Draft 2025 Inputs,

Assumptions and
Scenarios Report
December 2024

Draft report
For use in Forecasting and Planning studies and analysis
 We acknowledge the Traditional Custodians of the land, seas and waters across
Australia. We honour the wisdom of Aboriginal and Torres Strait Islander Elders past
and present and embrace future generations.

We acknowledge that, wherever we work, we do so on Aboriginal and Torres Strait

Islander lands. We pay respect to the world's oldest continuing culture and First
Nations peoples' deep and continuing connection to Country; and hope that our
work can benefit both people and Country.

'Journey of unity: AEMO's Reconciliation Path' by Lani Balzan

AEMO Group is proud to have launched its first Reconciliation Action Plan in May 2024. 'Journey of
unity: AEMO's Reconciliation Path' was created by Wiradjuri artist Lani Balzan to visually narrate our
ongoing journey towards reconciliation - a collaborative endeavour that honours First Nations
cultures, fosters mutual understanding, and paves the way for a brighter, more inclusive future.

Important notice
Purpose
AEMO publishes this Draft 2025 Inputs, Assumptions and Scenarios Report (IASR) in accordance with National Electricity
Rules (NER) 5.22.8. This report includes key information and context for the inputs and assumptions used in AEMO’s
Forecasting and Planning publications for the National Electricity Market (NEM) and the Wholesale Electricity Market (WEM)
in Western Australia. This publication is generally based on information available to AEMO as at 30 November 2024 unless
otherwise indicated.

Disclaimer
AEMO has made reasonable efforts to ensure the quality of the information in this publication but cannot guarantee that
information, forecasts and assumptions are accurate, complete or appropriate for your circumstances.

Modelling work performed as part of preparing this publication inherently requires assumptions about future behaviours and
market interactions, which may result in forecasts that deviate from future conditions. There will usually be differences
between estimated and actual results, because events and circumstances frequently do not occur as expected, and those
differences may be material.

This publication does not include all of the information that an investor, participant or potential participant in the National
Electricity Market might require, and does not amount to a recommendation of any investment.

Anyone proposing to use the information in this publication (which includes information and forecasts from third parties)
should independently verify its accuracy, completeness and suitability for purpose, and obtain independent and specific
advice from appropriate experts.

Accordingly, to the maximum extent permitted by law, AEMO and its officers, employees and consultants involved in the
preparation of this document:

• make no representation or warranty, express or implied, as to the currency, accuracy, reliability or completeness of the
information in this document; and

• are not liable (whether by reason of negligence or otherwise) for any statements or representations in this document, or
any omissions from it, or for any use or reliance on the information in it.

Copyright
© 2024 Australian Energy Market Operator Limited. The material in this publication may be used in accordance with the
copyright permissions on AEMO’s website.

Version control
Version Release date Changes

1.0 11/12/2024 Initial release

AEMO acknowledges the Traditional Owners of country throughout Australia and recognises their continuing
connection to land, waters and culture. We pay respect to Elders past and present.
Executive summary

Executive summary
Background

AEMO delivers a range of forecasting and planning publications for the National Electricity Market (NEM) and
Wholesale Electricity Market (WEM), including the Electricity Statement of Opportunities (ESOO) for both markets,
the Gas Statement of Opportunities (GSOO) for Western Australia and eastern and south-eastern Australia, and
the Integrated System Plan (ISP) for the NEM.

Publication of this Draft 2025 Inputs, Assumptions and Scenarios Report (Draft 2025 IASR) commences formal
consultation on the scenarios, inputs and assumptions proposed for use in AEMO’s 2024-25 forecasting and
planning activities, including the 2026 ISP. While most assumptions that will apply to AEMO’s planning
publications are consulted on through this document's formal consultation process, some inputs and assumptions
operate on different update cycles, as set out in the summary box under relevant sections of this report, and
AEMO encourages interested stakeholders to use these subsequent engagement opportunities to consult with
AEMO on these additional inputs.

Consultation process

Prior to the release of this Draft 2025 IASR, AEMO has provided several opportunities for stakeholder input that
has helped shape the proposed scenarios in the Draft 2025 IASR and several of the draft assumptions. In July
2024, AEMO received submissions from 50 stakeholders with feedback and suggestions, and has published a
consultation summary paper1 that demonstrates the considerations that the feedback has provided to AEMO in
developing this Draft 2025 IASR, in informing the scenarios, and in some instances the assumptions, in this Draft
2025 IASR2.

The Draft 2025 IASR is being released in two stages for consultation
The IASR includes a wealth of inputs and assumptions that apply to AEMO’s planning publications, and are used
across the industry for other planning purposes, including for use in regulatory tests for transmission. In April
2024, the Energy and Climate Change Ministerial Council (ECMC) published its response to a review conducted to
examine the optimal function and form of the ISP, and in June 2024 the Australian Energy Market Commission
(AEMC) commenced rule change processes to address various ECMC-endorsed recommendations from the ISP
Review3. If these rule changes are made, they will expand the scope of considerations in the ISP, so AEMO has
needed to consider the breadth of the inputs and assumptions necessary to support this.

1
See https://aemo.com.au/-/media/files/stakeholder_consultation/consultations/nem-consultations/2024/2025-iasr-scenarios/consultation-
paper.pdf?la=en.
2
A summary of submissions was presented at the 25 September 2024 Forecasting Reference Group meeting pack; see
https://aemo.com.au/en/consultations/industry-forums-and-working-groups/list-of-industry-forums-and-working-groups/forecasting-reference-
group-frg.
3
See https://www.aemc.gov.au/rule-changes/improving-consideration-demand-side-factors-isp and https://www.aemc.gov.au/rule-
changes/better-integrating-gas-and-community-sentiment-isp.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 3

Executive summary

To extend the Draft 2025 IASR to include these additional considerations, AEMO is releasing the Draft 2025 IASR
in two stages for consultation. Many of the traditional inputs and assumptions are included in this release
(Stage 1), while new assumptions required for the ISP Review recommendations and some assumptions involving
emissions reduction will be released in Stage 2:

• Stage 1 release (this publication) on 11 December 2024, with consultation on this release commencing on that
date and submissions closing at 6.00 pm AEDT on 11 February 2025.

• Stage 2 release in February 2025, will include emissions reduction parameters as well as new inputs needed to
consider new elements of the ISP’s scope, with consultation on this release commencing on that date and
submissions closing in March 2025.

AEMO will update the Stakeholder Engagement web page 4 to outline changes to the above schedule, and to
inform stakeholders of other opportunities, including use of the Forecasting Reference Group (FRG) 5 and any
other forums, as appropriate.

Notice of Consultation: Invitation for written submissions

AEMO is committed to continued engagement on the content of this Draft 2025 IASR in the interests of
increasing transparency, and utilising stakeholder feedback for the benefit of energy consumers and the energy
sector. The commitment to engagement is also consistent with the principles outlined in the Australian Energy
Regulator’s (AER’s) Forecasting Best Practice Guidelines.

Feedback is welcome on all report content, and AEMO has included ‘Matters for Consultation’ as a guide.
Feedback will be particularly helpful where views are accompanied by supporting information. AEMO requests
that, where possible, submissions should provide evidence that supports any views or claims that are put
forward.

Submissions should be sent in PDF format via email to [email protected] and are required by
6.00 pm AEDT on Tuesday 11 February 2025 for the Stage 1 publication and March 2025 for the Stage 2
publication. Please note that submissions will be published, other than confidential material, subject to AEMO’s
Consultation submission guidelines6.

After receiving submissions for both stages of this Draft 2025 IASR, AEMO will facilitate a webinar to discuss the
key issues raised by stakeholders, focusing discussions on inputs and assumptions referenced most frequently
across the submissions. Other opportunities for engagement on the Draft 2025 IASR may emerge in relation to
companion activities, including consultations on the ISP Methodology7 and Electricity Demand Forecasting
Methodology8. Details for the current Draft 2025 IASR engagement opportunities can be found in Table 1 in

4
At https://aemo.com.au/energy-systems/major-publications/integrated-system-plan-isp/2026-integrated-system-plan-isp/opportunities-for-
engagement.
5
See https://aemo.com.au/en/consultations/industry-forums-and-working-groups/list-of-industry-forums-and-working-groups/forecasting-
reference-group-frg.
6
At https://aemo.com.au/-/media/files/stakeholder_consultation/working_groups/industry_meeting_schedule/aemo-consultation-submission-
guidelines---march-2023.pdf?la=en&hash=DB5BAA8CC5A29297C205B91640A97518.
7
At https://www.aemo.com.au/consultations/current-and-closed-consultations/2026-isp-methodology.
8
At https://aemo.com.au/consultations/current-and-closed-consultations/2024%20Electricity%20Demand%20Forecasting%20Methodology
%20Consultation.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 4

Executive summary

Section 1.1, and will be updated on the Opportunities for Engagement web page 9. AEMO’s ISP Timetable10 has
details on all major milestones specific to the ISP development process.

Proposed scenarios and sensitivities

The use of scenario planning is an effective practice when planning in highly uncertain environments. Scenarios
are a critical aspect of forecasting, enabling the assessment of future risks, opportunities, and development needs
in the energy industry. Scenarios therefore purposefully capture the key uncertainties and material drivers of
these possible futures in an internally consistent way.

AEMO uses a scenario planning approach coupled with cost benefit analysis to determine economically efficient
ways to provide reliable and secure energy to consumers while meeting the policies of Australia’s governments
that are supporting the energy transition.

Scenarios represent plausible future ‘worlds’, being a collection of circumstances and external variations that
determine the environment in which the energy transition occurs, driving different conditions for energy supply
and demand. Scenarios do not describe the outcomes of the planning process and are thus not focused on
particular solutions. While some scenarios may be more likely than others, no single scenario is expected to be
the definitive version of the future that will occur; the value of the scenario collection is in describing uncertainties
from which further analysis identifies benefits or regrets of various alternative investments.

The proposed scenarios in this Draft 2025 IASR reflect a similar scenario collection to the 2023 IASR scenarios
applied in the 2024 ISP, with adjustments based on stakeholder feedback across various engagement
opportunities since the Draft 2024 ISP was released. These changes are described further in Section 2.1.

The scenarios, representing plausible future worlds within which the energy transition occurs, all reflect and
consider the policies that Australia’s governments have committed to in order to transition Australia’s economy to
net zero emissions by 205011. The scenarios provide a mechanism to explore the investment needs of the energy
system with consideration of various pathways to that outcome. As such, the scenarios continue to provide a
broad range of environments on which to:

• Plan the energy system, supporting decision makers in identifying overall investment needs and applying them
to AEMO’s statutory functions to assess electricity system reliability and security, and gas system adequacy.

• Inform regulatory network and non-network investment processes, including both the development of the ISP
and application of the regulatory investment test for transmission (RIT-T).

• Test the risks of under- and over-investment.

In developing the scenarios, AEMO focused on the principles that scenarios should remain broad, distinct,
internally consistent, and plausible, and take into consideration the requirements and guidance provided in the
AER’s cost benefit analysis (CBA) guidelines12.

9
At https://aemo.com.au/energy-systems/major-publications/integrated-system-plan-isp/2026-integrated-system-plan-isp/opportunities-for-
engagement.
10
At https://aemo.com.au/-/media/files/major-publications/isp/2026/2026-isp-timetable.pdf.
11
As per National Electricity Rules (NER) 5.22.3(b), which acknowledges that AEMO must (or may) consider eligible government policies when
identifying power system needs and in developing how the ISP contributes to achieving the national electricity objective. See Section 3.1.
12
See https://www.aer.gov.au/system/files/2024-11/AER%20-%20Cost%20Benefit%20Analysis%20guideline%20%28clean%29%20-
%2021%20November%202024.pdf.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 5

Executive summary

The scenarios explore critical dimensions and uncertainties affecting the energy sector. Key uncertainties include:

• The growth of the Australian economy, and associated population trends and economic activity that may be
expected across Australia’s industrial, commercial, manufacturing, mining and transportation sectors (and
others), including emerging commercial loads such as data centres.

• The pace and scale of consumer energy resources (CER) investments, which comprise small-scale embedded
generation and storage technologies, such as residential and commercial photovoltaic (PV) systems, battery
storage, and electric vehicles (EVs), as well as consumer appetite for the coordination of these active devices.

• Cost trends for the range of technologies that may be developed across electricity generation, storage and
network developments.

• The opportunities for emerging energy technologies affecting Australia’s decarbonisation pathway and export
economy, including hydrogen production and manufactured products that utilise hydrogen (such as green iron
and ammonia products), and other technologies (such as biomethane) that may impact the emissions intensity
of energy.

AEMO has defined three scenarios in this Draft 2025 IASR for its planning activities, including the 2026 ISP.
Scenarios may be supported by sensitivity analysis to explore the effect of specific uncertainties on AEMO’s
planning publications, including the power system development outlook in the ISP, or emerging electricity/gas
supply availability in the statements of opportunities.

The proposed scenarios are as follows:

• Step Change – refines the 2023 Step Change scenario. This scenario is centred around achieving a scale of
energy transformation that supports Australia’s contribution to limiting global temperature rise to below 2°C
compared to pre-industrial levels consistent with international efforts to the same goal. Compared to the 2023
Step Change scenario, while consumer investment in the energy transition remains strong (with energy
efficiency and electrification investments, as well as aggregators of consumer resources, being a key part of
the transition), consumers are tentative to share control and coordinate the operation of their consumer energy
devices through a third party such as their electricity retailer. Investment in CER, particularly in rooftop solar
and batteries, reflects that households place high value on the benefits provided by these systems, and
typically install relatively large household systems to improve their self-supply. The scenario captures some of
the ambition in developing hydrogen associated opportunities, reflecting the economic challenges of
establishing this new industry, while trends in artificial intelligence and other data-heavy applications
encourage continued growth in data centres in Australia.

• Progressive Change – continues to explore a transition to net zero emissions within an economy that features
less growth and greater challenges than other scenarios. In response to weaker economic circumstances,
investment in decarbonisation is more gradual at sufficient pace to meet the requirement of Australia’s current
2030 Paris Agreement commitments (and other state-based policy commitments) resulting in greater
aggregate emissions even in achieving current commitments. Conversely, slower economic activity and
population growth reduces the pace of electrification that increases electricity demand while energy-intensive
industry are at greater risk of closure due to the weak economic circumstances, with a material proportion of
large energy-intensive businesses in each NEM region shut down in the short to medium term.
Consumers continue to invest in CER, yet with relatively less growth than other scenarios, and consumer

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 6

Executive summary

adoption of measures to share control of their devices to aggregators is lowest of all the scenarios, reducing
the coordination opportunity for these assets.

As a result, the scenario has a less robust economy and a smaller population base consuming less electricity. A
weaker and slower energy transition globally, higher technology costs, and tighter supply chains affecting
consumer investments relative to other scenarios, combine to slow the pace of change to limit the medium-
term ambition beyond current policy targets. As a result, this scenario requires less investment to achieve the
decarbonisation goals.

• Green Energy (which will examine one of two variants, Green Energy Exports or Green Energy Industries) –
refines the 2023 Green Energy Exports scenario, and is this IASR’s most ambitious scenario, with the strongest
decarbonisation and strongest economic growth. The scenario features a rapid transformation of Australia’s
energy sectors, utilising all available pathways to net zero including strong adoption of electrification, and
action to reduce the emissions intensity of molecular forms of energy. Australia’s energy transition in this
scenario is commensurate with global actions underway to limit temperature increases to 1.5°C.
Consumers in this scenario continue to invest in CER, with the greatest relative uptake of these assets, and the
greatest relative acceptance of coordination opportunities.

