Australia may experience electricity shortages by 2027.

The Australian Energy Market Operator (AEMO) has warned that mainland states in the country could experience electricity shortages as early as 2027, and called for urgent investments in the sector. According to the latest national electricity market update (pdf), the AEMO revealed that while Australia had sufficient electricity generation capacity in the next couple of years, new projects must be completed to ensure the power grid’s reliability over the next decade. This is due to the phasing out of coal-fired power stations and delays on some major projects.

The report noted a number of major changes to the energy system, including new gas, wind and battery developments, the earlier shutdown of AGL’s Torrens Island B Power Station, and a delay to the Snowy 2.0 hydro project and the gas-fired Kurri Kurri Power Station. These changes have filled the short-term reliability gaps in South Australia (2023/24) and Victoria (2024/25). However, the report predicted that mainland states in the NEM would face electricity shortages from 2027 onward due to the shutdown of five coal-fired power stations in the region, which account for 13 percent of the market’s capacity.

AEMO CEO Daniel Westerman noted that the analysis only took into account committed projects, and that those projects would not be sufficient to satisfy the country’s future energy needs. He called for urgent investments to be made in the energy sector, noting that it would take two to three years to complete a renewable energy project, and a longer period to build new electricity transmission networks and gas-fired power stations.

Federal Energy Minister Chris Bowen reassured Australians that the federal government was working to prevent blackouts in the future, but noted there was more work to be done to close gaps in the power grid. In addition, he said work to legislate emissions reduction targets and new renewable energy projects were bringing positive changes to the system.

The AEMO’s analysis comes as the government has launched a roadmap for decarbonising Australia’s heavy industries. The ambitious 30-year plan will cost the country $625 billion (US$432 billion) in both government and private investments. However, a major problem with the plan is the massive amount of electricity needed – around 600 terawatt-hours per year for the electrification of the most heavily polluting operations, and potentially 1,450 terawatt-hours per year for new export markets for “green” iron and hydrogen. Given the current state of the energy market and future electricity shortages outlined in the AEMO’s analysis, it is unclear how the government will ensure the implementation of the decarbonisation plan.