Both small- and grid-scale solar and battery energy storage systems (BESS) will be dominant in achieving Australia’s least cost energy transition to 2050, according to the Australian Energy Market Operator (AEMO) 2026 Integrated System Plan (ISP).
Targeting a total generation and storage capacity increase from 99 GW in 2026 to 308 GW over the next 24 years to 2050, would require from grid-scale wind and solar, a 5-fold increase from 23 GW in 2026, to 117 GW in 2050, or 3.9 GW per year.
Similarly, distributed solar would need to increase 20 GW to 87 GW, and dispatchable storage capacity from batteries, virtual power plants (VPP) and pumped hydro, would need an 11-fold increase from 6 GW to 64 GW, or an average of 2.6 GW per year to 2050.
The 117 GW of wind and solar will replace vanishing coal fleet capacity, which is projected to be 0 GW by 2049, when all plants are scheduled to be retired.
It will also be needed to meet rising demand, which the ISP forecasts will nearly double from 205 TWh in 2026 to 390 TWh in 2050.
Investment by consumers is forecast to contribute 87 GW of rooftop and other small-scale solar by 2050, and 35 GW of BESS.
In the 2050 Step Change scenario AEMO least-cost forecast, rooftop and other small-scale solar would have a 28% share of total National Electricity Market (NEM) capacity and, supported by consumer batteries and distribution networks, deliver a similar share of annual generation.
Similarly, in 2050, grid-scale solar would have a 21% share of NEM capacity and, supported by grid-scale batteries, deliver 29% of annual generation.
“This ISP projects a higher share of grid-scale solar and battery storage in the NEM capacity than previously, as their relative costs decline and battery connections increase,” the ISP says.
Transmission
Under the Step Change scenario, the plan forecasts around $106 billion (USD 73 billion) in annualised capital investment to 2050 (in today’s dollars) in transmission projects to connect to renewable energy generation and distribution sources.
“Around $6 billion of this is for transmission, which would deliver significant benefits, saving consumers $30 billion in avoided capital, operating and fuel costs compared to a pathway without these transmission investments,” the ISP says.
“Transmission is a relatively small share of overall system investment but delivers substantial benefits for consumers by unlocking lower-cost energy across the National Electricity Market,” Westerman said.
“The direction for Australia’s energy future remains clear, it’s renewable energy, supported by storage, connected by transmission and distribution, and backed up by gas.”
Smart Energy Council Chief Executive Officer David McElrea said “the more we delay, the more we pay”.
“That’s almost $30 billion Australians stand to lose if we prolong our reliance on expensive, unreliable, ageing, and polluting fossil fuels like coal and gas.”
“Without a continued, rapid rollout of new transmission, grid-scale investment costs will balloon by $17 billion and system operating costs will shoot up by $12 billion. This infrastructure isn’t just about generating clean energy; it’s about moving it to where it is needed most – our regional manufacturing hubs, mining centers, cities, and electrified transport networks,” McElrea said.
AEMO Group System Planning Group Manager Eli Pack asked on LinkedIn what if the transition keeps moving, but delivery is harder, slower and more expensive than we’d like?
“That matters because this transition is happening in the real world, with real people, and not in a perfect model or giant spreadsheet. Even in that tougher world, there would still be around 45 GW of renewables and 31 GW of storage needing to connect by 2030, making transmission even more important across the NEM,” Pack said.
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