Higher economic growth internationally (and locally) increases global demand for green energy, enabling
greater development of green energy products for both domestic and international customers (particularly
green iron and ammonia products). Compared to the 2023 Green Energy Exports scenario, NEM-connected
hydrogen production is lower reflecting that the scale of hydrogen developments remains uncertain and the
opportunity for embedded electricity supply is expected to reduce grid investment. Two scenario variants are
proposed that include, or exclude, some hydrogen export opportunities, and AEMO seeks stakeholder
feedback on both in this consultation. In the ISP, AEMO is likely to examine one of the variants as one of the
three scenarios, and explore the investment impacts of the other variant as a sensitivity. Further detail on the
two variants and AEMO’s proposed treatment of them in the ISP context is in Section 2.1.

AEMO considers that this scenario collection provides consistency for comparison with the 2023 IASR
collection, used in the 2024 ISP and other planning assessments, and suitably reflects developments since then,
including stakeholder feedback during early consultation.

AEMO is exploring two variations to its most ambitious energy transition scenario, and seeks stakeholder
feedback on the more appropriate variant for its scenario planning activities in the ISP.

Sensitivities

To increase confidence in the robustness of the investment conclusions developed in the ISP and to test the
resilience of investment outcomes against various uncertainties, AEMO employs sensitivity modelling. Most
commonly, this involves changing a single variable at a time.

AEMO invites stakeholders to submit their views on what sensitivities to explore in the 2026 ISP. An indicative list
of sensitivities that AEMO will consider for the 2026 ISP will be published in the final 2025 IASR in July 2025.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 7

Executive summary

Inputs and assumptions

This Draft 2025 IASR describes in detail the inputs and assumptions in relation to:

• Government policy inputs, including settings that reflect carbon emissions constraints.

• Energy consumption forecasting components, including CER.

• Generation and storage assumptions affecting existing assets, and new entrant technologies, including capital
cost projections and fuel price assumptions.

• Renewable energy zones (REZ).

• Transmission modelling.

• Other power system security inputs.

• Financial and economic parameters.

• Gas modelling inputs, and assumptions relating to hydrogen production and hydrogen demand.

• Employment factors that will be used to estimate the workforce requirements needed to implement the ISP.

AEMO publishes the Draft 2025 Inputs and Assumptions Workbook 13 alongside this Draft 2025 IASR to provide
more detail on the various inputs.

Recognising policy uncertainty

Government policy is included as an input for the purpose of AEMO’s planning analysis. The range of policies
included is set out in the IASR.

If there is a significant change to energy policies that may materially change AEMO’s planning analysis, AEMO
would adopt the updated policy as appropriate. This would involve consultation and could result in the
requirement to restart planning activities, depending on the magnitude of the change and the type of planning
analysis being undertaken.

Next steps

This Draft 2025 IASR invites stakeholders to provide submissions on its contents, acknowledging that a further
stage to the Draft 2025 IASR will be released in February 2025, and containing additional, complementary inputs
and assumptions to this release. In many instances, this release indicates the inputs to be released in the next
IASR release.

While this report does not solely focus on the input variables and parameters for the purposes of the ISP, these
inputs, assumptions and scenarios are required to be used for the ISP. AEMO has published key engagement
milestones for the 2026 ISP in its ISP Timetable14 and will provide stakeholders with updates to the engagement

13
See https://aemo.com.au/consultations/current-and-closed-consultations/2025-iasr.
14
At https://aemo.com.au/-/media/files/major-publications/isp/2026/2026-isp-timetable.pdf.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 8

Executive summary

opportunities on the Opportunities for Engagement web page15. Other forums, such as the FRG16, may provide
further opportunity to consult or inform stakeholders on other inputs for AEMO’s forecasting and planning
processes.

AEMO will continue to engage with governments to further understand any developments or changes to existing
policy initiatives to include in the final IASR and ISP, consistent with the requirements in the National Electricity
Rules (NER).

AEMO will use these inputs, assumptions and scenarios in its planning work including the development of the
2025 GSOO (to be published March 2025), the 2025 ESOO (August 2025), the Draft 2026 ISP (December 2025),
and the final 2026 ISP (June 2026).

15
At https://aemo.com.au/energy-systems/major-publications/integrated-system-plan-isp/2026-integrated-system-plan-isp/opportunities-for-
engagement.
16
See https://aemo.com.au/en/consultations/industry-forums-and-working-groups/list-of-industry-forums-and-working-groups/forecasting-
reference-group-frg.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 9

Contents
Executive summary 3

1 Introduction 11

1.1 Consultation process 13

2 Scenarios 15

2.1 Scenario narratives and descriptions 16

2.2 Key scenario parameters 20

2.3 Scenario likelihoods 22

2.4 Sensitivities 22

3 Inputs and assumptions 23

3.1 Policy settings 23

3.2 Emissions and climate assumptions 41

3.3 Consumption and demand: historical and forecasting components 45

3.4 Existing generator and storage assumptions 80

3.5 New entrant generator assumptions 92

3.6 Fuel and renewable resource assumptions 108

3.7 Financial parameters 117

3.8 Climate change factors 120

3.9 Renewable energy zones (REZs) 122

3.10 Network modelling 138

3.11 Power system security 160

3.12 Gas infrastructure 167

3.13 Employment factors 169

A1. ISP Review implementation measures 172

A2. Supporting material 174

List of tables and figures 175

Abbreviations 179

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 10

Introduction

1 Introduction
AEMO develops publications that provide stakeholders with key forecasting and planning advice, including:

• Electricity Statement of Opportunities (ESOO) – provides operational and economic information about either
the National Electricity Market (NEM) or the Wholesale Electricity Market (WEM) over a 10-year outlook period,
with a focus on electricity supply reliability. The NEM ESOO includes a reliability forecast identifying any
potential reliability gaps in the coming five years, as defined according to the Retailer Reliability Obligation
(RRO). The final five years of the 10-year ESOO forecast provide an indicative forecast of any future material
reliability gaps. The WEM ESOO includes the 10-year long-term projected assessment of system adequacy,
used to assess reserve capacity requirements. The ESOO also includes forecasts of annual electricity
consumption, maximum demand, and demand side participation (DSP). It is published annually for each
jurisdiction, with updates if required.

• Gas Statement of Opportunities (GSOO) – provides AEMO’s forecasts of annual gas consumption and
maximum gas demand and uses information from gas producers about reserves and forecast production, to
project the supply-demand balance and potential supply gaps in either the East Coast Gas Market or in
Western Australia. It is published annually for each jurisdiction, with updates if required.

• Integrated System Plan (ISP) – is a roadmap for the transition of the NEM power system, with a clear plan for
essential infrastructure that will meet future energy needs. It sets out the needed generation, storage and
network investments to transition to net zero by 2050 through current policy settings and deliver significant net
market benefits for consumers. It identifies transmission projects that should be progressed urgently by
relevant network service providers, as well as providing information on broader opportunities to invest in
generation, storage and other non-network investments to achieve the decarbonisation objectives of
governments and deliver an efficient energy transition for electricity consumers. AEMO published the inaugural
ISP for the NEM in 2018, and publishes it every two years.

For the 2026 ISP, the breadth of the ISP will expand to implement recommendations of the ISP Review endorsed
by the Energy and Climate Change Ministerial Council (ECMC). These recommendations require AEMO to expand
the technical scope of the ISP, and consider broader inputs and assumptions, affecting both the ISP Methodology
and the IASR. Appendix 2 in this IASR describes AEMO’s approaches to addressing the ISP Review actions, and
the relevant opportunities for stakeholders to engage with AEMO on these.

AEMO forecasts and models the future in these publications through a scenario planning approach, relying on
scenario assumptions that are documented in the Inputs, Assumptions and Scenarios Report (IASR).

In this Draft 2025 IASR, AEMO seeks stakeholder feedback on the proposed scenarios and assumptions to identify
the current risks and opportunities in Australia’s energy transition. AEMO provides transparency on the scenarios
and their inputs and assumptions, and separately on the methodologies that apply them, to support effective
decision making.

This report documents the draft scenarios, and their respective draft inputs and assumptions, that will be finalised
after incorporating stakeholder feedback, ahead of deploying them in the relevant planning publications.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 11

Introduction

The scenario set traverses a range of plausible futures based on key uncertainties facing the energy sector as it
decarbonises:

• The growth of the Australian economy, and the role the energy sector will play in decarbonising it towards
net zero emissions by 2050.

• The role of demand-side factors in the energy transition through ongoing consumer investments in
increasingly energy efficient appliances and buildings, new preferences in electric and other low-emissions
technology alternatives, and in particular the uptake and potential coordination of consumer energy resources
(CER).

• Emerging commercial and industrial sectors including electrification (switching from other fuels to
electricity) in the business, industrial and transport sectors, the development of hydrogen production and
manufactured products that utilise hydrogen (such as green iron, green steel and ammonia products), and
emerging commercial developments in data centres to support a growing demand for Australian digital
technology services.

• The trends in technology costs affecting the potential developments required to meet consumers’ energy
needs in electricity generation, storage and transportation, as well as costs and potential infrastructure
developments to maintain and improve Australia’s gas networks and markets, including potential gas supply
developments that support broader energy consumers and Australia’s electricity needs through flexible gas-
powered generation facilities.

The scenarios are of critical importance in AEMO’s planning and forecasting publications, but also in the
regulatory investment test for transmission (RIT-T) assessments conducted by transmission network service
providers (TNSPs).

The use of scenarios is enhanced by sensitivity analysis. Sensitivities enable deeper analysis on key uncertainties
and the impacts of alternative solutions to those uncertainties.

The information in this report is supported by the Draft 2025 Inputs and Assumptions Workbook17, which provides
more granular detail about the inputs and assumptions for use in 2025-26 forecasting, modelling, and planning
processes and analyses.

All dollar values provided in this report are in real June 2024 Australian dollars unless stated otherwise.

Consultation on the draft inputs and assumptions released in two stages

The IASR includes a wealth of inputs and assumptions that apply to AEMO’s planning publications, and are used
across the industry to inform other planning purposes, including for use in RIT-T assessments. Several of the rule
changes flowing from the ISP Review involve material expansions to the scope and breadth of considerations within
the ISP, and as such AEMO has needed to consider the breadth of the inputs and assumptions appropriate for this.

To extend the IASR to include these additional factors, AEMO has chosen to release the Draft 2025 IASR in two
stages for consultation, with many of the traditional inputs and assumptions released in the first stage, while new
inputs and some existing but complex assumptions involving decarbonisation will be released in a second stage.

17
See https://aemo.com.au/consultations/current-and-closed-consultations/2025-iasr.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 12

Introduction

The Draft 2025 IASR will be released in two stages for consultation:

• Stage 1 (this publication) release on 11 December 2024, with consultation from that date and submissions
closing on 11 February 2025.

• Stage 2 release commencing in February 2025, will include emissions reduction parameters as well as new
inputs needed to consider new elements of the ISP’s scope, with consultation from that date and submissions
closing in March 2025.

This Draft 2025 IASR therefore does not include all inputs and assumptions necessary to define each scenario and
quantify all aspects of each scenario’s decarbonisation narrative. Stage 2 will provide added clarity on:

• The pace of decarbonisation in the Australian economy, particularly emissions reduction expected in the
energy sector, and emissions reduction expected outside the energy sector including through sequestration
(mainly in the land-use sector). These inputs define each scenario’s carbon budgets (applied in the ISP).

• Energy efficiency investments to improve energy productivity and save energy.

• Fuel-switching expectations away from fossil fuels to zero or near-zero emissions alternatives, including
electrification and alternative renewable gases.

1.1 Consultation process

Engaging with stakeholders on planning inputs, assumptions and methodologies is essential to shape their
development and ensure their effective implementation both in AEMO publications, and to enable action by
stakeholders, policy-makers, investors and consumers.

Being transparent and building trust in the way AEMO engages with stakeholders is not only a key part of planning
‘best practice’, but also one of AEMO’s four Corporate Priorities18.

In developing the 2025 IASR, AEMO has appropriate regard for the consultation requirements set by the
Australian Energy Regulator’s (AER’s) Forecasting Best Practice Guidelines 19. In considering these minimum
requirements, AEMO strives to at least meet, and where appropriate exceed, these guidelines, leading to regular
consultation and engagement opportunities using both formal and informal channels such as through AEMO’s
formal stakeholder consultations, and through various relevant forums such as the Forecasting Reference Group
(FRG). These engagement opportunities seek to improve transparency and clarity on AEMO’s decision-making
processes, modelling approaches and preliminary inputs, and provide transparency on how AEMO has considered
stakeholder feedback.

Ahead of the publication of this Draft 2025 IASR, AEMO has undertaken a variety of engagement activities
including:

• Consulting selected key stakeholders, including TNSPs, jurisdictional bodies and AEMO’s ISP Consumer
Panel, to reflect on the 2023 IASR scenario collection and identify issues and opportunities impacting future
scenarios and how the existing collection should evolve.

18
Priority 3: Engaging our stakeholders. See AEMO Corporate Plan FY 2025, at https://aemo.com.au/about/corporate-governance/corporate-
plan.
19
At https://www.aer.gov.au/system/files/AER%20-%20Forecasting%20best%20practice%20guidelines%20-%2025%20August%202020.pdf.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 13

Introduction

• Consulting all interested stakeholders on the 2025 IASR scenarios via formal consultation, to support early
verification of the scenario collection and their narratives.

• Consulting with stakeholders on preliminary forecast components through the FRG20, an open forum that
provides an opportunity to engage on key inputs as they are under development.

• Engaging regularly with the ISP Consumer Panel to consult on the scenarios, ensuring that the Panel’s
experience and consumer perspectives remains at the centre of development of the 2025 IASR.

Table 1 below summarises key engagement activities conducted to date and planned to support the development
of the 2025 IASR21.

Table 1 Stakeholder engagement on the 2025 IASR

Activity Date

Activity to Date:

Pre-development scenario discussions with TNSPs, jurisdictional April 2024

bodies and the ISP Consumer Panel
2025 IASR Scenario Consultation Paper publication 16 July 2024

Forecasting Reference Group – scenario consultation 31 July 2024 and 25 September 2024

2025 IASR Scenarios – consumer verbal submission session 12 August 2024

2025 IASR Scenario Consultation Paper submissions close 13 August 2024

Forecasting Reference Group – preliminary component forecasts August 2024 – December 2024

ISP Consumer Panel consultation August 2024 – December 2024

Draft 2025 IASR Stage 1 publication 11 December 2024

Planned activities following the Draft 2025 IASR publication:

Draft 2025 IASR Stage 1 webinar 23 January 2025

Draft 2025 IASR Stage 1 – consumer verbal submission session 11 February 2025
Draft 2025 IASR Stage 1 submissions close 11 February 2025

Draft 2025 IASR Stage 2 publication February 2025

Draft 2025 IASR Stage 2 webinar March 2025

Draft 2025 IASR Stage 2 – consumer verbal submission session March 2025

Draft 2025 IASR Stage 2 submissions close March 2025

Draft 2025 IASR submissions reflections webinar April 2025

2025 IASR publication By 31 July 2025

For more information about related engagement including engagement for the broader 2026 ISP, see the 2026
ISP Stakeholder Engagement Plan22.

20
See https://aemo.com.au/en/consultations/industry-forums-and-working-groups/list-of-industry-forums-and-working-groups/forecasting-
reference-group-frg.
21
Presentations and recordings of webinars are available at https://www.aemo.com.au/energy-systems/major-publications/integrated-system-
plan-isp/2024-integrated-system-plan-isp/opportunities-for-engagement.
22
At https://www.aemo.com.au/energy-systems/major-publications/integrated-system-plan-isp/2026-integrated-system-plan-isp/opportunities-
for-engagement.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 14

Scenarios

2 Scenarios
The use of scenario planning is an effective practice when planning in highly uncertain environments. Scenarios
are a critical aspect of forecasting, enabling the assessment of future risks, opportunities, and development needs
in the energy industry. Scenarios are designed to cover the breadth of potential and plausible futures impacting
the energy sector and capture the key uncertainties and material drivers of these possible futures in an internally
consistent way. AEMO uses a scenario planning approach to assess system adequacy with existing and expected
investments, and (coupled with cost benefit analysis) to determine economically efficient ways to provide reliable
and secure energy to consumers through the energy transition.

