Latest news with #AEMO
ABC News
4 days ago
- Business
- ABC News
AI data centres need round-the-clock energy and could be more power-hungry than we think
Consider, for a moment, the year 2008. Kevin Rudd was less than a year into his first, ill-fated prime ministership, Ricky Ponting was the captain of the Australian Test cricket side, and social media platform Facebook was sweeping the world by storm. It was also a time of rising demand for electricity. In fact, up until that time, demand for electricity had been rising steadily for as long as anyone could remember. There was a basic equation that seemed to explain it — as the economy grew, so, too, did our need for power. Merryn York, who was at the time working at Powerlink, the state-owned Queensland transmission company, says the equation was the bedrock of planning for the grid. "Demand for electricity had always responded to economic conditions," Ms York says. But then something unexpected, and unprecedented, happened. That link between economic growth and electricity demand broke down. Ms York, now the executive general manager of system design at the Australian Energy Market Operator, explains that electricity demand fell — and for a remarkably long time. For more than 15 years, demand was subdued as appliances became more efficient, soaring prices made householders increasingly wary about using power and industry contracted. Now, however, Australia's long march towards ever greater power needs has resumed. And it's come back with a vengeance. "We're really turning a corner," Ms York says. Figures from AEMO show average demand for power in the national electricity market, which spans Australia's eastern seaboard, last year finally surpassed the previous high recorded way back in 2008. In that time, the way demand for power is measured has changed. Whereas once there was simply demand, it is now split between "operational" demand for power from the grid — excluding rooftop solar generation — and "underlying" demand. On that, more relevant, score, demand in July last year was almost 26,000 megawatts, eclipsing the 25,738MW record set some 16 years ago. In the first three months of this year, underlying demand rose 1.4 per cent compared with the previous corresponding period to a new record. Ms York says the numbers are expected to get much higher in the years ahead. "We are seeing significant growth and we're forecasting significant growth," she notes. Much of the growth to date, and much of what's expected to come, is thanks to the effects of electrification — from cooking and transport to entire industrial processes. "Electricity demand is now being driven by things like electrification, as people want to decarbonise their electricity usage," Ms York says. "That's playing a role now and will play a stronger role going forward." Indeed, AEMO noted in its most recent snapshot of the NEM that electrification was already having an effect. It was one of the big factors behind the most recent rise in demand, even if the rate of uptake for things like electric vehicles has been slower than expected. For all the implications of electrification, experts say there is another source of demand that looms even larger. Matt Rennie, who co-owns and runs energy advisory firm Rennie, says our need for data has the potential to change everything. "It is a big deal," Mr Rennie says. Mr Rennie says Australia is on the cusp of what is likely to be a revolution in the way we use data and — more importantly — how much of it we use. He says it's a revolution that is being driven by the migration of so many services — from education and games to healthcare and shopping — to the digital realm. More ominously, he suggests the rise of artificial intelligence is another thing entirely. In a world where AI becomes "pervasive", he says there is likely to be a step-change in demand power that will require round-the-clock supply. "The thing about AI is that the algorithms that it uses are much more power-intensive," Mr Rennie says. "So as these begin to pervade the way in which we do business and the way in which we plan and conduct our lives, we can expect that there'll be many more of these data centres specifically allocated to training AI systems and then to operate them after that. "Beyond this point, I think we're going to see a different nature of data centre, a much more power-hungry data centre in Australia." Mr Rennie says demand from data centres is already sneaking up and risking the assumptions used by AEMO to forecast electricity requirements. He notes AEMO's official forecasts show there will be up to 1.5 gigawatts of new demand by 2035 in an "accelerated data centre scenario". However, Mr Rennie says his firm's own research suggests demand will be far higher. "Our research shows that that's something like 4.9 gigawatts — so two, three times what AEMO was forecasting," he says. To put that in context, a large coal-fired power plant typically has about a gigawatt of capacity. "One