station, although there is not at this stage a forecast reliability gap.

It says since summer, there have been two well-publicised, long-term outages at power stations in Victoria that have resulted in over 750MW of capacity being unavailable until at least mid-December 2019 “with some prospect that these outages could continue into the key summer months where maximum demand typically occurs”.

It notes the past two years have had the highest rates recorded for forced outages from brown coal generators. “The reliability of the ageing brown coal generation fleet in Victoria continues its recent trend of poor performance.”

Looking ahead over the coming decade, Aemo says the Snowy 2.0 pumped storage project, which is assumed to be fully operational by end of March 2025, leads to no significant improvement in reliability in the forecast, because a lack of transmission infrastructure remains a limiting factor in transferring supply to the region’s load centres.

The market operator is also proposing the introduction of a new reliability standard designed to assure that each region has sufficient resources to meet peak demand requirements during 90% of the time.