While some scenarios may be more likely than others, no single scenario is expected to be the definitive version of
the future that will occur. The scenario collection helps to build understanding for the potential benefits or regrets
of developments when investing amidst uncertainty, and to identify various risks to the energy transition.

In developing the proposed scenarios, AEMO has focused on the principles that scenarios should remain broad,
distinct, internally consistent, and plausible, and has taken into consideration the guidance provided in the AER’s
cost benefit analysis (CBA) guidelines:

• Internally consistent – the underpinning assumptions in a scenario must form a cohesive picture in relation to
each other.

• Plausible – the potential future described by a scenario narrative could come to pass.

• Distinctive – individual scenarios must be distinctive enough to provide value to the planning activities
undertaken by AEMO and other stakeholders.

• Broad – the scenario set covers the breadth of possible futures.

• Useful – the scenarios explore the risks of over- and under-investment.

The proposed scenarios explore critical dimensions and uncertainties affecting the energy sector while meeting
emissions reductions objectives set by the commitments of Australia’s governments. Key uncertainties include:

• The growth of the Australian economy.

• The development of demand side factors, including CER (including rooftop solar, battery storage and electric
vehicles, or EVs), alongside the potential coordination of these resources, and other consumer investments in
demand flexibility and energy efficiency.

• Cost outlooks for technologies across electricity generation, storage and transportation, as well as costs and
potential infrastructure developments to maintain and improve Australia’s gas networks and markets.

• The emergence of hydrogen and related value-added products, as well as biomethane.

• The changing nature of commercial and industrial loads, including the potential for closures and the growth of
data centres.

AEMO proposes to develop three scenarios to inform its scenario planning approach used across its forecasting
and planning publications to examine a plausible range of variations in the pace and directions of the transition.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 15

Scenarios

AEMO’s proposed scenario collection predominantly re-uses the 2023 IASR names to support comparison of
modelling outcomes.

Stakeholders have provided input in developing the scenarios

Preliminary stakeholder input throughout 2024 has helped shape the proposed scenarios and their inputs and
assumptions in this Draft 2025 IASR. In July 2024, AEMO published the Draft 2025 IASR Scenarios consultation
paper23 and received submissions from 50 stakeholders with feedback and suggestions, which have helped shape
the revised scenarios in this Draft 2025 IASR.

A summary of stakeholder feedback to the scenarios and AEMO’s considerations is in the consultation summary
report on AEMO’s website24.

2.1 Scenario narratives and descriptions

Scenarios describe plausible future worlds, being a collection of circumstances and external variations that
determine the environment in which the energy transition occurs, driving different conditions for energy supply
and demand. Scenarios do not describe the outcomes of the planning process and are thus not focused on
particular solutions. The collection of scenarios in the IASR enables consideration of combinations of various
uncertainties from which further analysis identifies benefits or regrets of various alternative investments to meet
the future needs of the NEM power system. The scenarios intentionally span a range of current and future trends
in energy consumption, consumer energy investments, and technology costs.

The proposed scenarios in this Draft 2025 IASR reflect a similar scenario collection to the 2023 IASR scenarios,
applied in the 2024 ISP, with adjustments reflecting stakeholder feedback including:

• Reduction in anticipated hydrogen developments associated with exports, yet greater recognition of the
diverse production opportunities associated with green commodities (such as green iron, steel, alumina and
ammonia),

• Moderation of assumptions regarding forecast growth in CER coordination,

• Increased consideration of emerging commercial loads, in particular the growing role of data centres
associated with increased digital services provided in Australia.

AEMO considers that the proposed scenarios continue to provide a broad range of futures to inform regulatory
network and non-network investment purposes, and enable identification of emerging system adequacy risks (for
reliability and security assessments) as well as test the risks of under- and over-investment (for investment
planning purposes).

23
See https://aemo.com.au/-/media/files/stakeholder_consultation/consultations/nem-consultations/2024/2025-iasr-scenarios/consultation-
paper.pdf
24
See https://aemo.com.au/-/media/files/major-publications/isp/2025/2025-IASR-Scenarios-Consultation-Summary-Report.pdf

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 16

Scenarios

2.1.1 AEMO’s scenario collection

This 2025 IASR scenario collection provides consistency for comparison with the 2023 IASR collection, used in
the 2024 ISP and other planning assessments, which AEMO considers is useful for ongoing planning activities.
The scenarios provide a breadth of plausible futures to consider power system needs for a range of planning
purposes.

Step Change

This proposed scenario refines the 2023 Step Change scenario. It is centred around achieving a scale of
transformation that supports Australia’s contribution to limiting global temperature rise to below 2°C compared to
pre-industrial levels. With broader decarbonisation activities outside the electricity sector, Australia’s contribution
may approach 1.5°C alignment also, though investments to deliver the energy transition would be equivalent to
those needed to achieve 2°C alignment only.

The scenario experiences moderate economic conditions on average, with population growth that is also
moderate, reflecting long term average trends. Recent economic challenges and current economic conditions
affect the starting conditions for the scenario.

In this scenario, consumers continue to provide a key role in the transition, with strong investments in
electrification, CER and energy efficiency measures. There is also strong transport electrification, driven by
consumer preferences and supported by ongoing government support across various government programs.
Investment in CER, particularly in rooftop solar and batteries, reflects that households place high value on the
benefits provided by these systems, and typically install relatively large household systems to improve their
self-supply.

Emerging commercial and industrial loads have moderate growth outcomes, with data centres and electrification
of larger industries leading to material new electricity consumption, but with greater potential growth unrealised.
While ambition remains for hydrogen production opportunities to develop, these are slower and more focused on
domestic opportunities, reflecting the economic challenges of establishing this new industry.

Notably, compared to the 2023 Step Change scenario, consumers are more hesitant to share control of their CER
with third-party aggregators or their retailer, such as via virtual power plants (VPPs) and vehicle-to-grid (V2G),
although there remains moderate long-term growth in coordinating these resources, and aggregators of consumer
resources do become a strong contributor of the transition.

Scenario purpose

To explore the investment needs in a world with strong decarbonisation of the electricity sector, supporting
other sectors decarbonising their current energy activities through electrification. Consumers increase their
investment in CER, potentially reducing the need for utility-scale alternatives, but the coordination of these
resources is more gradual than it could be, with initial difficulties to demonstrate to consumers the great
potential value in coordinating these assets as well as reward consumers’ choice to provide increased access to
their resources to improve the efficiency and effectiveness of the transition.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 17

Scenarios

Progressive Change

This proposed scenario describes a world that aims to achieve Australia’s current Paris Agreement commitments
of 43% emissions reduction by 2030, amid economic circumstances that are more challenging. The scenario
features slower and weaker economic growth domestically, and global ambition to address climate change is less
ambitious after current commitments. While achieving current decarbonisation commitments, global action is
insufficient to meet the intent of the Paris Agreement to limit temperature rise to less than 2°C, and aggregate
emissions over the coming decades are higher than other scenarios as Australia more gradually reaches a net
zero emissions economy by 2050.

With weaker economic conditions, major industrial loads are much more likely to wind up Australian operations in
favour of offshore alternatives. Australia’s emissions-intensive industries are therefore at much greater operational
risk, and the scenario explicitly reflects this risk with closures to large energy-intensive loads in each NEM region.
Lesser economic and population growth reduces the overall scale of change required to achieve net zero. Lower
global investment reduces the speed of technology cost decline, and supply chain challenges relative to other
scenarios slow the pace of change affecting Australia’s demand for energy. As a result, this scenario requires less
investment to achieve the decarbonisation goals.

Progressive Change slows the pace of decarbonisation from consumers and from industry, meaning local benefits
from new green industry opportunities are relatively unrealised. With weaker economic activity, consumers
continue to embrace ways to support the transition, but with less capacity to invest in demand side factors such as
energy efficiency savings and CER, and are even less willing also to give operational control of their resources to
third parties, instead preferring to maximise their individual benefits, leading to less coordination of these valuable
assets. Consumer adoption of measures to share control of their devices to aggregators is lowest of all the
scenarios, reducing the coordination opportunity for these assets.

Scenario purpose

To explore investment needs in a world with headwinds to decarbonisation, including lesser growth across
Australia’s economy. As a consequence, this scenario examines possible over-investment risks in a more slowly
growing economy.

Green Energy

This proposed scenario refines the 2023 Green Energy Exports scenario. It reflects very strong decarbonisation
activities domestically and globally to limit temperature increase to 1.5°C, resulting in rapid transformation of
Australia’s energy sectors, utilising all available pathways to net zero including a strong use of electrification, and
transformation of other sectors at pace, including action to reduce the emissions intensity of molecular forms of
energy. Higher economic growth internationally (and locally) increases technology developments and leading to
more rapid cost decline for new tech, and the global demand for green energy is very high given the strong global
appetite for low and zero emissions fuel sources. Australia’s economy is boosted from hydrogen production
opportunities to service domestic and international interest in hydrogen and in green energy products, particularly
commodities produced with green energy, such as green iron and steel.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 18

Scenarios

Consumers in this scenario continue to invest in CER, with the greatest relative uptake of these assets, and the
greatest relative acceptance of coordination opportunities.

In this future, Australia also embraces a rapid change to the emissions intensity of the energy sector. With strong
renewable energy penetration, the opportunity for large-scale development of hydrogen and associated
commodities is greater than other scenarios, offsetting emissions intensive components of Australia’s economy.
Australia’s international trading partners, particularly in Asia, provide great opportunities for Australia’s potential to
develop and deliver green commodities to support their decarbonisation actions. Australia therefore is a relatively
strong contributor to global efforts to embrace low/zero emissions alternatives through this transition, with
hydrogen replacing declining coal and gas exports.

The scale of the Green Energy scenario is smaller relative to previous versions of AEMO’s scenarios, reflecting
that the scale of hydrogen developments remains uncertain and the opportunity for embedded electricity supply is
expected to reduce broader power system needs.

In relation to green commodity exports, exports of hydrogen and value-add commodities are a focus; as the
world's largest iron ore exporter for example, and with high renewable energy opportunities, Australia in this
scenario is well placed to service the growing global need for green energy commodities.

Considering stakeholder feedback to date, the Green Energy scenario will reflect one of two alternatives that are
focused around 1.5°C scale decarbonisation actions in Australia, but with more/less embracement of Australia’s
export potential in this world. In the ISP, AEMO anticipates that one of the scenario variants will be adopted as the
scenario narrative, while the other will enable, exploration of the investment impacts of the other variant through
sensitivity analysis.

The proposed scenario variants are:

• Green Energy Exports – includes development of a hydrogen industry, focusing on value-add hydrogen
products such as green iron and steel, for domestic and export. Also includes significant opportunity for
hydrogen production and associated manufacturing users to develop products for export, including hydrogen
as an energy carrier.

• Green Energy Industries – includes development of a hydrogen industry, focusing on value-add hydrogen
products such as green iron and steel, for domestic and export. The variant excludes those developments that
are expected to support hydrogen exports as an energy carrier, thereby representing a materially smaller
hydrogen impact on investment requirements than the Green Energy Exports variant.

Both variants are very similar to the 2023 IASR scenario, with domestic and export opportunities, with a reduced
level of hydrogen activity – particularly for exports – relative to the 2023 IASR. Value-add commodity
developments represent a key potential driver of Australia’s economic activity in the medium to long term in this
scenario, and Australia is well-placed with strong renewable energy generation potential and critical access to raw
materials that may benefit from green energy in conversion processes. The Green Energy Industries variant is
thematically identical to Green Energy Exports in all areas of the scenario’s key parameters except for a lower
level of new investment in value-add commodities and hydrogen exports.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 19

Scenarios

Scenario purpose

To explore investment needs in a world embracing very rapid decarbonisation to support the strong potential
economic benefits Australia’s renewable generation potential. It will therefore identify the scale and speed of
investments that may be required to realise this potential in a rapidly decarbonising global economy.

This Draft 2025 IASR may use either the Green Energy or the Green Energy Exports names in this report
when referring to inputs and assumptions that are identical between the two variants. Where the two
variants lead to alternative inputs and assumptions, Green Energy Industries is also described. Many of the
differentiated inputs will be available in the second stage of the Draft IASR release, however AEMO is seeking
stakeholder feedback on the appropriateness of the scenario narrative to apply as the scenario.

Matters for consultation

• Are the scenarios, and the scenario collection, suitable for use in AEMO's planning publications including the
2026 ISP? Does the scenario collection support the exploration of a diverse range of possible futures that
could occur over the planning horizon?

• Which of the two described scenario variants for the Green Energy scenario is the more appropriate variant
for application as the scenario in AEMO’s 2025 IASR scenario collection (depending on the planning
analysis, AEMO may apply the alternate variant in sensitivity analysis).

2.2 Key scenario parameters

Table 2 summarises decarbonisation targets, key demand drivers, technological trends and other key parameters
for each of the scenarios. Details are in the Draft 2025 Inputs and Assumptions Workbook. Scenarios vary by the
pace of the transition to net zero, considering global, national and sectoral influences, leading to variations in
future energy system needs while achieving the emissions reduction policy objectives of Australia’s governments.

Table 2 Key parameters, by scenario

Parameter Green Energy A Step Change Progressive Change

National decarbonisation At least 43% emissions At least 43% emissions At least 43% emissions
targets reduction by 2030. reduction by 2030. reduction by 2030.
Net zero by 2050 Net zero by 2050 Net zero by 2050

Global economic growth and High economic growth, Moderate economic growth, Slower economic growth,
policy coordination stronger coordination stronger coordination lesser coordination

Australian economic and Higher, with near-term Moderate economic growth, Lower
demographic drivers economic growth impacted with near-term economic growth
somewhat by current economic impacted by current economic
challenges challenges

Electrification Higher electrification efforts to High electrification to meet Electrification is tailored to meet
meet aggressive emissions emissions reduction existing emissions reduction
reduction objectives, with faster commitments, with pace of commitments, with slower
pace of adoption adoption reflecting economic adoption given weaker
conditions economic circumstances

Emerging commercial loads Emerging sectors such as data Emerging sectors such as data Emerging sectors such as data
centres match opportunities centres match opportunities centres experience lower

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 20

Scenarios

Parameter Green Energy A Step Change Progressive Change

associated with higher domestic associated with moderate growth as weaker economic
economic drivers domestic economic drivers circumstances limit technology
uptake

Coordination of CER (VPP and High long-term coordination, Moderate long-term Low long-term coordination,
V2G) with faster acceptance of coordination, with gradual with gradual acceptance of
coordination acceptance of coordination coordination

Energy efficiency Higher High Moderate

Hydrogen use and availability High production for domestic Moderate-low production for Low production for domestic
industries, with moderate domestic use, with minimal use, with no export hydrogen
exports in the short term, and export hydrogen
high exports in the longer term

Industrial load closures No specific load closures No specific load closures Weak economic conditions
provide challenging commercial
conditions, resulting in load
closures across key commercial
and industrial facilities

Demand side participation Higher Moderate Lower

uptake

CER investments (batteries, Higher High Lower

PV and EVs)
Renewable gas blending in Up to 10% (hydrogen), with Up to 10% (hydrogen), with Up to 10% (hydrogen), with
gas distribution network B unlimited blending opportunity unlimited blending opportunity unlimited blending opportunity
for biomethane and other for biomethane and other for biomethane and other
renewable gases renewable gases renewable gases

Potential for supply chain Low Moderate High

limitations affecting demand
forecasts
Global/domestic temperature Applies Representative Applies RCP 2.6 where relevant, Applies Representative
settings and outcomes C Concentration Pathway (RCP) consistent with a global Concentration Pathway (RCP)
1.9 where relevant, consistent temperature rise of ~ 1.8°C by 4.5 where relevant, consistent
with a global temperature rise of 2100 with a global temperature rise of
~ 1.5°C by 2100 ~ 2.6°C by 2100
International Energy Agency Net Zero Emissions by 2050 Announced Pledges Scenario Stated Policies Scenario
(IEA) 2024 World Energy (NZE) (APS) (STEPS)
Outlook scenario alignment
A. Both the Green Energy scenario variants, Green Energy Exports and Green Energy Industries, are equivalent in terms of these key parameters and
their qualitative descriptors for each key parameter.
B. Hydrogen blending into the gas distribution network will need to accommodate the technical requirements of distribution pipelines, as well as the
capabilities of connected gas appliances. Higher blends than ~10% by volume are assumed possible for industrial use but may require equipment
change and/or shifts to dedicated hydrogen transmission pipelines.
C. RCPs were adopted in the Intergovernmental Panel on Climate Change (IPCC) first Assessment Report, see https://www.ipcc.ch/report/ar5/syr/.