of the interesting things is that Jemena alone, one of the electricity networks in Victoria, has had connection applications for data centres of around 1.5 gigawatts by 2030, Mr Rennie said. "And that's only for that one distributor in that one state. One person at the bleeding edge of the debate is Alex Coates, the chief executive of data centre operator Interactive. Ms Coates agrees Australia is on the threshold of a transformation as the twin forces of "radical digitisation" and AI combine to propel power demand higher. She says both applications require huge amounts of extra computing power, or chips. "That chip must reside somewhere," Ms Coates says. "And of course, it must reside in a place that's secure and safe and reliable, and that's a data centre." According to Ms Coates, there are already about 200 data centres in Australia. Between them, she says, they use about 5 per cent of the power drawn from the grids in which they operate. Much of the power is used to cool computer chips housed in the servers that make up data centres. Ms Coates says significant efforts are being made to make cooling more efficient. Interactive, for example, is exploring two different types of temperature control known as "liquid-to-chip" and "immersion" cooling to cut its electricity use. Ultimately, however, she says data centres will need to find new sources of power from somewhere. "By 2030, we're expecting double the capacity — another 175 facilities," Ms Coates says. "We haven't seen anything like the demand that we will see over this coming period. "In what that means and therefore what that then means for, again, the compute, the data centre provision and the power to the data centre." For Ms Coates, America provides a useful, if cautionary, tale on what to expect. In the US, demand for power from data centres — especially those connected to AI — has caught almost all forecasters off guard. Celebrated American energy writer Daniel Yergin noted in an essay earlier this year that data centres alone could consume as much as 10 per cent of power in the US by 2030. "One large tech company is opening a new data centre every three days," Mr Yergin wrote. "Electricity consumption is already outpacing recent demand forecasts. "PJM, which manages electricity transmission from Illinois to New Jersey, almost doubled its growth projection between 2022 and 2023 and is warning of the danger of shortfalls in electricity before the end of the decade. Indeed, Ms Coates says a constant consideration for her business is not only how to secure power supplies, but how to secure them in a sustainable way. At the moment, she says Interactive draws its power from the grid, meaning it is a mix of renewable and fossil fuel generation. But she says the company is determined to eventually rely totally on clean energy and may sign deals with generators — so-called power purchase agreements — to do so. "Certainly we will consider it," Ms Coates says. "I certainly see it continuing as well." For both Ms Coates and Mr Rennie, the coming surge in demand for power to meet our insatiable thirst for data is likely to arrive whether Australia is prepared or not. Mr Rennie says that will almost certainly have consequences for Australia's electricity system, its renewable energy target and its emission goals. "I mean, we're already concerned about the way in which demand will be met by supply," Mr Rennie says. "We know that the Australian system is growing enormously in terms of demand. "We know people are buying EVs. We know that these data centres are coming. "But we also know that coal's coming out of the system, that renewables are taking a little longer than what we thought they would. "Transmission is now three and a half years behind schedule on average. "And the overblown role of batteries and solar in the forecast suggests to us that there will already be a gap between demand and supply, which is something that we're worried about. "Adding more demand through data centres just takes that to a different level." At AEMO, which is responsible for keeping on the lights in Australia's biggest electricity systems, Ms York is optimistic. She says one of the virtues of forecasting is that it's a "repeat exercise", meaning whatever is missed or had changed in one year could be updated the next. This was true generally, she says, and is no different when it comes to data centres and the ways they will affect Australia's grids. To that end, she says AEMO has started treating demand forecasts for data centres much more seriously and is endeavouring to better understand the implications. "Certainly, data centres is something we are specifically considering in our forecasting," Ms York says. "It is quite challenging to know how much of that will turn up here in Australia and where it will be located. "But it is something that we are very focused on making sure that we are well positioned to support data centres coming to Australia and being able to meet their needs.
