Energy reality bites in Victoria and NSW

Victoria and New South Wales (NSW) face a grim reality when it comes to meeting their energy demands, as coal-fired power plants are set to close, leaving the grid vulnerable. According to AEMO's latest report, over 5 GW of coal capacity will be retired by 2029, with nearly 15 GW of coal power disappearing entirely by 2035. The majority of these closures will come from Victoria and NSW, leaving the region with a significant energy gap that must be filled.

The demand for electricity is set to soar due to several factors, including the construction of data centers, population growth, and the switch to electric vehicles. The addition of wind and solar power is not enough to replace the lost baseload non-weather-dependent generation, posing a serious threat to the availability of power for homes and businesses.

AEMO has warned that both Victoria and South Australia could face supply shortages starting in July 2028, as Yallourn power station's closure will remove nearly 25% of Victoria's generation. Furthermore, the pace of wind farm construction is not fast enough to compensate for the retiring coal plants. Rystad Energy has also expressed concerns about an acute supply deficit on Australia's east coast in the early 2030s if the current retirement plan for coal-fired power plants remains unchanged.

Coal has historically dominated Victoria's electricity generation, accounting for 61% of the region's power over the past three months. NSW has been even more reliant on coal, with 70% of the state's electricity generated by coal-fired plants during the same period. Despite these figures, the Australian government has set an ambitious goal of 82% renewable energy by 2030, which seems increasingly unlikely given the current pace of wind farm installations and the need to balance energy abundance with a diverse mix of generation sources.

Given the current trajectory, it appears that the more likely outcome is the extension of coal plants, particularly in NSW, as wind generation fails to materialize at the required rate. This raises questions about the wisdom of Labor's target and whether an energy policy that focuses more on abundance and a balanced mix of generation sources might be more viable in the long run.