Matters for consultation

• Are the scenarios parameters, and parameter values, clear and suitably aligned with their respective
narratives?

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 21

Scenarios

2.3 Scenario likelihoods

The scenario collection defines three broad scenarios that each are plausible and internally consistent and will
challenge the scale, timing and need for new investments. Each scenario therefore is not expected to explore
uncertainties in the transition that are equally likely. As such, for some planning processes that influence
investment planning, it is appropriate to develop a view on the likelihood of each scenario to subsequently identify
projects that are optimal across the scenario collection on a scenario-weighted basis. This is particularly important
for the ISP, while other analyses such as the gas and electricity statements of opportunities may focus primarily on
the most likely scenario, or each scenario individually, when assessing reliability and system adequacy.

AEMO is not providing the weightings of the scenario collection in the Draft 2025 IASR. AEMO prefers to examine
scenario likelihood at a point closer to when these scenario weightings are applied, to ensure that the latest
market or policy developments are incorporated into this consideration.

AEMO will identify stakeholder engagement opportunities prior to assessing scenario weightings, to ensure
interested stakeholders are kept informed of the key milestones for this particular scenario ‘input’.

2.4 Sensitivities

The three proposed scenarios capture a range of plausible futures that vary inputs and assumptions to allow the
risk of under-investment (or overdue investment) and over-investment (or premature investment) to be assessed
in the ISP. The scenarios will also be used to examine reliability and security assessments of the electricity and
gas markets as appropriate.

There is inherent uncertainty around the specific impacts of any given assumption, and sensitivity analysis is often
used to complement scenario-based planning approach to examine the degree to which outcomes may be
influenced by individual (or a subset of) scenario settings. Sensitivities can be used to test the impact of varying
key input assumptions in the scenarios.

All AEMO’s planning publications tend to include some degree of sensitivity analysis. The specific sensitivities are
identified either by evaluating stakeholder uncertainty in the inputs, or by examining scenario outcomes and
adapting the modelling to develop deeper and richer insights. In developing the ISP, sensitivity analysis is used to
test the resilience of the investments, to increase confidence in the robustness of the investment conclusions.
Most commonly, this would involve change to a single variable at a time. There may also be change to multiple
variables, although this is less common, as it is then unclear in isolation which variable was the primary driver for
any result variation.

This Draft 2025 IASR does not provide an explicit list of sensitivities for the 2026 ISP, however AEMO invites
stakeholder feedback on important components or insights to deploy sensitivity analysis on for the 2026 ISP.

Matters for consultation

• What uncertainties are valuable to explore with sensitivity analysis?

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 22

Inputs and assumptions

3 Inputs and assumptions

3.1 Policy settings

Input vintage December 2024

Source Australian governments

Updates since 2023 IASR Additional policies or aspects of policies have been incorporated since the 2023 IASR.

Australia’s governments have a critical role in setting the pace and breadth of the energy transition through policy
direction and international commitments. Efficient investments in the energy transition therefore must have
visibility of, and regard to, the direction that is provided through government policy. As a roadmap for the
development of the NEM power system to support the energy transition, which informs further policy-making and
investment decisions, it is important that the ISP reflects government policy settings to ensure these decisions can
be made efficiently. The Draft 2025 IASR considers policies which AEMO must or may consider under NER
5.22.3(b) in determining the power system needs to be met by the ISP and how the ISP contributes to achieving
the national electricity objective (NEO).

3.1.1 Identifying the policies to be considered

The framework in the NER that underpins the ISP recognises that policy settings are a key influence on the future
investment needs of the power system. Under NER 5.22.3(b), the provision for two separate types of policy
collections is outlined:

• Policies that governments have created to meet emissions reduction objectives, provided by them to the
AEMC and included in the AEMC Emissions Targets Statement. By providing these policies to the AEMC for
this purpose, jurisdictions are outlining those policies that market bodies, including AEMO, must consider, at
minimum, in having regard to the emissions reduction element in the national electricity objective. AEMO
considers these policies as inputs to the ISP and does so by recognising their influence within AEMO’s
forecasting, modelling and scenarios.

• Policies that governments have committed to by sufficiently progressing the policy such that it meets at least
one of the eligibility criteria in NER 5.22.3(b)(2), described in the section below. By meeting clear eligibility
criteria (for example, by legislating a policy target or by allocating material funding in the jurisdiction’s State or
Territory budget papers), jurisdictions are demonstrating a sufficiently high standard of commitment to the
policy to indicate that AEMO, in the context of the ISP, should incorporate the policy into its forecasting,
modelling and scenarios, with the power system needs to meet the policy at lowest cost identified through the
ISP modelling and evaluation process.

The following sub-sections describe how AEMO assesses the eligibility of jurisdictional policies under
NER 5.22.3(b) to be considered in the ISP. Section 3.1.2 then provides a description of how AEMO considers
eligible policies within its forecasting and modelling approach, and across its scenarios.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 23

Inputs and assumptions

Emissions reduction targets in AEMC targets statement

AEMO must consider the emissions reduction targets stated in the Australian Energy Market Commission’s
(AEMC’s) emissions targets statement25 as required by NER 5.22.3(b)(1). Emissions reduction targets are defined
in the NER to mean targets set by jurisdictions for reducing greenhouse gas emissions or which are likely to
contribute to reducing emissions. The targets statement is structured to reflect these two categories of targets.
The requirement for AEMO to consider the targets supports Australian governments’ intention that the targets
statement provides a publicly available, up-to-date list of government targets that decision-makers, including
AEMO, must take into account at a minimum when having regard to achieving the emissions reduction element of
the NEO26.

AEMO therefore includes all policies in the AEMC targets statement as inputs to the ISP’s development, meaning
the ISP modelling results will demonstrate collectively what is required to meet these policies.

Other policies eligible to be considered

Additionally, the NER allow AEMO to consider an environmental or energy policy that is not in the targets
statement if:

• it is sufficiently developed for AEMO to identify its impacts on the power system; and

• it meets at least one of the following criteria specified in NER 5.22.3(b)(2):

– a commitment has been made in an international agreement to implement the policy;

– the policy has been enacted in legislation;

– there is a regulatory obligation in relation to that policy;

– there is material funding allocated to that policy in a budget of a relevant participating jurisdiction; or

– AEMO has been advised by the Ministerial Council of Energy to include the policy.

By engaging with jurisdictions, AEMO will assess the degree to which each policy is sufficiently developed to
enable incorporation into its forecasting and modelling, and whether it sufficiently meets at least one of the five
minimum requirements for consideration. This engagement enables AEMO to determine the degree to which the
detail of each policy position is compatible with AEMO’s various ISP models and forecasts, ensuring that the policy
collection includes only those policies that are sufficiently detailed to influence the ISP’s development outcomes.

If AEMO assesses that such a policy is eligible to be considered, AEMO’s practice is to include these policies that
may be considered under the NER alongside the targets in the AEMC targets statement that must be considered
under the NER, to ensure the ISP identifies an appropriate scale of investment requirements and power system
needs that reflects the governments’ aggregate policy positions.

25
At: https://www.aemc.gov.au/regulation/targets-statement-emissions.
26
Statutes Amendment (National Energy Laws) (Emissions Reduction Objectives) Bill, Second Reading Speech, Minister for Infrastructure and
Transport, Minister for Energy and Mining, the Hon. A. Koutsantonis, 14 June 2023, at https://hansardsearch.parliament.sa.gov.au/daily/
lh/2023-06-14/38?sid=68968ae9a2ec4e84aa. Section 32A(5) of the National Electricity Law (NEL) requires decision-makers who are
required to have regard to the NEO under the NEL, National Energy Regulations or the NER to consider, at a minimum, the targets stated in
the targets statement.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 24

Inputs and assumptions

3.1.2 How AEMO includes policies in the ISP

Having considered policies for inclusion, including the targets in the targets statement and other policies eligible to
be considered (collectively, ‘included policies’), the ISP process then identifies the power system needs required
to collectively meet the objectives of included policies at lowest cost while meeting reliability and security
requirements.

Policies influence demand-side factors, supply investments and transmission development

As outlined in this chapter, jurisdictions have developed a wide range of policies to support and drive Australia’s
net zero transition that AEMO assesses to be included policies. These policies traverse many parts of Australia’s
economy, focusing on consumers, industry, energy suppliers, and other infrastructure developers.

AEMO’s incorporation of these policies may therefore impact the inputs and assumptions for forecasting
consumers’ energy consumption and demand patterns (including residential, commercial and industrial
consumers), as well as the development of supply and transmission developments in the ISP. Incorporating the
policies may therefore influence AEMO’s energy forecasts, having regard to its forecasting approach, or influence
supply and/or network infrastructure developments identified by the ISP models through explicit development
constraints (for example, targeting a particular amount of generation technology to be deployed).

AEMO applies included policies in all scenarios

AEMO considers that taking a consistent approach to both emissions targets and other eligible policies best meets
the purposes for consideration of the included policies and satisfies the requirements in the AER’s CBA Guidelines
for how AEMO must conduct its cost-benefit analysis in the ISP.

This analysis requires AEMO to apply a ‘weighted average net-economic benefit’ approach to all scenarios in
assessing the net market benefits of each development path used to select the optimal development path. This
means that, when assessing the combination of investments that will be selected as the optimal development path,
AEMO’s analysis combines the outcomes from all assessed scenarios.

While the optimal development path must demonstrate positive benefits in the most likely scenario, all scenarios
are still intrinsically part of the cost benefit analysis, necessitating consistent consideration of policies across each
scenario. AEMO considers that an approach in which only some policies are selectively considered in the
scenarios would result in inconsistent consideration of the policies across the scenario collection, once the
weighted net economic benefits of each scenario are combined to select the optimal development path. AEMO
has not identified a need to develop a different approach based on how a policy is assessed to be an included
policy under NER 5.22.3(b).

This approach recognises that inefficient outcomes are likely to emerge where power system planning does not
adequately consider committed government policy (i.e. the included policies). While it is possible that an included
policy’s objectives or the actual pace of achievement of those objectives may change after the publication of the
ISP, AEMO considers it appropriate for each of the ISP scenarios to model for the stated objectives of these
policies.

Recognising policy uncertainty

The ISP rules in the NER do not require AEMO to assess the merits or feasibility of such policies. However, in
accordance with the CBA Guidelines and ISP rules, AEMO may explore the robustness of the power system

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 25

Inputs and assumptions

needs set out in the ISP through sensitivity analysis, in the event that the implementation of included policies is not
able to achieve their targeted timeframes due to uncertainties in key assumptions (such as the availability of
supply chains).

If an included policy is discontinued or materially amended or new policy is developed and this would result in a
change to a key planning input or assumption that may materially change AEMO’s planning analysis, such as
selection of the optimal development path in the ISP, AEMO would incorporate the changes to the policy in its
analysis (or remove it if discontinued). This would involve consultation and may take some time. As the IASR is
used for a range of planning assessments, such as the ESOO and GSOO, the extent to which these other
assessments are impacted would need to be considered at the time. In terms of the ISP, the rules in the NER
enable AEMO to address a material change through consulting on the changed inputs, and consulting on and
issuing an ISP update27, or the change may be included in the next ISP, depending on its timing.

3.1.3 Policies included in the Draft 2025 IASR

Table 3 summarises the policies included in this Draft 2025 IASR. The sub-sections following Table 3 describe the
various policy settings to be applied in the Draft 2025 IASR scenario collection.

27
NER 5.22.15.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 26

Inputs and assumptions

Table 3 Summary of policies included in the Draft 2025 IASR

Policy type Federal Australian Capital New South Wales Queensland South Australia Tasmania Victoria
Territory

Emission 43% below 2005 levels Economy-wide emission 30% reduction below Emission reduction Net zero or lower Emission reduction target
reduction by 2030 and net zero reduction target relative to 2005 levels by 2030, target of 60% below (already achieved of 28-33% below 2005
by 2050 under the 2005 levels of 50% by 2030, 75% reduction by 2035, 1990 levels by 2050 since 2015) levels by 2025, 45-50%
Climate Change Act 70% by 2035 and net zero and net zero by 2050 in (legislated) / 60% by 2030, 75-80% by 2035
2022. by 2050 under the Climate the Clean Economy Jobs reduction below 2005 and net zero by 2045
Change (Net Zero Future) Act 2024. levels by 2030 and net under the Victoria’s
Act 2023. zero by 205028. Climate Change Act 2017
Safeguard Mechanism and the Climate Change
and Energy Legislation
Amendment (Renewable
Energy and Storage
Targets) Act 2024.
Renewable 82% renewable energy Construct new renewable Queensland Renewable 100% net renewable 150% Tasmanian Victorian Renewable
energy target by 2030. generation by end of 2029 Energy Target (QRET) of energy by 2030 (AEMC Renewable Energy Energy Target (VRET) of
development that can produce the same 50% by 2030, 70% by Targets Statement) / Target (TRET) by 2030 40% by 2025, 50% by
support electricity as 8 gigawatts 2032, and 80% by 2035. 100% net renewable and 200% by 2040. 2030, 65% by 2030 and
Capacity Investment (GW) in New England REZ, 3 energy by 2027 95% by 2035; VRET
Scheme GW in Central-West Orana (pending legislation). auctions 1 and 2.
REZ, and 1 GW elsewhere
(New South Wales Electricity
Infrastructure Investment Act
2020 [NSW EII Act]).
REZ Access Schemes to
support the coordination of
renewable energy and
storage investment in REZs

28
AEMO will model the existing legislated 60% reduction by 2050 (compared to 1990 levels). Although not yet legislated, the Climate Change and Greenhouse Emissions Reduction (Miscellaneous) Amendment Bill
2024 is expected to pass by publication of the 2025 IASR. AEMO proposes to model this policy, unless it is not sufficiently advanced by publication of the 2025 IASR.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 27

Inputs and assumptions

Policy type Federal Australian Capital New South Wales Queensland South Australia Tasmania Victoria
Territory
Storage Target of 2 GW/16 gigawatt Borumba Dam Pumped Battery of the Nation Renewable Energy
targets hours (GWh) of deep Hydro (included as an (as development Storage target of 2.6 GW
storage by 2030 and 28 anticipated project29). candidate). by 2030 and 6.3 GW by
GWh of deep storage by 2035.
2034 under the NSW EII Act.
Firming round tender
including the Federal
Government contribution
under the Capacity
Investment Scheme.

Offshore wind Offshore wind targets of

targets 2 GW by 2032, 4 GW by
2035, and 9 GW by 2040.

Hydrogen Renewable Fuels Scheme of Hydrogen Jobs Plan

policies the New South Wales including 250
Hydrogen Strategy. megawatts (MW)
electrolyser project,
200 MW hydrogen
turbine.