News.com.au
11-07-2025
- Business
- News.com.au
Solar farms forced to switch off as poles and wire delays hamper renewable transition
Some major solar farms in Australia's southeast will be forced to shut off up to two thirds of the power they generate by 2027 as delays in building poles and wires causes major bottlenecks, the energy regulator has warned. The Australian government has set a target of 82 per cent renewable energy by 2030 — from 35 per cent in 2023 — and a 43 per cent reduction in carbon emissions. The Australian Energy Market Operator (AEMO) has previously laid out a $122 billion blueprint, known as the Integrated System Plan (ISP), for the country's electricity grid to achieve that goal without major disruption as ageing coal-fired generators are taken offline. NSW's Eraring coal plant will cease operations in 2027, followed by Victoria Yallourn coal plant in 2028. But AEMO has warned that delays and cost blowouts for a number of major transmission projects, particularly in Victoria, will severely curtail the amount of energy generated by renewable energy projects over the next two years. 'While some locations have not seen heavy congestion historically, they are nearing their current network limits and additional capacity may result in new areas of congestion,' AEMO's 2025 Enhanced Locational Information report published on Wednesday said. Major transmission projects facing delays include the $3.3 billion VNI West, a 500 kV double circuit transmission line connecting the NSW and Victorian energy grids, the 700 kilometre EnergyConnect line between South Australia and NSW, and the 190 kilometre Western Renewables Link from western Victoria to Melbourne. AEMO's analysis found no major solar farms in Victoria or South Australia were forecast to have a shut-off rate of less than 35 per cent by 2027, with that figure as high as 65 per cent for some projects. 'This is more pronounced in the near-term horizon, while improvements are seen in the medium term based on new actionable ISP projects being delivered, and as investment is made to meet required system security services which would begin to relax system security constraints,' the report said. 'Projected curtailment is particularly high in South Australia and Victoria in the near term, as these regions are further progressed in the renewable transition, and each further increase in capacity is more heavily curtailed by minimum security and export limitations.' AEMO noted that there were approximately 20 gigawatts (GW) of projects currently at the application to connect stage, as well as the 300 GW of proposed future projects under consideration by developers using a range of technical and economic considerations to identify the most viable project locations. 'Opportunities exist in all National Electricity Market (NEM) regions for renewable and firming projects to deliver energy, capacity, and network support services,' AEMO executive general manager of system design Merryn York said in a statement. 'This report presents key locational data to help investors understand where their projects are most likely to succeed, and where challenges, such as network congestion, curtailment, or energy losses, may arise. Not all locations are equal, and geographic network conditions must be a critical part of investment decisions.' AEMO's report warned some locations were already reaching 'significant levels' of congestion and curtailment. In 2024, over half of all grid-scale wind and solar generation experienced network-driven curtailment of less than 1 per cent. Wind farms averaged 1.1 per cent network curtailment, but this was as high as 4.8 per cent for some units. However for solar farms, curtailment averaged 4.5 per cent with several experiencing 'very high levels' of curtailment above 25 per cent. 'High curtailment was mainly concentrated in specific areas (particularly western New South Wales and north west Victoria), and illustrates that most transmission lines did not experience significant congestion,' AEMO said. 'The most severe network congestion arose in areas with high levels of generation connected in locations that were originally designed to service demand rather than supply. These high network congestion areas broadly overlap with the areas experiencing high levels of generation curtailment.' The Clean Energy Council, which represents a number of solar investors impacted by the forecast curtailment, told The Australian Financial Review the slow rollout of transmission was affecting investment decisions. 'As the coal fleet exits, we need new capacity in the right places and quickly,' CEC spokesman Chris O'Keefe told the newspaper. 'Large-scale solar is fast and cost-effective to build, but it's also the most exposed to curtailment, especially when system security limits or negative prices hit in the middle of a sunny day. 'In the longer term, the only durable solution is new transmission. These transmission projects are absolutely essential to unlocking new generation and maintaining momentum in the transition.'
