Australia’s electricity grid is on track to meet reliability standards over the next decade, although the timely delivery of generation, storage and transmission projects will be crucial as coal plants retire, according to the Australian Energy Market Operator (AEMO).

“The ten-year investment pipeline to manage energy reliability is healthy,” AEMO CEO Daniel Westerman said on Thursday.

“Considering the large volume of generation retirements over the next decade, the timely delivery of new generation, storage and transmission, along with the operation of consumer energy resources to support reliability, remain critical,” he added.

AEMO’s latest outlook forecasts a 28% increase in operational electricity consumption, from 178 TWh in 2024/25 to about 229 TWh in 2034/35. The rise is being driven by data centre growth, accelerating business electrification and greater industrial demand.

Last financial year, a record 4.4 GW of new generation and storage was commissioned. Between 5.2 GW and 10.1 GW is expected to come on line every year over the next five years, often backed by government schemes. This will help offset the retirement of 11 GW of coal-fired capacity, including major stations such as Eraring, Bayswater, Vales Point, Yallourn and Callide B.

Reliability challenges, however, remain. Under AEMO’s broader government schemes and actionable developments assessment, a minor gap of 25 MW is forecast in South Australia in 2026/27 when Torrens Island B retires and before Project EnergyConnect Stage 2 is fully commissioned.

In its more conservative committed and anticipated developments outlook, an 80 MW gap is forecast in Queensland in 2025/26 owing to reduced generator availability, higher peak demand and delayed projects. South Australia faces a 390 MW gap in 2026/27 if Torrens Island B retires as scheduled.

The modelling does not account for AGL’s in-principle deal with the South Australian government to extend Torrens Island B for two years. If that extension is confirmed, no reliability gap would be forecast in those years.

From the later years of the outlook, reliability gaps are forecast across all mainland regions of the National Electricity Market (NEM), though AEMO said these could be addressed as further projects progress to commitment.

To address South Australia’s shortfall, AEMO will ask the Australian Energy Regulator to consider imposing obligations on retailers and liable entities under the retailer reliability obligation, or RRO, in 2026/27.

AEMO is also preparing for summer with a panel of providers available to procure additional reserves when reliability risks emerge. The outlook further considers challenges from planned outages, potential gas shortfalls and drought conditions.

The operator noted that system security remains a critical challenge alongside reliability. AEMO will publish its yearly system security report in December, setting out the investments required to keep the grid stable.