Transmission Concessional Finance REZ network infrastructure SuperGrid Infrastructure National Electricity
support projects and priority Blueprint and (Victoria) Act 2005
policies transmission infrastructure Queensland Renewable (NEVA)-supported
projects under the NSW EII Energy Zone (QREZ) transmission projects and
Act, including Waratah infrastructure will be VicGrid planning of REZs,
Super Battery System treated as options. including some projects
Integrity Protection Scheme CopperString 2032 treated as development
as committed and Central- development is options and others as
West Orana Transmission considered to be committed or anticipated
Project as anticipated. anticipated with the projects (for example,
Townsville to Western Renewables
Hughenden connection Link as anticipated and
being modelled

29
Projects are modelled as committed or anticipated based on criteria covering five areas of development: land/site acquisition, contracts for major components, planning and other approvals, financing, and
construction. Further information is available on AEMO’s Generation Information and Transmission Augmentation Information pages accessible via https://aemo.com.au/energy-systems/electricity/national-
electricity-market-nem/nem-forecasting-and-planning/forecasting-and-planning-data/generation-information and https://aemo.com.au/energy-systems/electricity/national-electricity-market-nem/nem-forecasting-
and-planning/forecasting-and-planning-data/transmission-augmentation-information.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 28

Inputs and assumptions

Policy type Federal Australian Capital New South Wales Queensland South Australia Tasmania Victoria
Territory
quantitively as a REZ the Mortlake Turn-in as
network expansion. committed).

Transmission Strategic Benefit Payments SuperGrid Landholder Landholder Payments

land payment Scheme. Payment Framework. For A Fairer Renewables
programs Transition.

CER-related Small-scale Renewable Sustainable Funded actions under New Voluntary retailer Solar Homes Program
policies Energy Scheme Households Scheme South Wales Consumer contributions feed in and Solar for Business
(SRES). and other CER Energy Strategy. tariff. Program.
incentives.

Electric New Vehicle Efficiency ACT Zero Emissions Funded infrastructure Zero Emission Vehicle 170,000 EVs by 2030. Stamp duty waiver, Zero Emissions Vehicle
vehicles Standard, EV fringe Vehicle strategy initiatives under the New (ZEV) Strategy 2022- 1,000,000 EVs 100% government Roadmap – 50% of light
benefits tax (FBT) 2022-2030. South Wales EV Strategy. 2032. 50% of new integrated by 2040. vehicles by 2030. vehicle sales ZEV by
exemption, 80-90% of sales ZEV passenger vehicle sales 2030.
infrastructure funding by 2030. ZEV by 2030, 100% by
(Driving the Nation) 2036.
and fleet purchases.

Energy National Construction ACT Energy New South Wales Energy South Australian Victorian Energy
efficiency Code (NCC) 2022 and Efficiency Savings Scheme and Peak Retailer Energy Upgrades program.
NCC 2025; Improvement Demand Reduction Target Productivity Scheme.
National Australian Scheme. under the New South Wales
Built Environment Energy Security Safeguard.
Rating Scheme;
Greenhouse and
Energy Minimum
Standards;
National Energy
Performance Strategy
and National Energy
Productivity Target;
Household Energy
Upgrades Fund.
Other Policy on new gas Gas Substitution
government connections. Roadmap.
policies

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 29

Inputs and assumptions

3.1.4 Australia’s emissions reduction targets

Climate Change Act (2022) (C’th)

In September 2022, the Federal Government legislated Australia’s economy-wide emissions reduction target,
committing to reducing greenhouse gas emissions by 43% below 2005 levels by 2030 and achieving net zero
emissions by 2050. These targets are complemented by an emissions budget for the period 2021-2030 amounting
to 4,381 million tonnes of carbon dioxide equivalent (MtCO2-e)30. AEMO must consider these targets as they are in
the emissions targets statement, and the target has also been submitted to the United Nations Framework
Convention on Climate Change (UNFCCC) as Australia’s updated Nationally Determined Contribution (NDC)
under the Paris Agreement. AEMO expects to include Australia’s 2035 NDC when it is determined.

Powering Australia Plan

The Federal Government has committed to achieve an 82% share of renewable generation by 2030 as announced
in the Powering Australia Plan31. AEMO must consider this target as it is specified in the emissions targets
statement.

Safeguard Mechanism

The Safeguard Mechanism is a federal policy, enacted through legislation32, aimed at reducing emissions at
Australia’s largest industrial facilities in line with Australia’s 2030 and 2050 emission reduction targets. It was
reformed in 2023 and sets out a number of targets for participating industrial facilities, including the requirement
that net emissions from all Safeguard facilities should not exceed 100 MtCO 2-e in 2030 (and net zero in 2050).
AEMO may consider the policy given it meets the legislative requirements of NER 5.22.3(b)(2); it does not feature
in the AEMC Emissions Targets Statement.

The Safeguard Mechanism is expected to influence industrial electrification volumes, energy efficiency
investments, and operational efficiency improvements. AEMO captures these within its electrification and energy
efficiency forecasts (both are supported by forecasts that AEMO engages suitably qualified consultants to
provide), as well as within its large industrial load forecasts (informed by industrial surveys).

State-based emissions targets

All states and territories in Australia have net zero emissions ambitions that are either legislated or currently
introduced in state parliaments. AEMO must consider each of these that are captured within the AEMC Emissions
Targets Statement.

State-based positions regarding emissions reduction are shown in Table 4.

30
The emissions budget is not directly found in the Act but is referenced in Australia’s Nationally Determined Contribution; see
https://unfccc.int/sites/default/files/NDC/2022-06/Australias%20NDC%20June%202022%20Update%20%283%29.pdf.
31
At https://www.energy.gov.au/government-priorities/australias-energy-strategies-and-frameworks/powering-australia.
32
At https://www.dcceew.gov.au/climate-change/emissions-reporting/national-greenhouse-energy-reporting-scheme/safeguard-mechanism.
Enacted via the National Greenhouse and Energy Reporting Act 2007 and other legislation.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 30

Inputs and assumptions

Table 4 State-level economy-wide emission reduction ambitions relative to 2005 levels (in financial year unless otherwise stated)

New South Wales Australian Capital Queensland South Australia A Tasmania B Victoria Western Australia Northern Territory
Territory A,B (Calendar year) (Calendar year)

Instrument Climate Change (Net Climate Change and Clean Economy 60% by 2050 relative to Climate Change 2050 legislated via Climate Change Bill Aspirational target
Zero Future) Act Greenhouse Gas Jobs Act 2024 1990 level as legislated (State Action) Act Victorian Climate 2023, introduced in published in “Climate
2023 Reduction Act 2010 via Climate Change and 2008 as amended by Change Act 2017; Parliament in Change Response –
Greenhouse Emissions the Climate Change other targets November 2023 but Towards 2050”, not
Reduction Act 2007. (State Action) formalised via the not yet passed. Sets legislated
Proposed updates to Amendment Act Climate Change and out a net zero target
2030 and 2050 targets 2022. Energy Legislation as well as the
by the Climate Change Amendment requirement to set
and Greenhouse (Renewable Energy interim targets (not
Emissions Reduction and Storage Targets) yet announced, to be
(Miscellaneous) Act 2024. set as soon as
Amendment Bill 2024, practicable following
introduced in August Australia’s
2024 to the South submission of an
Australian Parliament. NDC).

2025 50-60% reduction 28-33% reduction

2030 50% reduction 65-75% reduction 30% reduction 60% reduction Net zero or lower 45-50% reduction
2035 70% reduction 75% reduction 75-80% reduction

2040 90-95% reduction

2045 Net zero Net zero

2050 Net zero Net Zero 60% reduction Net zero Net Zero Net Zero
(legislated)
and
Net Zero (amendment
in Parliament)
Notes: Timing of emissions reduction ambition may be rounded to the nearest five-yearly increment, for presentation purposes.
A. Relative to 1990 levels.
B. While Tasmania’s and Australian Capital Territory’s legislated climate change targets aim to achieve net zero emissions, AEMO recognises the low emissions intensity of the electricity sector for the jurisdictions, and considers
that an electricity-sector equivalent carbon budget would be inappropriate to reflect the economy-wide application of the legislations.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 31

Inputs and assumptions

For the 2026 ISP, AEMO proposes to exclude the targets for Tasmania and Australian Capital Territory on the
basis that neither are appropriate to quantify within the ISP models:

• Tasmania has already achieved its net zero target (in 2015).

• The Australian Capital Territory has already achieved its objectives through direct support to inter-state
renewable energy projects (which is an implementation that is not modellable within AEMO’s ISP models).

3.1.5 Relevant federal and state energy policies

New South Wales Electricity Infrastructure Roadmap

In 2020, the New South Wales Government released its Electricity Infrastructure Roadmap 33, and enabling
legislation, the Electricity Infrastructure Investment Act 2020 (NSW EII Act), was passed that provided a plan to
transform New South Wales’s electricity system reliably and affordably. The NSW EII Act sets out ‘minimum
infrastructure investment objectives’34 to construct, by 31 December 2029, a minimum target of the equivalent of
12 gigawatts (GW) of new renewable energy capacity. This is within the AEMC Emissions Targets Statement, and
therefore must be considered by AEMO.

The implementation of these objectives is underpinned by Long-Term Energy Service Agreements (LTESAs) with
the New South Wales Consumer Trustee that provide revenue protection to project developers.

Although these objectives are specified for these REZs, the generation constructed and operated under LTESAs
are not required to be located in a REZ if the Consumer Trustee is satisfied the project demonstrates “outstanding
merit”. This target is proposed to be implemented as a trajectory to 33,600 gigawatt hours (GWh) by 2030, in line
with the 2023 Infrastructure Investment Opportunities Report.

The NSW EII Act also sets an infrastructure investment objective for the construction of long-duration storage
infrastructure (classified as storage with capacity that can be dispatched at full power for at least eight hours) with
at least storage of 16 GWh and 2 GW capacity by the end of 2029. The New South Wales Government has
legislated a second target for long-duration storage, of an additional 12 GWh, for a cumulative 28 GWh, to the end
of 2033, in addition to Snowy 2.035.

The target of 16 GWh of long duration storage capacity is within the AEMC Emissions Targets Statement, and
therefore must be considered by AEMO, and the additional 12 GWh of long duration storage which is legislated
will also be considered.

The infrastructure investment objectives exclude any generation capacity that was either existing or committed at
or before AEMO’s November 2019 Generation Information page. Therefore, any generation that has progressed to
committed or existing since that time is included as contributing to the achievement of these objectives.

The 2025 IIO Report is anticipated to be released prior to the finalisation of the 2025 IASR. Where practical, AEMO
will consider any adjustments to the IIO development trajectories within that publication in the 2026 ISP.

33
See https://www.energy.nsw.gov.au/nsw-plans-and-progress/major-state-projects/electricity-infrastructure-roadmap.
34
Electricity Infrastructure Investment Act 2020 (NSW), s.44, at https://legislation.nsw.gov.au/view/whole/html/inforce/current/act-2020-044.
35
See https://www.parliament.nsw.gov.au/bills/Pages/bill-details.aspx?pk=18673.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 32

Inputs and assumptions

REZ access schemes

Access schemes are a key part of the NSW EII Act, which support the coordination of renewable energy and
storage investment in REZs. Generation and storage projects that seek to connect to the network infrastructure
where a REZ access scheme applied may be subject to access rights – either through application or competitive
tender. The fees paid to gain access rights contribute to community benefit and employment purposes in the
region.

A REZ access scheme can provide investor certainty, streamline the grid connection process, and govern the
volume of projects that may connect into REZ network infrastructure. AEMO proposes to model REZ access
schemes as they are developed by EnergyCo, currently including:

• Central-West Orana – a maximum connection limit of 7.7 GW of new variable renewable energy (VRE) is
applied, and is lifted if transmission augmentation increases the REZ capacity beyond the scope of the
Central-West Orana REZ Network Infrastructure Project36.

• South West New South Wales – a maximum connection limit of 3.98 GW of new VRE is applied, and is lifted if
transmission augmentation increases the REZ capacity beyond the scope delivered by Project
EnergyConnect, HumeLink and Victoria – New South Wales Interconnector West (VNI West)37.

Queensland Energy (Renewable Transformation and Jobs) Act 2024

The Energy (Renewable Transformation and Jobs) Act 2024 (Qld)38 includes a range of measures for the
development of renewable and firming generation in Queensland, including providing for the establishment of
REZs and facilitating transmission investments.

The Act includes targets to achieve 50% of electricity generated in Queensland to be from renewable energy
sources by 2030, 70% by 2032, and 80% by 2035. The Queensland Renewable Energy Target (QRET) will be
incorporated in the modelling for all scenarios as it is a legislated target and is also included in the AEMC’s
emissions targets statement.

Additional Queensland Government measures include the development of Borumba Pumped Hydro and the
hydrogen-ready Brigalow Peaking Power Plant. In addition, the Act establishes planning and governance
frameworks for REZs, and requires the government to develop a Queensland SuperGrid Infrastructure Blueprint,
the next of which is due for release by May 2025. AEMO will incorporate these other developments in accordance
with its normal project commitment assessments as evaluated in AEMO’s regular Generation Information and
Transmission Augmentation Information processes, and its consultation on the Draft 2025 Network Expansion
Options Report.

36
EnergyCo. Notification of Draft Headroom Assessment in the Central-West Orana REZ, at https://www.energyco.nsw.gov.au/sites/default/
files/2024-08/Notification%20of%20Draft%20Headroom%20Assessment%20for%20the%20Central-West%20Orana%20REZ%20Access%20
Scheme.pdf.
37
EnergyCo. South West REZ access rights tender update, at https://www.energyco.nsw.gov.au/news/south-west-rez-access-rights-tender-
update.
38
See https://www.legislation.qld.gov.au/view/whole/html/inforce/current/act-2024-015.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 33

Inputs and assumptions

Tasmanian Renewable Energy Target (TRET)

The TRET is a renewable energy target in the Energy Co-ordination and Planning Act 1995 (Tas)39 requiring
development of sufficient renewable energy capacity to double current electricity consumption (or 21,000 GWh of
production) by 2040 with an interim target of 150% (or 15,750 GWh) by 2030.

This policy will be incorporated in all scenarios as it is legislated and published in the emissions targets statement.

South Australia’s net-100% renewable energy generation target

The South Australian Government has announced and is seeking to legislate for a target of net 100% renewable
energy generation by 31 December 202740. This means that South Australia will target generation of enough
additional renewable energy (to be consumed within South Australia and exported interstate) to net the volume of
local fossil fuel generation. This is an update of the net 100% renewable energy generation by 2030 target (which
remains in the emissions targets statement) that existed previously in South Australia.

AEMO proposes to model the 2027 target given the South Australian Parliament is considering legislation for the
proposed new target. AEMO will continue to engage with the South Australian government to evaluate the
appropriateness of this as the 2025 IASR is finalised.

Victoria’s renewable energy, storage, and offshore wind targets

Underpinning Victoria’s electricity sector contributions to emissions reductions are the Victorian Renewable
Energy Target (VRET), the Victorian Energy Upgrades (VEU) program, and a target for 50% zero-emission
vehicles new sales by 2030 as outlined in the Zero Emissions Vehicle Roadmap.

The Renewable Energy (Jobs and Investment) Act 2017 (Vic)41 contains the VRET, which mandates 40% of the
region’s generation (including CER) be sourced from renewable sources by 2025, and 65% by 2030, and 95% by
203542. These targets will be included in all scenarios of the 2024-25 forecasting and planning activities (including
specific projects that are funded via VRET auctions conducted to date43).

The legislation includes offshore wind energy generation targets of at least 2 GW of offshore generation capacity
by 2032, 4 GW by 2035, and 9 GW by 2040.

The legislation also includes energy storage targets44 of at least 2.6 GW of storage and dispatch capacity by 2030,
and at least 6.3 GW of storage and dispatch capacity by 2035.

AEMO will include these three targets (VRET, the offshore wind target and the storage target) in all scenarios as all
are included in the emissions targets statement.

