Australian Energy Market Operator

History

Formation and early operations

AEMO commenced operations on 1 July 2009, superseding several state-based and cross-state organisations. These included the National Electricity Market Management Company Limited (NEMMCO), the Victorian Energy Networks Corporation (responsible for the operation of gas and electricity industries in Victoria), the Electricity Supply Industry Planning Council (responsible for the operation of the electricity industry in South Australia), the South Australian operations of Retail Energy Market Company, Gas Market Company, and Gas Retail Market Operator.

In 2015, AEMO became the market and independent power system operator for the Wholesale Electricity Market (WEM) in Western Australia.

Coal plant closures and system security

In March 2017, AEMO sought to reassure the public that the closure of the Hazelwood Power Station, which has a capacity of 1600 megawatts, would be offset by the availability of three mothballed gas-fired stations, which have a combined capacity of 830 megawatts, and large industrial businesses agreeing to time-shift their electricity use in the event of an emergency. The additional capacity would be provided by the Pelican Point Power Station in South Australia, Tamar Valley Power Station in Tasmania and Swanbank Power Station in Queensland.

In 2017, AGL Energy reaffirmed that it intends to close the Liddell Power Station in 2022. The closure of this and other coal-burning power stations in Australia led former Prime Minister of Australia Malcolm Turnbull to seek advice from AEMO on extending the life of a number of them, to head off future power shortages. Turnbull said the government had been advised that if the Liddell plant were to close in 2022, there would be a 1000MW gap in base load, dispatchable power generation.

Renewable energy transition challenges

In May 2018, AEMO warned solar and wind projects in north-western Victoria of potential curtailment to their generation profiles. In particular, the 220kV transmission line that links Ballarat, Horsham, Red Cliffs, Kerang and Bendigo was the focus of their announcement.

In order to simplify operations of the electricity market, AEMO suspended the spot market for wholesale electricity across the country in June 2022. That move came after AEMO issued warnings for possible power interruptions amid supply shortfalls and significant price rises.

In June 2023, AEMO sounded an alarm over the country's transition to renewable energy. Daniel Westerman was concerned that investment in renewables wasn't happening fast enough as two-thirds of coal-fired power stations were expected to shut down by 2030.

Recent developments (2024–2025)

In July 2024, the Australian Renewable Energy Agency (ARENA) provided up to $15 million to AEMO to accelerate delivery of AEMO's Engineering Roadmap, aimed at advancing operational capacity for renewable generation in the National Electricity Market. The funding supports accelerating operational readiness for major power system changes, foundational enablers for energy transition, and providing long-range visibility to investors on emerging power system requirements.

In August 2024, AEMO downgraded its warnings about power shortage risks in coming years, citing an improved outlook due to 5.7 gigawatts of new generation and storage developments. These included 3.9 gigawatts of batteries, 1.2 gigawatts of large-scale solar and about 400 megawatts of wind power. The improved outlook was also attributed to the decision to extend the life of the 2.9 gigawatt Eraring Power Station north of Sydney. However, CEO Daniel Westerman emphasised it remained "critical" that new generation and transmission projects be delivered on time.

In October 2024, the Australian Energy Market Commission initiated an expedited rule change process following a request from Delta Electricity to allow AEMO to accept cash as credit support from market participants. This addressed difficulties some generators faced in obtaining traditional bank guarantees due to evolving environmental, social, and governance policies among financial institutions.

In December 2024, AEMO received $728.1 million in federal funding over five years to upgrade its core digital systems, as announced in the Mid-Year Economic and Fiscal Outlook budget update. The funding aims to "enhance energy security and reliability" and includes upgrades to operational digital systems and strengthening of AEMO's cybersecurity posture.

In the 2024–25 financial year, AEMO reported a record-breaking surge in new renewable energy projects, with 29 projects totalling 4.4 gigawatts reaching full operation—double the previous year's total.

References

References

1. "AEMO Strategic Corporate Plan FY26". Australian Energy Market Operator.
2. "AEMO Final Budget and Fees FY26". Australian Energy Market Operator.
3. "Wholesale Electricity Market (WA)". Australian Energy Market Operator.
4. "Archived copy".
5. "AEMO About AEMO".
6. "AEMO Who We Are".
7. Morton, Adam. (2017-03-29). "What we'll do to keep the lights on post Hazelwood: grid operator".
8. (6 September 2017). "AGL Energy statement on Liddell Power Station". [[AGL Energy]].
9. Osborne, Paul. (6 September 2017). "Turnbull throws his weight behind coal power". [[InDaily]].
10. Hannam, Peter. (2017-09-07). "Liddell power plant operating below 40 per cent capacity, faces 'mammoth' woes".
11. Parkinson, Giles. (2018-05-07). "Victoria wind and solar farms warned of curtailment".
12. "Australian Energy Market Operator suspends spot market for wholesale electricity to ensure reliability and avoid blackouts". ABC News.
13. (14 June 2022). "Power uncertainty hits multiple states as AEMO makes moves to cover shortfalls". ABC News.
14. Hannam, Peter. (20 June 2023). "Australia's transition away from fossil fuels 'not fast enough' as wind and solar investment lags". The Guardian.
15. (26 July 2024). "ARENA and AEMO to charge up NEM transition".
16. (29 August 2024). "Summer blackout threat eases but AEMO warns risks remain as coal, gas plants retire".
17. (24 October 2024). "Consultation paper published on allowing AEMO to accept cash as credit support".
18. (18 December 2024). "AEMO bags $728.1m for core IT uplift".
19. (22 July 2025). "Australia's NEM sees 'record-breaking' surge in renewables and energy storage assets".