The Chamber of Minerals and Energy of Western Australia (CME) has today released a highlighting the need for urgent action to address growing reliability and pricing pressures during the decarbonisation of the State’s primary power grid.
Wholesale electricity prices have doubled in the space of three years – from $46/MWh in 2021 to $96/MWh in 2024 – and major industrial users are increasingly concerned about reliability.
The South West Interconnected System (SWIS) is critical to both the ongoing viability and decarbonisation pathways of CME members, who account for around 60 per cent of large industrial electricity demand on the network.
CEO Rebecca Tomkinson said industry had growing concerns about the timely delivery of new transmission lines and large-scale renewable generation required to offset the removal of coal-fired plants due to exit the SWIS by 2030.
“To be considered successful, a future-focused SWIS must tick three boxes. It must be low emission, reliable and cost-competitive,” Ms Tomkinson said.
“Failure to deliver in all three areas risks decimating the energy-intensive resources and manufacturing industries that are the backbone of the State’s economy.”
Energy Costs in Transition: Decarbonising Western Australia’s SWIS, maps a pathway to achieving 90 per cent renewable generation by 2040 without compromising reliability or asking businesses to absorb a massive spike in costs.
The report relies on modelling from Endgame Economics that examined three scenarios to meet the central “Future Ready” forecast contained in the WA Government’s SWIS Demand Assessment.
Crucially, it found a swift decarbonisation scenario – 90 percent renewables by 2040, with an interim target of 75 per cent by 2030 – could be achieved at a total system cost only marginally higher than meeting the forecast demand without a specific emission reduction target.
The report found current and under-construction 4-hour battery storage capacity was likely to be sufficient until 2030 but transmission and generation investment was urgently required. That included a six-fold increase in wind generation capacity and doubling of both solar and gas-fired generation.
Ms Tomkinson said the modelling found additional firming gas-fired generation was essential to ensure low-cost grid reliability and support the roll-out of new renewables.
“Gas has a critical role to play as the grid’s backstop when the sun isn’t shining and the wind isn’t blowing, as has recently been the case on the east coast,” she said.
“Changes to the Domestic Gas Policy announced on Thursday – designed to improve market transparency, clarify producer obligations and provide investment certainty – illustrate the Cook Government understands gas remains an essential ingredient on the road to decarbonising the electricity grid.”
Ms Tomkinson urged the WA Government to prioritise the swift release of a master transmission plan to guide public-private investment and provide certainty to customers and generation and storage proponents.
“Investment in large-scale renewables relies on connecting transmission infrastructure but there is currently little guidance over what areas will be wired up and when they will come online,” she said.
“Industry supports a flexible, genuine user-pays funding model for transmission lines but there has been little engagement to date on what these models could look like and time is rapidly running out for work to commence.”
FACT FILE
- Every component of SWIS electricity costs has increased sharply over recent years: wholesale costs have doubled, reliability costs are up five-fold, administration costs have tripled and transmission and distribution costs have climbed 45 per cent.
- The WA Government’s SWIS Demand Assessment’s central “Future Ready” scenario forecasts peak electricity demand to triple and total annual demand to increase five-fold by 2042. It estimates that this would require 50GW of new generation and storage (wind, solar, firming gas and battery storage) along with 4000km of new transmission lines.
- A survey of CME members provides support for this expected increase in electricity demand, with some noting the electricity share of operating costs could double by 2030 from roughly 5-10 per cent currently, depending on the technical and commercial viability of electrification projects. There is at least $2 billion in electrification investment decisions under consideration that are reliant on the WA Government providing industry with certainty regarding a timely SWIS transformation.
- Modelling commissioned by the CME indicates the SWIS could reach 90 per cent renewables by 2040 – with an interim target of 75 per cent by 2030 – at only a marginally higher price than pursuing the lowest-cost generation mix.
- Getting there requires investment of a similar scale to Metronet in new transmission lines and a six-fold increase in wind generation capacity. Solar and gas-fired generation would also need to double.