Sky News AU
11-07-2025
- Business
- Sky News AU
Dan Tehan slams the government's energy transition as solar farms face forced shutdowns amid grid bottleneck crisis
Shadow energy minister Dan Tehan has accused the Albanese government of mismanaging Australia's energy transition, warning delays to critical infrastructure are forcing solar farms to switch off and drive power prices through the roof. His comments come in the wake of alarming new forecasts from the Australian Energy Market Operator (AEMO), which reveal that nearly every major solar farm in Victoria and South Australia will be required to curtail at least one third of their output by 2027 due to grid congestion. Some projects are expected to lose more than 65 per cent of their generation capacity. In an interview with Sky News, Mr Tehan laid blame squarely on Energy Minister Chris Bowen, accusing him of ignoring the real-world cost of the transition and failing to deliver the infrastructure needed to support it. "Well, the problem is that Chris Bowen's made a complete mess of our electricity transition,' he said. "Everywhere you look, it's a mess. And the one thing that he doesn't want to answer is, what is the cost of this mess? "We know that his plans don't take into consideration the cost of this rollout of new poles and wires. He won't put a figure on it. We now know that that's delayed. "So, what does that mean when it comes to the grid's reliability going forward, and also what does it mean for consumers?" With key projects like the $3.3 billion VNI West interconnector now facing multi-year delays, the energy grid is struggling to accommodate the surge in renewables production, leaving solar farms with no choice but to shut down during periods of peak generation. Mr Tehan also took aim at the broader approach to renewables in Victoria, where much of the grid congestion is concentrated. "It's because they've focused on this renewables only approach and they've completely demonised gas - they've completely demonised the idea that we should have gas peaking plants and now in Victoria, to try and overcome these delays, they're taking property rights away from farmers," he said. AEMO has warned that unless key transmission lines are fast-tracked, large-scale solar farms will increasingly be forced offline, even as coal plants close and the grid becomes more dependent on renewable sources. For Mr Tehan, the solution lies in abandoning the narrow focus on renewables and adopting a more balanced, technology-neutral strategy. "If they had a technology-neutral approach we wouldn't be in the mess that we are in at the moment," the shadow energy minister said. "Everyone says we need more gas into the systems and rather than running roughshod over communities when it comes to putting increased grid costs on everyone, look at simple things you can do right here and how to alleviate costs on power bills, but also making sure that you're going to have a much more stable system going forward." The Coalition has long criticised Labor's handling of the energy transition, arguing that excluding technologies like gas from the long-term plan would put Australia's energy security at risk. With energy prices continuing to rise and reliability coming under threat, Mr Tehan said Australians are being left to pick up the tab for policy failure. "The message from these customers to Chris Bowen, who is sunning himself in the Pacific Island at the moment, is they want an apology because Chris Bowen promised these customers a $275 reduction in their power bills, and yet here he is when they get another increase saying, 'oh, we've got this under review'. 'Everywhere you look, it's just a mess."
Sky News AU
01-07-2025
- Business
- Sky News AU
Two-year delay for VNI West sparks fresh doubts over Australia's renewable energy ambitions
Australia's shaky transition to clean energy has suffered a major blow, with the roughly $4 billion VNI West electricity interconnector project now delayed by two years – moving the delivery date from 2028 to late 2030. The postponement raises serious concerns over whether the Albanese government can meet its renewable energy targets, including a plan to double the grid's renewable share to 82 per cent by the end of the decade. The pressure is mounting as major coal plants like Victoria's Yallourn station are still on track to close in 2028, leaving a potential gap in supply. Stretching 240 kilometres across Victoria and New South Wales, the VNI West project is facing stiff resistance from landowners and farmers who have become increasingly vocal about the proposed route slicing through regional communities. Back in May, VicGrid – the agency overseeing the project on Victoria's end – told The Australian that delays for both VNI West and the Western Renewables Link were in part due to the challenge of earning 'social licence' among affected communities. The new timeline deepens concerns around the state's broader transition strategy, especially given the critical role of transmission in delivering new solar and wind generation from renewable energy zones in western Victoria and along the Murray River. The Australian Energy Market Operator (AEMO) says the delay reflects 'revised planning, design and construction assumptions' and allows for a more inclusive process with landowners. 'The new construction completion target allows more time for detailed environmental, geotechnical and cultural assessments, along with more meaningful landholder engagement on access and easement arrangements,' said Claire Cass from AEMO's Transmission Company Victoria (TCV) unit. 