Every year, the Australian Energy Market Operator, known as AEMO, releases its Electricity Statement of Opportunities (ESOO). It provides a 10-year outlook on the investment needed to maintain reliability in the National Electricity Market (NEM).
To keep Flow Power customers up to date with market movements, each year we ask our energy specialists to summarise the key points, and what they mean.
(In case you missed it, here’s a look at last year’s report.)
Now, let’s get into the latest from the ESOO for 2025.
Two development outlooks for 2025
This year’s report assesses reliability using two different scenarios:
- A full-delivery scenario that assumes all planned government programs and transmission projects go ahead. This includes more than 50 GW of new solar, wind and storage capacity from federal and state schemes that are currently planned or proposed.
- A conservative scenario that counts only projects already well advanced in development. This includes generation, storage and transmission projects that have reached clear milestones and are likely to proceed.
Comparing both scenarios helps manage uncertainty, guides regulators and investors on priorities, and identifies where market or contingency actions, like triggering retailer reliability obligation (RRO) or reserve procurement, may be needed.
Reliability is trending upwards
There is positive investment momentum underway, aiming to meet growing demand and fill gaps from retiring generation.
Compared to last year’s ESOO, reliability outlook has improved across both assessments, bolstered by more than 10 GW of additional projects that now meet AEMO’s committed and anticipated criteria (2.9 GW/7 GWh of utility storage, 4 GW of grid-scale solar and 3 GW of wind).
AEMO’s CEO, Daniel Westerman, states that “the 10-year investment pipeline to manage energy reliability is healthy.”
However, Westerman notes that the timely delivery of new generation, storage and transmission, plus the operation of consumer energy resources (such as solar panels, batteries or EVs) remain critical.
Electricity consumption forecast to rise
With the ongoing rapid expansion of data centres and accelerating industry-wide electrification, the latest forecasts show an expected 28% increase in operational electricity consumption from 178 TWh in 2024-25, to around 229 TWh by 2034-35.
Thermal generators set to retire
In the 10-year period, 11 GW of predominantly coal power stations will retire, including Eraring, Bayswater, Vales Point, Yallourn and Callide B.
Following these retirements, there are a few minor reliability gaps forecast in South Australia in 2026-27, and in Queensland in 2025-26 due to reduced generator availability, higher forecasts of maximum demand and delayed project commissioning.
Managing energy reliability risks
Potential reliability risks can be mitigated with on-time delivery of new generation, storage and transmission developments, often supported by government-led investment programs, and coordinated consumer energy resources.
Since last year’s ESOO, the reliability gaps identified for 2027-28 in NSW following the closure of Eraring, and in VIC following the closure of Yallourn, are no longer forecast. This emphasises the importance of early identification and intervention to reduce reliability risk.
What factors influence the reliability outlook?
The reliability outlook is influenced by many moving parts in the electricity market. This includes:
- Advised generator retirements
- Investment in new generation, storage and transmission developments
- Forecast energy consumption and maximum demand
- Rooftop solar, home batteries and EV uptake
Record investment for 2025
Last financial year saw a record 4.4 GW of new generation and storage commissioned.
Over the next 5 years, additional investment between 5.2 GW to 10.1 GW is expected to come online annually, supported by government schemes.
This ever-growing capacity will help offset the retiring thermal generation and can be further supported through the intelligent management of large, flexible energy loads.
What’s next?
As emphasised every year in the ESOO, the importance of delivering the pipeline of projects on time and in full is vital to reliability. But it’s not just grid-scale developments that impact the outlook each year.
At a consumer level, there is growing opportunity for rooftop solar, batteries and EVs to actively participate in the power system. This approach can offer financial incentives and increased energy independence, while supporting the ongoing transition of Australia’s energy system.
The more homes and businesses using energy flexibly to align with renewables in the wholesale market, the faster we can transition away from thermal generation and minimise the impact of retiring coal plants.
Questions?
If you have further questions about the ESOO, how this could impact your business, or ways Flow Power can help optimise your electricity use, reach out to one of our energy specialists today.
