ARENA provides AUS$15 million to enhance operational capacity of NEM in Australia

July 31, 2024
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The NEM connects the states of Victoria, South Australia, New South Wales and Queensland, alongside the Australian Capital Territory and Tasmania. Image: Queensland Department of Energy and Public Works.

The Australian Renewable Energy Agency (ARENA) has provided AUS$15 million (US$9.7 million) in funding to the Australian Electricity Market Operator (AEMO) to enhance the operational capacity of the National Electricity Market (NEM).

This funding will aid solar energy and other renewable energy generation technologies like hydro and wind. It will also support energy storage, often regarded as a vital cog in developing a renewable energy-based grid.

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ARENA confirmed that the funding will help accelerate operational readiness for major power system changes in the next two years – enabling reduced reliance on fossil-fuelled generators to support system stability.

This initiative will assist AEMO in developing essential resources for the energy transition. These resources will encompass governance frameworks, systems, and processes to facilitate consumers’ growing adoption of rooftop solar, batteries, and electric vehicles (EVs).

Additionally, it will offer investors better visibility into the power system’s evolving needs and the potential for various technologies to address these needs.

Investment welcome with coal-fired withdrawal on the horizon

The AEMO will welcome news of this new allocation. The organisation recently said that the NEM, which interconnects southern and eastern Australia, must invest around AUS$16 billion into its grid infrastructure to achieve net zero.

Transmission projects must be rolled out to facilitate new renewable energy, with AEMO predicting that around 10,000km will be needed.

AEMO CEO Daniel Westerman believes the funding will be crucial in bolstering the NEM via increasing its operational capacity, which could prove critical as coal-fired generation starts to be withdrawn from the country – AEMO predicts this will occur by 2038.

“This will in-turn help make efficient use of available renewable energy resources, alleviate future system security management challenges, and reduce future reliance on fossil-fuel generation. ARENA’s grant funding will accelerate this critical work, enabling the deployment of innovative and timely solutions to support our future power system.”

NEM sees renewable energy generation increase year-on-year

Increasing the operational capacity of the NEM also will be critical in ensuring that the growth witnessed in renewable energy generation, such as solar, maintains its strong performance in the electricity mix.

Indeed, coverage by PV Tech last week (24 July) showed that grid-scale solar generated an average of over 1.4GW in Q2 2024, a 132MW increase year-on-year (YoY). The commissioning of new facilities in New South Wales was a particular driver of this change.

AEMO’s report also outlined that 43GW of new capacity is progressing through the end-to-end connection process from application to commissioning, showcasing why grid infrastructure investment is required.

Earlier this week (30 July), it was revealed that projects seeking to connect to the NEM rose to 43GW in June 2024, representing a 43% year-on-year increase. With this figure expected to rise for the foreseeable future, ensuring these projects can connect will be critical to ensuring no delays are witnessed, particularly with impending 2030 decarbonisation targets.

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