'We know this updated timeline may be frustrating, but we're committed to working with landholders respectfully and providing the support they need to consider what is best for them, their properties and farming or business operations.' The state government insists the delay won't impact reliability in the short term. 'AEMO has indicated the revised project timeline will not impact the reliability of Victoria's electricity network,' a government spokeswoman said. AEMO is expected to factor in the revised deadline in its upcoming Electricity Statement of Opportunities report due in August. The delay comes on the back of AEMO's recent warning in May, when it flagged a blowout in the cost of delivering $20 billion worth of transmission projects. These soaring costs – partly fuelled by skill shortages and growing resistance from rural communities – could add to household power bills. Overhead transmission line costs have spiked by as much as 55 per cent, while substation costs have surged up to 35 per cent, based on updated estimates from AEMO's 2024 modelling. The new 2030 timeline also aligns with the release of TCV's easement and access package for VNI West, set to be delivered directly to landowners along the proposed route. 'For the first time, landholders will receive detailed information about the project benefit payments they can receive, indicative property-specific impact compensation and field survey access terms,' Ms Cass said. TCV stressed that reviewing the documents or engaging with liaison officers did not mean landowners were endorsing the project. 'The approach simply provides landholders with more say on how the project may affect them and their properties, so that compensation accurately reflects the impact,' Ms Cass said. Meanwhile, AusNet – developer of the 190km Western Renewables Link – last week announced a new 'Near Neighbour' payment scheme, offering up to $40,000 to households within a kilometre of the planned infrastructure, in an attempt to ease opposition. 'The Near Neighbour Benefit Program was a recognition that neighbours have similar experiences to those landholders directly hosting infrastructure on their land,' AusNet said. Despite these financial sweeteners, frustration continues to grow among Victorian farmers, many of whom say they're bearing the brunt of the state's renewables push. They accuse the Allan government of ignoring their concerns and putting food security at risk in its haste to overhaul the power grid. Both the VNI West and Western Renewables Link projects were originally due online in 2028, a timeline that aligned with the planned closure of several legacy coal plants. Now, officials and energy experts are sounding the alarm over the growing gap between ambition and delivery, as Victoria targets 65 per cent renewables by 2030 and 95 per cent by 2035. The state's transition blueprint includes 5.2 million solar panels, nearly 1,000 wind turbines, and transmission corridors covering 7 per cent of Victoria's landmass, all under intense scrutiny as delays and discontent mount.
ABC News
25-06-2025
- Business
- ABC News
As gas use declines, pipeline companies are shifting extra network costs onto consumers
Clare Savage might be reluctant to acknowledge she is something of a veteran of Australia's energy industry. But for more than 20 years, she has held senior positions within it, including the past six as the chair of the industry's top watchdog — the Australian Energy Regulator (AER). During that time, many things have transformed. Governments and ministers have come and gone, policies have chopped and changed, and the very mix of Australia's biggest electricity system has been radically reshaping. There has also been another, fundamental shift in Australia's energy landscape. Australian households are using less gas, with some getting off the fuel entirely. When it comes to the business of gas pipelines — how much they are worth, how they are regulated, who pays for them and how — Ms Savage says this trend changes everything. "The whole gas regulatory framework was built upon the belief that you would have a growing network," Ms Savage says. "And so all of the tools that we have, or most of the tools that we have, are founded on the belief that we'll have a growing network and that sharing the fixed costs of a network amongst a growing customer base is the best possible thing to do." Indeed, official and unofficial forecasts show declines to varying degrees in the number of customers connected to Australia's various gas networks. According to the Australian Energy Market Operator (AEMO), the body which runs the country's power and gas markets, a tipping point is at hand. The agency forecasts the number of household and business customers connected to gas networks is set to fall from almost 5 million now, to barely 4 million by 2030. AEMO says this number will collapse to as few as 1.5 million by the middle of the 2040s. Experts says a precipitous decline in gas connections will completely break the model used to regulate the networks. Under that model, gas pipeline owners are able to recover the huge cost of buying or building their networks — plus a profit margin — by charging a "fair" price to everyone connected to the network. How those prices are set, and the way they are apportioned to consumers, is determined by regulators. Ms Savage says the model had always been based on the notion there would be more customers joining the network. Courtesy of that assumption, she explains there are cross-subsidies that have helped keep costs low and encouraged ever more connections. Among them is a subsidy — paid by all existing users — that makes the cost of a new connection artificially low. Ms Savage says this way of regulating the industry