39
Energy Co-ordination and Planning Act 1995 (Tas) s.3C, at https://www.legislation.tas.gov.au/view/html/inforce/current/act-1995-047.
40
Climate Change and Greenhouse Emissions Reductions (Miscellaneous) Amendment Bill 2024 (SA), clause 4, at
https://www.legislation.sa.gov.au/lz?path=/b/current/climate%20change%20and%20greenhouse%20emissions%20reduction%20(miscellane
ous)%20amendment%20bill%202024.
41
See https://www.legislation.vic.gov.au/in-force/acts/renewable-energy-jobs-and-investment-act-2017/003.
42
See https://www.energy.vic.gov.au/renewable-energy/victorian-renewable-energy-and-storage-targets.
43
See https://www.energy.vic.gov.au/renewable-energy/victorian-renewable-energy-and-storage-targets/victorian-renewable-energy-target-
auction-vret1.
44
At https://www.energy.vic.gov.au/renewable-energy/victorian-renewable-energy-and-storage-targets.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 34

Inputs and assumptions

Large-scale Renewable Energy Target (LRET)

Australia’s Renewable Energy Target (RET) established targets for large-scale and small-scale renewable
investments. The LRET aims to deliver 33,000 GWh of electricity from renewable sources each year until 2030.
AEMO modelling captures the operation the LRET until the end of the currently legislated targets in 2030.

Capacity Investment Scheme

In December 2022, the Federal Government announced the Capacity Investment Scheme, which provides a
national framework to drive new renewable and dispatchable capacity. The scheme provides a revenue
underwriting mechanism aimed at unlocking around $10 billion of investment in clean dispatchable power to
support energy reliability and security.

Three Capacity Investment Scheme tenders have been launched to date to support the scheme. A fourth
upcoming tender will announce successful bids in Q3 2025.

In November 2024, the Federal Government released a Market brief on Renewable Energy Transformation
Agreement allocations by jurisdiction November 2024, outlining updated allocations by jurisdiction as agreed as
part of Renewable Energy Transformation Agreements between the Federal Government and other jurisdictions.

AEMO will incorporate the outcomes of Capacity Investment Scheme tenders in its modelling, as well as the
cumulative dispatchable allocations by jurisdiction. As the mechanism continues to develop, AEMO may
incorporate further detail into the 2026 ISP.

Battery of the Nation

The Battery of the Nation project announced by Hydro Tasmania represents an increase in capacity of existing
hydro generators, as well as the development of additional pumped hydro generation in Lake Cethana 45. Hydro
Tasmania suggests that with further interconnection, upgrading assets and adapting hydropower operation can
result in up to 390 megawatts (MW) of additional capacity across Western Tasmania, Gordon Power Station and
Tarraleah Power Station.

AEMO proposes to model the Cethana pumped hydro station as a separate build candidate with its potential
development optimised within the ISP models. Further interconnection with Tasmania allows for more efficient
re-development of Tarraleah, Gordon Power Station and West Coast hydro generation by repurposing
maintenance expenditure resulting in collective additional capacity.

South Australia Firm Energy Reliability Mechanism

The Government of South Australia has developed a framework to support the provision of long duration firm
capacity to enable a reliable and resilient power system for the state. The Firm Energy Reliability Mechanism
(FERM) is planned to be calculated as part of the annual South Australia Electricity Development Plan, to be
supported by a form of tender process. Subject to the release of sufficient detail to define its impact upon power

45
See unlocking-tasmania's-energy-capacity_december-2018.pdf for further information on the impact of greater interconnection on existing
latent capacity.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 35

Inputs and assumptions

system needs and a clear pathway to implementation before the finalisation of the 2026 ISP, AEMO intends to
consider this policy further prior to finalising the 2025 IASR.

Jurisdictional policies regarding hydrogen development

Various jurisdictions have announced funding to support the establishment of hydrogen technologies, particularly
renewable hydrogen production. AEMO proposes to include the following policies:

• The South Australian Government is supporting a number of projects, including the Hydrogen Jobs Plan 46
which seeks to establish hydrogen production and power generation in South Australia. The output from a
250 MW electrolyser project is included in the hydrogen production forecasts for each scenario. The
electrolyser is expected to be complemented with a 200 MW hydrogen-capable generator. The generator is
assessed according to AEMO’s standard generation commitment criteria.

• The New South Wales Hydrogen Strategy47 includes the Renewable Fuels Scheme, established in the
Electricity Supply Act 199548. The Scheme targets increasing production of renewable hydrogen up to
8 petajoules (PJ) per annum by 203049. There is a consultation underway to expand the scheme to include
other fuels. The effect of the currently legislated Renewable Fuels Scheme is considered in forecasting
hydrogen production needs for each scenario.

3.1.6 Transmission project support

National Electricity (Victoria) Act 2005 (NEVA) – 2020 amendment for expedited transmission
approval

The NEVA facilitates expedited approval of transmission system upgrades, enabling Victoria’s Minister for Energy
and Resources to approve or accelerate approvals for augmentations of the Victorian transmission system.
Several projects are currently supported under the NEVA and have advanced to the point where they are
considered committed or anticipated developments. These include the specified augmentations for Western
Renewables Link, the Mortlake turn-in, the Murray River REZ, Western Victoria REZ, South West Victoria REZ and
Central North REZ minor augmentations, and the Koorangie Energy Storage System, as well as other projects
providing system strength services. For more information on these developments, see Section 3.9.3.

The VNI West project is also subject to NEVA Orders which act to accelerate the project and specify requirements
for its configuration. These orders relate only to the Victorian side of VNI West. VNI West is currently an Actionable
ISP project.

46
See https://www.ohpsa.sa.gov.au/about-the-project and https://www.statebudget.sa.gov.au/our-budget/jobs-and-economy/hydrogen.
47
See https://www.energy.nsw.gov.au/nsw-plans-and-progress/regulation-and-policy/energy-security-safeguard/renewable-fuel-
scheme#:~:text=The%20Renewable%20Fuel%20Scheme%20was%20established%20under%20the,will%20commence%20in%202024%20a
nd%20run%20until%202044.
48
See https://legislation.nsw.gov.au/view/whole/html/inforce/current/act-1995-094.
49
Electricity Supply (General ) Regulation 2014 (NSW), at https://legislation.nsw.gov.au/view/whole/html/inforce/current/sl-2014-0523.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 36

Inputs and assumptions

AEMO will consider the development of projects supported under the NEVA as transmission options in the Draft
2025 Network Expansion Options Report, or as committed or anticipated projects in some cases, as outlined in
AEMO’s Transmission augmentation information page 50.

Rewiring the Nation

In 2022, the Federal Government announced the Rewiring the Nation program, which aims to modernise the grid
and ensure the country’s transmission networks are ready for the renewables and storage investment needed for
the decarbonisation task ahead. The framework aims to prioritise transmission projects of national significance and
support a transition to renewable energy. The Rewiring the Nation program provides up to $20 billion in finance at
concessional rates to minimise the cost of investments that will help strengthen, grow and transition Australia’s
electricity grids. Managing the Rewiring the Nation fund, the Clean Energy Finance Corporation is administering
$19 billion of low-cost finance for Rewiring the Nation. An additional $1 billion has been allocated to the Rewiring
the Nation Special Account, which enables the Government to invest in the timely delivery of eligible projects. The
Federal Government has so far entered the following agreements with NEM states:

• The Federal Government has committed $4.7 billion (which joins 3.1 billion from the New South Wales
Transmission Acceleration Facility) to help New South Wales realise its Electricity Infrastructure Roadmap and
unlock priority projects including VNI West, HumeLink, Sydney Ring, and the Central-West Orana, New
England, Hunter Central Coast, and South-West REZs.

• The Federal Government has committed to provide low-cost finance to Marinus Link as well as support for
eligible Battery of the Nation and grid-firming projects in Tasmania.

• The Federal Government has committed $2.25 billion of concessional financing to Victorian projects, including
$750 million for VNI West as well as concessional financing for Victorian REZ projects, including offshore wind
projects.

AEMO will include concessional finance in the 2026 ISP where any of the benefit will be shared with consumers
for projects where funding is publicly committed or an agreement is likely to be executed, consistent with the
recommended approach in the AER’s CBA Guidelines51. Details regarding concessional finance will be maintained
on the Transmission Augmentation Information Page52.

Electricity Infrastructure Investment Act (New South Wales) 2020 (NSW) – REZ network
infrastructure projects and priority transmission infrastructure projects (PTIPs)

The New South Wales Minister for Energy and Minister for Climate Change may direct that REZ network
infrastructure projects and PTIPs be carried out.

50
See https://aemo.com.au/en/energy-systems/electricity/national-electricity-market-nem/nem-forecasting-and-planning/forecasting-and-
planning-data/transmission-augmentation-information.
51
AEMO. Cost Benefit Analysis Guidelines, at https://www.aer.gov.au/industry/registers/resources/reviews/2024-review-cost-benefit-analysis-
and-regulatory-investment-test-guidelines/final-decision.
52
See https://aemo.com.au/en/energy-systems/electricity/national-electricity-market-nem/nem-forecasting-and-planning/forecasting-and-
planning-data/transmission-augmentation-information.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 37

Inputs and assumptions

Waratah Super Battery is a PTIP under the NSW EII Act53, and is listed as a committed project in AEMO’s
transmission augmentation information page 54. It is being delivered with a System Integrity Protection Scheme
(SIPS) to improve transfer capabilities from: Central New South Wales (CNSW) to Sydney, Newcastle and
Wollongong (SNW); Southern New South Wales (SNSW) to CNSW; and Northern New South Wales (NNSW) to
CNSW, while the scheme is in place.

The Central-West Orana Transmission project will provide new network infrastructure for the Central-West Orana
REZ including high-capacity transmission lines and energy hubs to transport power from solar and wind
generators and storage systems to major load centres.

The Central-West Orana Transmission project is a REZ network infrastructure project under the NSW EII Act 55 and
is listed as an anticipated project in AEMO’s transmission augmentation information page 56. EnergyCo is
overseeing the planning and approval processes for the project and has selected ACE Energy as the first ranked
network operator for the project.

Queensland SuperGrid Infrastructure Blueprint, Queensland REZ Roadmap, and CopperString

2032

The Queensland Government SuperGrid Infrastructure BluePrint57 was released in 2022 and is scheduled to be
updated in 2025. The Queensland REZ Roadmap58, published in March 2024, laid out the framework to develop
and connect grid-scale renewable energy.

AEMO will consider the development of the blueprint projects and the Queensland REZ Roadmap as transmission
options in the Draft 2025 Network Expansion Options Report.

The Queensland Government has announced that it is working to deliver the CopperString 2032 transmission
project – approximately 1,100 km of transmission lines from Mount Isa to south of Townsville – to connect the
North West Minerals Province to the NEM. CopperString 2032 is listed as an anticipated project in AEMO’s
transmission augmentation information page 59.

Only the Townsville to Hughenden connection will be modelled as a REZ network expansion. Insufficient data is
available to AEMO at this time to capture the currently off-grid load and development opportunities at Mount Isa
and the broader western minerals province; the full connection may be considered in future planning activities.

Jurisdictional landholder payment schemes

In some jurisdictions, landholder payment schemes have been established to provide payments to landholders for
hosting transmission infrastructures. These payments are in addition to any compensation that is paid under

53
For more information, see https://www.energyco.nsw.gov.au/projects/waratah-super-battery.
54
See https://aemo.com.au/en/energy-systems/electricity/national-electricity-market-nem/nem-forecasting-and-planning/forecasting-and-
planning-data/transmission-augmentation-information.
55
See https://www.energyco.nsw.gov.au/cwo.
56
See https://aemo.com.au/en/energy-systems/electricity/national-electricity-market-nem/nem-forecasting-and-planning/forecasting-and-
planning-data/transmission-augmentation-information.
57
At https://www.epw.qld.gov.au/__data/assets/pdf_file/0030/32988/queensland-supergrid-infrastructure-blueprint.pdf.
58
At https://www.epw.qld.gov.au/__data/assets/pdf_file/0036/49599/REZ-roadmap.pdf.
59
See https://aemo.com.au/en/energy-systems/electricity/national-electricity-market-nem/nem-forecasting-and-planning/forecasting-and-
planning-data/transmission-augmentation-information.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 38

Inputs and assumptions

conventional land acquisition frameworks. AEMO will model landholder payment schemes in New South Wales,
Queensland and Victoria. If new landholder payment schemes are announced, AEMO will use reasonable
endeavours to model them.

New South Wales

In October 2022, the New South Wales Government established a Strategic Benefit Payments Scheme 60 for new
major transmission projects. Under this scheme, private landowners hosting new high voltage transmission
projects critical to the energy transformation and future of the electricity grid will be paid a set rate of $200,000 (in
real 2022 dollars) per kilometre of transmission hosted, paid out in annual instalments over 20 years.

Queensland
Taking effect from May 2023, Powerlink’s SuperGrid Landholder Payment Framework 61 offers payments to
landowners that host new transmission infrastructure. Powerlink has also become the first transmission company
in Australia to offer payments to landholders with properties adjacent to new transmission infrastructure. To
represent this framework, AEMO will apply a cost of $230,000 (in 2023 dollars) per km of new transmission, paid
out in a lump sum – noting that landholders can decide between a lump sum or annualised payments.

Victoria
The Victorian Government announced in 2023 it will pay landholders whose properties host new power
transmission lines $200,000 over a 25-year period in annual instalments indexed to inflation, to help smooth the
state’s transition to a 95% renewable grid by 2035.

3.1.7 Nuclear technology

AEMO is technology agnostic in its planning functions, and in particular in its assessment of generation options in
identifying power system needs in the ISP. Rather, AEMO’s analyses identifies efficient combinations of
generation, storage and network developments to provide a reliable and secure power system for consumers.

Currently, Section 140A of the Environment Protection and Biodiversity Conservation Act (1999) (C’th) prohibits
the Federal Government from approving the construction or operation of a nuclear installation that is for the
purpose of generating electricity. This is current legislation that prohibits a particular electricity generation
technology, and as such AEMO cannot consider the technology option in any of its scenarios.

If this legislation were changed, AEMO would endeavour to include the new policy, noting that AEMO would need
to develop and consult on the new inputs and assumptions relevant to each technology.

3.1.8 Policies affecting consumer demand

Numerous state and federal policies support investment in energy savings measures and the development of CER,
including small-scale technology certificates (STCs) and Australian carbon credit units (ACCUs).

60
See https://www.energyco.nsw.gov.au/sites/default/files/2023-01/overview-strategic-benefit-payments-scheme.pdf.
61
See https://www.powerlink.com.au/sites/default/files/2023-05/SuperGrid-Landholder-Payment-Framework.pdf.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 39

Inputs and assumptions

Energy efficiency policies

Australian governments have implemented a range of energy efficiency policies that encourage investments in
activities to lower energy consumption, including:

• Building energy performance requirements contained in the Building Code of Australia (BCA) 2010, the
National Construction Code (NCC) 2019, NCC 2022, and NCC 202562.

• The Nationwide House Energy Rating Scheme (NatHERS), which is a pathway for new dwelling designs to
demonstrate compliance with the NCC 2022.

• Building rating and disclosure schemes of existing buildings such as the National Australian Built Environment
Rating System (NABERS) Energy for Offices and Commercial Building Disclosure (CBD).

• National Framework for Disclosure of Residential Energy Efficiency Information sets out high-level policy
settings for future energy performance disclosure regimes.

• The Equipment Energy Efficiency (E3) program (or Greenhouse and Energy Minimum Standards [GEMS]) of
mandatory energy performance standards and/or labelling for different classes of appliances and equipment.

• State-based schemes, including the New South Wales Energy Savings Scheme (ESS), the Victorian Energy
Upgrades (VEU) program, the South Australian Retailer Energy Productivity Scheme (SA REPS), and the
Australian Capital Territory’s Energy Efficiency Improvement Scheme.

• The National Energy Performance Strategy (NEPS)63, which provides a framework for policies that improve
energy performance through energy efficiency, demand flexibility, and electrification or fuel switching. Energy
efficiency policies such as the NCC are considered supporting actions under the NEPS.

• The Clean Energy Finance Corporation (CEFC) Household Energy Upgrades Fund (HEUF).

CER and electric vehicle policies

Australian governments have announced numerous policies to encourage CER investment, including:

• The Small-scale Renewable Energy Scheme (SRES) to encourage investment in small-scale PV.

• The New South Wales Consumer Energy Strategy, which includes funded actions to give one million
households access to rooftop solar and a battery system by 2035, rising to nearly 1.5 million by 2050.

