National Electricity Market: Renewable Energy Zone expansions
The National Electricity Market (NEM) will require significant new grid-scale renewable energy generators to replace retiring thermal generation facilities.
In June 2022, the Australian Energy Market Operator (AEMO) released its 2022 Integrated System Plan (ISP) which forecasts the need for over 125 GW of additional Variable Renewable Energy by 2050, under the Step Change Scenario.
The 2022 ISP forecasts that most of this will be met by Renewable Energy Zones (REZs).
Renewable Energy Zones (REZs) are high-quality resource areas where clusters of large-scale renewable energy projects can be developed using economies of scale. REZs include onshore and offshore areas, all of which are subject to the same regulatory processes including REZ Design Reports.
The 2019 Australian Infrastructure Audit found that coordinating investment in REZs will lead to lower wholesale and network costs for users over time.
Co-locating this investment means that the same transmission infrastructure can be used to reduce the overall amount of network investment needed.
The Infrastructure Priority List separately includes a proposal for the future connectivity and reliability of the NEM, which includes transmission infrastructure to the REZs.
Potential options to address the proposal include expansion of existing or new REZs across the NEM. The infrastructure within these REZs could include new large-scale wind, solar and hydro.
For the 2022 ISP, AEMO has identified 41 REZs across Eastern Australia. In 2022, AEMO added six candidate Offshore Wind Zones that were considered in the ISP Update.
The Plan also outlines that enabling REZs is the first step towards providing efficient transmission investment as they have a high concentration of renewable generation and that this work should build on large transmission projects and consider how new generation connects to the grid.
The NEM is a wholesale market that connects generators and retailers across the six eastern and southern states and territories in Australia. Western Australia and the Northern Territory are not connected to the NEM.
The Australian Energy Market Commission (AEMC) develops the rules by which the market must operate.
The Australian Energy Regulator (AER) enforces the rules and makes judgements on the regulatory proposals of monopoly network operators.
As AEMO handles the day-to-day operations of the electricity and gas markets, we encourage them to continue to work with AEMC, AER, ESB, government and private sector asset owners and operators to identify options for REZs to connect to the grid.
Refer to Infrastructure Glossary for terms and definitions.