and allowing pipeline owners to get their money back had worked relatively well — while the number of connections grew. "Then when we find ourselves with a customer base that might be changing or shifting or shrinking through time, we find that we've got less tools available," she says. "From that perspective, it makes the job harder." Faced for the first time with falling connection numbers, regulators including the AER are turning to novel ways of determining a "fair" price for owners and consumers alike. One of those tools is increasingly in vogue — and increasingly controversial. It is called accelerated depreciation and refers to the accounting treatment in which a company is able to fast-track the process of writing down the value of an asset. Crucially, by writing down the value of the asset in this way, the owner can pass on the cost to the consumer. And the costs can be considerable — hundreds of millions of dollars for the business and hundreds of dollars for individual consumers over a five-year period. While consumer groups have railed against its increasing use, retailers are not happy, either. Jeff Dimery is the longstanding boss of Alinta Energy, which is one of Australia's biggest electricity and gas providers. Mr Dimery says he can understand the arguments for accelerated depreciation — he just does not think gas companies should be allowed to write down their assets so quickly. "We would certainly encourage regulators to consider and to revisit accelerated depreciation on the basis of how smooth and how quickly this transition to a low carbon economy is actually occurring," Mr Dimery says. "We've been on the public record saying that we think the transition is behind schedule. For his part, Mr Dimery questions whether people will disconnect from the gas network as quickly or in as many numbers as authorities are forecasting. He notes that in some cases, pipeline owners are seeking to bring forward the lifetimes of their assets dramatically. However, he thinks the transition away from gas will happen more gradually. And for industrial customers that rely on gas to make their products, he says the shift could take many decades. As such, Mr Dimery says pipeline companies' depreciation claims should be treated with caution. "I think an important element of that also then needs to be the pace of change and this transition," the Alinta CEO says. "Let's not run down the hill here and stumble, let's walk down the hill and get it right. "And if that means that we take a longer-term view of these assets and there's a slightly slower transition and that eases the burden on consumers during a cost-of-living crisis, we don't think that's a bad thing." Ms Savage insists the AER is taking a tough approach. She points out that, collectively, pipeline owners have asked for as much as $800 million in accelerated depreciation. But she says the regulator has barely given them half of that. "We are, of course, balancing the needs of network businesses and consumers," Ms Savage says. "That's our job." Pipeline companies are sticking to their guns. Australian Pipelines and Gas Association chief Steve Davies says falling gas use is a real issue for owners, particularly distribution networks that service smaller customers like households. Mr Davies notes pipelines are typically built to last at least 40 years and there was little doubt that much could — or would — change in that timeframe. He says pipeline companies are not seeking to price gouge or generate windfall profits but simply recover their costs in a reasonable way and within a reasonable time. "We need to encourage infrastructure investment in Australia," Mr Davies says. "The regulator sets those rates of returns. They are acceptable and in line with the risk associated with investing in utility infrastructure, which is fairly low. "But we are talking about the recovery of the money that has been put into these infrastructure assets and that is a separate question from the rates of return which you achieve when you invest in the assets. "So there's return of capital and return on capital." Mr Davies argues the use of accelerated depreciation reflects the fact the regulatory system for gas pipelines was not designed for the circumstances it now faced. To that end, he suggests a broader shake-up of the system is needed. "In this changing environment, this is a challenge that hasn't been faced in Australia before," he says. "It is a fundamental question that needs to be managed properly." On this point, Ms Savage from the Australian Energy Regulator firmly agrees. Ms Savage says the watchdog was among the first of its global peers to recognise the implications for regulators of the shift away from gas. Chiefly, she says, the trend risks saddling an ever diminishing group of users with the full cost of building and maintaining a vast and expensive network of gas pipelines. Worse still, she says many of those household users who will be left picking up the tab are those unwilling or unable to get off gas and electrify. She says the regulator will continue to "use the tools we have available under the current … framework". Ultimately, though, it would like to see a revamp in the way the industry was overseen. "Our job is to worry about not just the consumers we have today, but the consumers we're going to have in 5, 10, 15 and 20 years' time, and 50 years' time," Ms Savage says. "How much should a connecting customer pay to the gas network? "What kind of contribution should a new customer make towards the assets that are being invested in on their behalf? "We think that's a really interesting and very important question to get to the bottom of."