• The Victorian Government’s Solar Homes Program to enable the installation of solar systems, hot water
systems and batteries, for over one million homes to be powered by renewable energy.

Governments have also promoted increased uptake in EVs through:

• The Federal Government’s New Vehicle Efficiency Standard which requires each manufacturer to meet per
kilometre efficiency standards for new cars, 4WDs and utility vehicles.

• EV infrastructure initiatives funded under the New South Wales Government’s EV Strategy to ensure that EVs
represent most new car sales by 2035.

62
NCC 2025 is undergoing continued development. See https://consultation.abcb.gov.au/engagement/ncc-2025-public-comment-draft/.
63
See https://www.dcceew.gov.au/energy/strategies-and-frameworks/national-energy-performance-strategy.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 40

Inputs and assumptions

• Victoria’s Zero Emissions Vehicle Roadmap, which aims for 50% of light vehicle sales to be zero emission
vehicles (ZEVs) by 2030, and for all public transport buses to be ZEVs from 2025.

• Queensland’s Zero Emission Vehicle Strategy 2022-2032 which plans for ZEVs to account for 50% of new
passenger vehicle sales by 2030, and 100% by 2036.

• The South Australian Government’s goal for 170,000 EVs by 2030 and one million EVs to be integrated into the
electricity system over the next 20 years.

New South Wales Energy Security Safeguard

New South Wales has a target for energy efficiency savings through its established Energy Security Safeguard 64,
both in general through the Energy Savings Scheme65, and at time of peak demand through the Peak Demand
Reduction Scheme (PDRS)66. Both are modelled, with details in Section 3.3.12 3.3.12 for energy efficiency and
Section 3.3.15 for the PDRS (the PDRS is explicitly included in the emissions targets statement).

Victoria Gas Substitution Roadmap

The Victorian Government released its Gas Substitution Roadmap 67 in October 2022 (updated in 202368) to
support net zero emissions in Victoria in 2050 and halving emissions by 2030. The Roadmap outlines options for
replacing gas usage (such as energy efficiency, electrification, hydrogen and biogas) to reduce emissions and
consumer costs. On 1 January 2024, the Victoria Planning Provisions were amended to ban new residential gas
connections for developments requiring a planning permit 69.

Australian Capital Territory ban on new gas connections

The Australian Capital Territory Parliament in June 2023 passed the Climate Change and Greenhouse Gas
Reduction (Natural Gas Transition) Amendment Act 2023 70, allowing the Australian Capital Territory Government
to develop regulation banning new gas connections in the territory. Regulation preventing new gas network
connections in most areas commenced on 8 December 2023 71.

3.2 Emissions and climate assumptions

Decarbonisation is a significant driver affecting the pace of the energy transition.

64
See https://www.energy.nsw.gov.au/nsw-plans-and-progress/regulation-and-policy/energy-security-safeguard.
65
See https://www.energy.nsw.gov.au/nsw-plans-and-progress/regulation-and-policy/energy-security-safeguard/energy-savings-scheme.
66
See https://www.energy.nsw.gov.au/nsw-plans-and-progress/regulation-and-policy/energy-security-safeguard/peak-demand-reduction-
scheme.
67
See https://www.energy.vic.gov.au/renewable-energy/victorias-gas-substitution-roadmap.
68
See https://www.energy.vic.gov.au/__data/assets/pdf_file/0027/691119/Victorias-Gas-Substitution-Roadmap-Update.pdf.
69
See https://www.gazette.vic.gov.au/gazette/Gazettes2024/GG2024S001.pdf.
70
See https://www.legislation.act.gov.au/b/db_66446/.
71
See https://www.climatechoices.act.gov.au/energy/canberras-electrification-pathway/preventing-new-gas-network-connections#:~:
text=Compliance%20and%20enforcement-,Overview,and%20electrify%20Canberra%20by%202045.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 41

Inputs and assumptions

Traditional drivers of energy infrastructure development such as load growth or asset replacement need to be
considered alongside actions needed to reduce emissions. Additionally, the pace of change will be affected by
both domestic and global influences.

AEMO scenarios in this Draft 2025 IASR will be underpinned by national carbon budgets that are compatible with
global temperature targets (relating to Relative Concentration Pathways, see Section 3.2.2 for more details) by
aligning to International Energy Agency (IEA) World Energy Outlook (WEO) 2024 scenarios.

AEMO develops carbon budgets to apply to the electricity sector by engaging multi-sectoral modelling to identify
the decarbonisation efforts across the economy needed to meet the temperature rise goals associated with each
scenario. The model applies four decarbonisation pillars to reduce emissions in a growing economy:

• Electrification and other fuel-switching away from emissions-intensive fuels.

• Energy efficiency improvements to improve energy productivity.

• Decarbonising the electricity sector.

• Non-energy emissions reduction and emission sequestration.

To achieve the emissions pathways therefore relies on actions not just within the energy sector but also in other
parts of Australia’s economy, including the agriculture and land use sectors. Least-cost solutions for Australia’s
economy will consist of a mixture of these four pillars (discussed in Section 3.3.4), and earlier actions to
decarbonise will reduce the need for more aggressive actions later.

The multi-sectoral modelling will translate the national carbon budgets to NEM-wide carbon budgets that ultimately
underpin the ISP, as discussed in the current ISP Methodology72. These NEM-wide carbon budgets recognise that
the electricity sector has a key role to play as an early mover by enabling the decarbonisation of other sectors via
electrification and increased energy efficiency.

AEMO must consider the policies in the AEMC emissions targets statement under NER 5.22.3(b)(1) in determining
the power system needs to be met by the ISP and how the ISP can contribute to achieving the emissions
reduction targets as part of achieving the national electricity objective. The scenarios therefore also include a
number of complementary carbon budgets and state government policy as described in the previous sections.
The derivation of NEM-wide and state-level targets is further discussed in Section 3.2.3.

The multi-sectoral modelling commissioned by AEMO is ongoing and will be separately consulted on as part of the
Draft 2025 IASR Stage 2, to be published in February 2025. As such, this section does not present the proposed
carbon budgets to be modelled in the 2026 ISP.

3.2.1 Alignment to IEA World Energy Outlook scenarios

AEMO’s Draft 2025 IASR scenarios have been aligned to the IEA 2024 WEO scenarios to anchor them to global
narratives on developments and commitments to the Paris Agreement. This means AEMO's scenarios are
consistent with global economic settings and temperature goals. IEA’s scenarios provide a global backdrop to
economic and multi-sectoral modelling. They describe the transition towards a lower carbon economy with

72
At https://aemo.com.au/energy-systems/major-publications/integrated-system-plan-isp/2024-integrated-system-plan-isp/isp-methodology.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 42

Inputs and assumptions

differing levels of ambition and the associated changes in energy consumption and production at international and
regional level.

AEMO’s Draft 2025 IASR scenarios align to the WEO scenarios which inform the economic settings and forecasts.
The scenarios also help provide context for Australia’s share of meeting various temperature outcomes as well as
guidance to the multi-sectoral modelling regarding fossil fuel export projections and uptake rate and limits on
energy efficiency and electrification across scenarios.

The 2024 WEO did not contain the Sustainable Development Scenario (SDS) which was aligned with the 2023
IASR Step Change. However, as discussed below, the narrative of the Announced Pledges Scenario aligns closely
with the Step Change scenario as presented in the Draft 2025 IASR.

The 2024 WEO scenarios and how they align with the Draft 2025 IASR scenarios are summarised in Table 5.

Table 5 The 2024 IEA WEO scenario summaries

IEA scenario Summary narrative

Net Zero This is a normative scenario that maps a transition pathway limiting global warming to within 1.5°C by the end of the
Emissions by century with a 50% probability but with limited overshoot. This scenario sees the most ambitious deployment of
2050 (NZE) electrification and energy efficiency, with consumption declining by 2030. By 2050, clean energy meets 90% of
global energy demand with around one-third of the remaining fossil fuel demand being fully abated and another
third offset by negative emissions.

Announced The Announced Pledges Scenario was added in the 2021 WEO. It explores the full and timely implementation of
Pledges Scenario national energy and climate goal, including net zero emission targets, and its impact on the energy sector. In this
(APS) scenario, electrification and energy efficiency, as well as deployment of low-carbon hydrogen, increases relative to
STEPs. Consumption peaks in 2030 and then slowly declines. The share of clean energy in global energy demand
increases to nearly three-quarters by 2050. This scenario results in an increase in median surface temperatures
over pre-industrial levels of 1.7°C with a 50% probability.

Stated Policies This scenario is based on current policy settings and also considers the implications of industrial policies that
Scenario (STEPS) support clean energy supply chains as well as measures related to energy and climate. The scenario sees a decline
in the share of fossil fuels in primary energy demand from 80% in 2023 to 58% by 2050. Electrification of transport
and heat, as well as energy efficiency, all play a role. By the end of the century, the scenario is aligned with median
surface temperature increases over pre-industrial levels of 2.4°C with 50% probability.

In mapping the IEA’s 2024 scenarios to the scenarios in this Draft 2025 IASR, AEMO provides the following
observations:

• With a more stringent emission target aiming to achieve the aspirational 1.5ºC target of the Paris Agreement
and with significant structural changes in global energy consumption underpinning its narrative, the Green
Energy scenario is most closely aligned to NZE.

• The IEA’s APS scenario is consistent with the Paris Agreement target of limiting temperature increase to well
below 2ºC, which aligns to AEMO’s Step Change scenario.

• The Progressive Change scenario aligns best to STEPS as it reflects currently legislated or funded policy
positions only. It also fails to meet the Paris Agreement globally despite Australia fulfilling its commitments
under its Nationally Determined Contribution submitted to the United Nations Framework Convention on
Climate Change.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 43

Inputs and assumptions

3.2.2 Alignment with the Inter-governmental Panel on Climate Change’s Relative

Concentration Pathways

The Draft 2025 IASR scenarios also map to the RCPs framework used by the Intergovernmental Panel on Climate
Change (IPCC)73. There are multiple RCPs defined, representing trajectories of emissions and land-use and their
resulting impact on temperate increases. AEMO scenarios map to these temperature pathways as follows:

• AEMO’s Green Energy scenario sees a global drive to limit temperature rise to 1.5ºC by the end of the
century. It is best aligned to RCP1.9 which targets that 1.5ºC outcome.

• The Step Change scenario is aligned to RCP2.6, which is consistent with a temperature rise less than 2ºC by
the end of the century and in line with the Paris Agreement.

• The Progressive Change scenario is aligned to RCP4.5, which is consistent with a temperature rise of
approximately 2.7ºC by the end of the century.

The mapping of scenarios to IEA scenarios and RCP temperature targets is summarised in Table 6.

By mapping the Draft 2025 IASR scenarios to global outlooks in this manner, forecast components that are
influenced by global conditions and broader economic narratives may be developed in a more internally
consistent manner.

Table 6 Mapping of scenarios between studies

2023 IASR scenario 2024 WEO scenario RCP Framework

Green Energy NZE RCP1.9

Step Change APS RCP2.6

Progressive Change STEPS RCP4.5

3.2.3 Translating international climate scenarios to NEM-wide carbon budgets

To ensure the scenarios adopt emissions abatement outcomes consistent with the scenario narratives and
mapping to the WEO scenarios and RCPs described above, multi-sectoral modelling has been commissioned to
produce carbon budgets for the Australian economy 74 (including a distinct budget for the electricity sector and the
NEM) among other forecasting influences described in Section 3.3.4.

This project is ongoing, and outcomes will be provided in the Draft 2025 IASR Stage 2 to be published in February
2025.

State-level carbon budgets

A number of jurisdictions have committed or announced intentions to commit to state-based emissions reduction
targets. As discussed in Section 3.1, AEMO incorporates these state-wide targets as carbon budgets for NEM
activities within each jurisdiction.

Carbon budgets will be provided in the Stage 2 of the Draft 2025 IASR.

73
See, for example, page 65 in https://www.ipcc.ch/report/ar6/syr/downloads/report/IPCC_AR6_SYR_LongerReport.pdf.
74
The economy-wide carbon budget is broadly consistent with the 2021 to 2030 carbon budget defined in the Climate Change Act (2022).

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 44

Inputs and assumptions

3.3 Consumption and demand: historical and forecasting components

AEMO updates its projections of energy consumption and demand at least annually75. AEMO’s Forecasting
Approach applies methodologies that examine electricity and gas customer segments, and enables forecasting of
key forecast components affecting those customer segments. This approach enables appropriately granular
models to be deployed in a way that provides transparency of method and influence on energy consumption, and
enables scenario diversity where key uncertainties exist. Updates to these forecast components are informed by
stakeholder consultation through the FRG and other engagement opportunities where appropriate, and consider a
range of forecasting components, including:

• Economic and population growth drivers.

• Climate and weather.

• CER.

• Large industrial loads (LILs), informed by stakeholder surveys.

• Data centres.

• Electrification and other fuel-switching opportunities in the context of possible decarbonisation pathways.

• Energy efficiency.

AEMO uses a range of historical data to train models for developing electricity consumption component forecasts.
Historical data are updated at varying frequencies, from live meter data to monthly, quarterly, or annual batch
data, and include:

• Operational demand meter reads.

• Estimated network loss factors.

• Other non-scheduled generators.

• Distributed PV uptake.

• Battery storage uptake.

• Gridded solar irradiance and resulting estimated distributed PV normalised generation.

• Weather data (such as temperature and humidity levels).

The Electricity Demand Forecasting Methodology 76 and Gas Demand Forecasting Methodology Information
Paper77 detail how model inputs are applied to develop electricity and gas forecasts for energy consumption, and
maximum and minimum demand. The resulting aggregate forecasts that consider these components, and apply
AEMO’s forecasting approach described in these methodologies, are available on AEMO’s Forecasting Portal 78.

75
Updated forecasts (within a year) can be issued in case of material change to input assumptions.
76
At https://aemo.com.au/-/media/files/electricity/nem/planning_and_forecasting/nem_esoo/2024/electricity-demand-forecasting-
methodology.pdf.
77
At https://aemo.com.au/-/media/files/gas/national_planning_and_forecasting/gsoo/2024/gas-demand-forecasting-methodology-2024.pdf.
78
At https://forecasting.aemo.com.au/.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 45

Inputs and assumptions

The following sections describe the individual model inputs and component forecasts. Where appropriate,
comparisons are made with this Draft 2025 IASR’s scenarios against relevant 2023 IASR scenarios.

3.3.1 Historical demand data

Input vintage • November 2024 for demand data

• November 2024 for loss data
• November 2024 for auxiliary load data

Status • Current view

Source • SCADA/EMMS/NMI Data

• Generation Information page
• AER, WA-based retailer Synergy and network operators

Update process • Continuously updated

Operational demand
Operational demand ‘as generated’ is collected through the electricity market management system (EMMS) by
AEMO in its role as the market operator. Operational demand ‘as generated’ refers to the demand that is served
from electricity that is generated from scheduled generating units, semi-scheduled generating units, and some
non-scheduled generating units79.

Generator auxiliary load

Estimates of historical auxiliary load are determined by using the auxiliary rates provided by participants through
AEMO’s Generation Information survey process. This is used to convert between operational demand ‘as
generated’ (which includes generator auxiliary load) and operational demand ‘sent-out’ (which is net of the
auxiliary component).

Network losses
The AER and network operators provide AEMO with annual historical transmission loss factors. The AER also
provides AEMO with annual historical distribution losses which are reported to the AER by distribution companies.
AEMO uses the transmission and distribution loss factors to estimate half-hourly historical losses across the
transmission network for each region in megawatts or megawatt hours (MWh).

Large industrial loads

AEMO’s Electricity Demand Forecasting Methodology defines a methodology for identifying large loads for
inclusion in the large industrial load (LIL) sector. AEMO collects the historical consumption of existing LILs from
National Metering Identifier (NMI) meter data.

