AEMO’s new challenge: 100pc renewables by 2025

Mr Westerman replaced former AEMO CEO Audrey Zibelman, who left in December to take up a role at X, the “moonshot” innovations division of Google parent Alphabet Inc.

The changeover comes as the electricity system is undergoing a profound transformation through the rise of low-cost wind and solar power, including world-record rooftop solar installations, requiring an overhaul in the NEM rules to also cope with the looming closures of coal-fired generators.

AEMO has a central role in the process, working with the country’s other two principal energy market bodies on key market reforms, as well as with federal and state governments that are grappling with the challenges thrown up by the rapidly changing system.

In his speech at a Committee for Economic Development of Australia event in Melbourne, Mr Westerman will highlight the speed and scale of the change, which has seen 90¢ of every dollar invested in generation in Australia since 2012 sunk into wind and solar.

Australia is leading the world in renewable generation installation per head of population, adding new wind and solar at double the rate of the next fastest, Germany, and about 10 times the average worldwide.

The number of large-scale solar farms has exploded by 1000 per cent in the past three years while the number of wind farms has doubled.

The pace of change is running well ahead of AEMO’s fastest step-change scenario, with an additional 55 gigawatts of projects now proposed across the east coast – almost as much capacity as already exists.

The record rate of rooftop solar installations helped South Australia mark a world-first milestone of 100 per cent renewable generation for an hour last October, something AEMO expects the whole NEM will need to be ready for by mid-decade.

Across the NEM, the penetration of instantaneous wind and solar generation has surged, from 38 per cent in 2018 to 52 per cent last year.

But dealing with that rising share poses engineering challenges to the grid as thermal generators that provide vital services to the grid such as voltage control and inertia are pushed out of the market.

That requires AEMO to intervene in the market more frequently to either order gas power stations to run or to curtail solar generation in order to keep the system stable.

Such interventions by AEMO in the market have ballooned from just six in 2016 to 321 last year, adding costs for consumers.

Mr Westerman will say that curtailing rooftop solar to help stabilise the system is a last resort, but that capability, which has been introduced in South Australia, is set to be rolled out with distribution networks in other states so that they can do the same.

He will also point to lessons Australia could learn from Britain, where a power station that was mothballed in 2018 has just started to provide services into the grid, without actually generating power, saving consumers millions of dollars a year.

Mr Westerman will also back the federal government’s Snowy 2.0 pumped hydro project and storage more broadly to support the grid as well as more interconnection through new transmission.

Projects such as the Western Victorian Transmission Project, a nearly 200-kilometre transmission line to connect Ararat with Melbourne’s north-west, have met with some community opposition, he will point out, calling for early and collaborative work with communities to properly address concerns and gain social licence.

Mr Westerman will also call for collaboration and co-operation between governments, industry, regulators and communities to navigate through the transition to clean energy.