Residential and business demand

AEMO splits historical consumption data (excluding industrial loads identified above) into business and residential
segments using a hybrid bottom-up and top-down approach, as detailed in Appendix A6 (Residential-business
segmentation) of the Electricity Demand Forecasting Methodology. The hybrid approach is required given the

79
A small number of exceptions are listed in Section 1.2 of https://www.aemo.com.au/-/media/Files/Electricity/NEM/Security_and_Reliability/
Dispatch/Policy_and_Process/Demand-terms-in-EMMS-Data-Model.pdf.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 46

Inputs and assumptions

inconsistent level of interval meter penetration in some regions, meaning that if insufficient penetration exists for
interval data (bottom up), then basic meter analysis is required (top down). The bottom-up approach is based on
sampling of AEMO residential meter data. The top-down approach considers consumption data provided by
electricity distribution businesses to the AER as part of their Economic Benchmarking Regulatory Information
Notice (RIN). AEMO must perform some calibration of the RIN data to bring it into alignment with AEMO’s
definition of delivered energy, as described in Appendix A6 of the Electricity Demand Forecasting Methodology.

In the WEM, AEMO applies the segmentation of residential and business historical consumption using a simplified
top-down approach. This process makes use of aggregated residential data provided by the Western Australian
government owned retailer Synergy, combined with AEMO metering data for LILs.

Distributed PV uptake and generation

AEMO sources historical PV installation data from the Clean Energy Regulator and applies a solar generation
model to estimate the amount of power generation at any given time. Refer to Section 3.3.7 for details.

3.3.2 Historical weather data

Input vintage November 2024

Status Current view

Source Bureau of Meteorology (BoM)

Update process Continuously updated

AEMO uses historical weather data for training the annual consumption and minimum and maximum demand
models as well as developing forecast reference year traces that provide a half-hourly representation of future
demand and supply patterns.

The historical weather data comes from the Bureau of Meteorology (BoM), using a subset of the weather stations
that BOM make available across Australia, as shown in Table 7, Table 8 and Figure 1.

AEMO selected these weather stations based on data availability and correlation with forecast consumption or
demand. AEMO’s current Electricity Demand Forecasting Methodology uses one weather station per region,
except where weather stations have been discontinued, however AEMO is currently consulting on an updated
Electricity Demand Forecasting Methodology that proposes to increase the spatial granularity of the forecasting
approach. This intends to introduce greater consideration of sub-regional differences, which will require additional
weather stations for each sub-region. Table 7 therefore includes the current regional weather stations, and Table 8
lists proposed weather stations for the sub-regions if the changed approach is adopted80.

80
The in-progress consultation on AEMO’s forecasting approach is available at https://aemo.com.au/consultations/current-and-closed-
consultations/2024-electricity-demand-forecasting-methodology-consultation.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 47

Inputs and assumptions

Table 7 Weather stations used in forecasting consumers electricity use (regional)

Regional weather stations

Region Station name Date range BoM site number

New South Wales Bankstown Airport AWS January 1968 – Now 066137

Queensland Archerfield Airport April 1929 – Now 040211

South Australia Adelaide (Kent Town) October 1993 – July 2020 023090

Adelaide (West Terrace) July 2020 – Now 023000

Tasmania Hobart (Ellerslie Road) January 1882 – Now 094029

Victoria Melbourne Regional Office January 1908 – January 2015 086071

Melbourne (Olympic Park) May 2013 – Now 086338

Western Australia Perth Metro February 1993 – Now 009225

Table 8 Weather stations used in forecasting consumers electricity use (sub-regional)

Proposed weather stations for NEM sub-regions

Region Sub-region Station name Date range BoM site number

New South Wales Central New South Dubbo Airport AWS January 1946 – Now 065070
Wales

New South Wales Northern New South Coffs Harbour Airport August 2013 – Now 059151
Wales

New South Wales Sydney, Newcastle & Bankstown Airport AWS January 1968 – Now 066137
Wollongong

New South Wales Southern New South Canberra Airport September 2008 – Now 070351
Wales

Queensland Central Queensland Rockhampton January 1927 – Now 039264

Queensland Gladstone Grid Gladstone Airport October 1993 – Now 039326

Queensland Northern Queensland Townsville Aero January 1940 – Now 032040

Queensland Southern Queensland Archerfield Airport April 1929 – Now 040211

South Australia Central South Australia Adelaide (Kent Town) October 1993 – July 2020 023090

Adelaide (West Terrace) July 2020 – Now 023000

South Australia Northern South Australia Port Augusta Aero July 2001 – Now 018201

South Australia South East South Mount Gambier (Blue Lake January 1975 – Now 026085
Australia Holiday Park)

Tasmania Tasmania Hobart (Ellerslie Road) January 1882 – Now 094029

Victoria Greater Melbourne and Melbourne Regional Office January 1908 – Jan 2015 086071
Geelong
Melbourne (Olympic Park) May 2013 – Now 086338

Victoria West and North Victoria Bungaree (Kirks Reservoir) August 1881 – Now 087014

Victoria South East Victoria Morwell (Latrobe Valley January 1984 – Now 085280
Airport)

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 48

Inputs and assumptions

Figure 1 Map of weather stations used in forecasting consumers electricity use, per NEM sub-region

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 49

Inputs and assumptions

Matters for consultation

• Will these weather stations provide appropriate weather information to apply to the NEM sub-regions when
forecasting consumers’ electricity use, including annual aggregate electricity consumption and importantly
the peak maximum, and minimum, demand conditions?

3.3.3 Historical and forecast other non-scheduled generators (ONSG)

Input vintage October 2024 for installed capacity (Generation Information page)
October 2024 for historical and forecast ONSG generation

Source • Generation Information page

• Settlements data
• NMI data
• DER Register

Update process Updated quarterly

AEMO reviews its list of other non-scheduled generation (ONSG, which is non-scheduled generation that excludes
rooftop solar) using information from AEMO’s Generation Information81 dataset obtained through surveys, and
supplements where applicable with submissions from network operators, the DER Register and relevant publicly
available information where appropriate.

For ONSG generation, AEMO uses the generators’ Dispatchable Unit Identifier (DUID) or NMI to collect historical
generation output at half-hourly frequency.

AEMO’s current view of ONSG is contained in the Generation Information page. As at the October 2024 release of
Generation Information page, used for the development of the energy and demand forecasts, aggregate capacity
by region is shown in Figure 2 below. Note that this excludes any ONSG that is used solely as peaking capacity, as
these generators are modelled as part of AEMO’s DSP forecast instead (see Section 3.3.15).

81
At https://aemo.com.au/en/energy-systems/electricity/national-electricity-market-nem/nem-forecasting-and-planning/forecasting-and-
planning-data/generation-information.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 50

Inputs and assumptions

Figure 2 Aggregate ONSG capacity, by NEM region (MW)

AEMO forecasts commissioning or withdrawal of ONSG generators based on firm commitment statuses of these
generators in the short term and applying historical trends of ONSG by technology type (for example, gas or
biomass-based cogeneration, or generation from landfill gas or wastewater treatment plants) for the Step Change
scenario in the long term.

For the Progressive Change scenario, the same withdrawal of capacity is modelled, but forecast growth is slightly
slower. The Green Energy scenario, on the other hand, has significantly more growth assumed for renewable
technologies (small-scale wind and biomass). Figure 3 shows the NEM-wide installed capacity for the three
scenarios.

Historical capacity factors by technology type are used to forecast generation using the projected installed
capacities, offsetting the electricity consumption in the forecast. AEMO’s current view on ONSG for producing the
forecasts is based on the Generation Information page released in July 2024.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 51

Inputs and assumptions

Figure 3 Forecast NEM-wide other non-scheduled generation capacity (MW)

3.3.4 Multi-sectoral modelling influences to demand forecasts

Input vintage Not included in this stage of the Draft 2025 IASR

Status In progress

Source CSIRO

Get involved Formal consultation on this input in Stage 2 of the Draft 2025 IASR.

AEMO has engaged CSIRO to model least-cost pathways for the Australian economy to achieve emissions targets
within the parameters of scenario-based demand drivers such as economic growth, energy efficiency,
electrification, CER and road transport EV, that may affect the domestic as well as Australia’s export economy.
Multi-sectoral modelling also considers the mix of energy forms appropriate to achieve these targets, including the
potential development of alternative gaseous fuels (such as hydrogen and biomethane).

Using the CSIRO and ClimateWorks Centre (CWC) AUS-Times model, the multi-sectoral modelling approach
provides whole-of-economy interactions, by simultaneously considering a range of options available to meet
scenario-specific emissions targets at the least cost. The emissions targets align to specific global temperature
outcomes, informed by the RCP and IEA WEO scenario definitions (see Table 5 and Section 3.2) for key scenario
parameters).

The options to transition Australia’s economy broadly align with four pillars of decarbonisation. The scenarios
consider all four pillars to varying degrees, to align with the scenario narratives and to reflect the uncertainty
around future technology improvements, costs, and barriers to deployment. These pillars complement traditional

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 52

Inputs and assumptions

component forecasts outlined in subsequent sections, considering scenario drivers that may not be readily
captured by trend-based or historical regression modelling.

The four pillars are:

• Energy efficiency to improve energy productivity and reduce energy waste.

• Decreasing carbon intensity of electricity generation to near zero through increasing penetration of
renewable energy generators.

• Switching away from fossil fuels to zero or near-zero emissions alternatives, including electrification and
alternative gases.

• Non-energy emissions reduction and offsetting of residual emissions through sequestration (mainly in the
land-use sector).

Figure 4 illustrates the scale of utilisation of the four pillars across the scenarios.

Figure 4 Forecast utilisation of the four pillars of decarbonisation, by scenario

The model outputs that will be explicitly used to inform this 2025 IASR include:

• Future energy consumption trends and fuel-switching opportunities, particularly the electrification of other
sectors of Australia’s economy. Energy consumption trends may also be adopted as long-term drivers for
forecast business mass market and LIL growth.

• National and NEM emissions pathways (see Section 3.2.3 for further details), including forecast needs for
emission sequestration via land use sequestration, direct air capture (DAC), and carbon capture and storage
(CCS).

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 53

Inputs and assumptions

• Domestic hydrogen demand, as a substitute for other energy sources, complementing assumed hydrogen
export demand in the scenarios (see Section 3.3.6 for further details).

The multi-sectoral modelling outcomes will be published in Stage 2 of the Draft 2025 IASR in February
2025.

3.3.5 Electrification

Input vintage Not included in this stage of the Draft 2025 IASR

Status In progress
Source CSIRO multi-sectoral modelling for non-road transport electrification

Update progress Non-transport electrification updates to be published in Stage 2 of the Draft 2025 IASR

Get involved Formal consultation on this input in Stage 2 of the Draft 2025 IASR.

Decarbonisation of the Australian economy requires emissions-intensive energy sources for residential,
commercial and industrial processes to shift towards low and no emissions alternatives. In considering
electrification, AEMO includes the potential electrification of future NEM loads (including the transport sector), and
expansion of existing grid-connected loads.

The cost-efficiency of electrification depends on many factors including appliance replacement costs, electricity
infrastructure capabilities and costs, and the availability of alternative low emissions fuels, such as hydrogen and
biomethane. The 2025 IASR scenarios therefore consider a range of electrification outcomes, with the Green
Energy scenario adopting both a high degree of electrification and fuel-switching to hydrogen.

In the residential and commercial building sectors, space heating, cooking, and water heating appliances can all
be electrified from gas or liquefied petroleum gas (LPG). Electrification of the transport sector is expected in all
scenarios, although the pace and magnitude of electrified transportation also varies across scenarios (transport
sector electrification is described in detail in Section 3.3.7).

The industrial sector comprises a range of subsectors, each with their own fuel use characteristics. While most oil
and gas demand can be electrified (or switched to alternative gases), high-heat processes are challenging to
electrify without further technological advances. Examples of such processes are the direct reduction process for
iron and steel, and high temperature blast furnaces. Scenarios requiring faster emissions reduction assume
greater technological advances to achieve the emissions reduction goals (potentially driven by domestic or
international research initiatives, or early-adopter or policy support).

The electrification forecasts, influenced by multi-sectoral modelling, will be published in Stage 2 of the Draft
2025 IASR in February 2025.

3.3.6 Fuel-switching to alternative gaseous fuels

Input vintage Alternative gas volumes not included in this stage of the Draft 2025 IASR. Biomethane production cost
estimates as at December 2024.

Source ACIL Allen (biomethane availability and production costs)

Updates since 2023 IASR Updates of fuel-switching to biomethane

Get involved Formal consultation on this input in Stage 2 of the Draft 2025 IASR.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 54

Inputs and assumptions

To achieve the emissions reductions targets outlined in the scenario narratives, fuel-switching away from fossil
fuels is required over time in all sectors. Natural gas can be substituted by electricity (discussed in Section 3.3.5),
as well as low or zero emissions molecular fuels such as hydrogen or biomethane. This section reports the
forecast activities to fuel-switch from solid, liquid and gaseous fossil fuels to alternative fuels, particularly those that
are low or zero emissions alternatives to electrification.

Hydrogen production

A number of hydrogen production projects are identifiable across the eastern states of Australia, as listed in
CSIRO’s HyResource82 project listing. Although every state has outlined hydrogen strategies the cost, timing and
magnitude of an eventual hydrogen economy within Australia is highly uncertain. Hydrogen developments may,
however, be significant in affecting the needs of the power system, and AEMO considers various hydrogen futures
within the Draft 2025 IASR scenarios.

The assumptions for hydrogen production, including for value-add commodity production, will be
published in Stage 2 of the Draft 2025 IASR.

Biomethane

While biomethane is a proven technology widely used in Europe83 and other countries, there is relatively low
existing production in Australia. Biomethane has the potential to provide a low or zero emissions molecular fuel
source to blend into gas pipelines, lowering the emissions intensity of gas use84. As such, it provides a
decarbonisation alternative to electricity for industries that cannot easily electrify their industrial processes.

The uptake for each scenario’s biomethane forecast, particularly in the short to medium term, will be informed by
gas production insights from surveyed gas market participants for the East Coast Gas Market’s GSOO, and further
influenced by the forecast that comes from the multi-sectoral modelling considering estimated available volumes
and forecast biomethane costs.

For the Draft 2025 IASR, AEMO engaged consultant ACIL Allen to forecast biomethane production cost and
available volumes by feedstock type, state, and scenario. Figure 5 shows a snapshot of ACIL Allen’s forecast for
the various feedstock available volumes in PJ per year by scenario, including production cost in $/gigajoule (GJ)
for selected years85.

82
CSIRO, HyResource, at https://research.csiro.au/hyresource/.
83
See New record for biomethane production in Europeshows EBA/GIE Biomethane Map 2022-2023 | European Biogas Association and
https://energy.ec.europa.eu/topics/renewable-energy/bioenergy/biomethane_en#:~:text=The%20Biomethane%20Industrial%20
Partnership%20(BIP,of%20its%20potential%20by%202050.
84
See https://www.dcceew.gov.au/sites/default/files/documents/national-greenhouse-accounts-factors-2022.pdf (page 13).
85
Detailed data sets can be found in the ACIL Allen reports at https://aemo.com.au/consultations/current-and-closed-consultations/2025-iasr.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 55

Inputs and assumptions

Figure 5 ACIL Allen biomethane available volume and production cost estimates by feedstock and scenario

The estimated available volumes provided above will be an input into multi-sectoral modelling.

Draft biomethane production forecasts per scenario will be published in Stage 2 of the Draft 2025 IASR in
February 2025.

3.3.7 Consumer energy resources

Input vintage December 2024

Status Draft

Source • CSIRO
• Green Energy Markets
• Clean Energy Regulator

Updates since 2024 Updated with new consultant forecasts in 2024 and latest historical data
Forecasting Assumptions
Update

CER predominantly describes consumer-owned devices that can generate or store electricity and includes flexible
loads that can alter demand in response to external signals. In AEMO’s forecasting approach, CER refers to
embedded solar systems and battery devices within the distribution system, while energy management systems
are considered in AEMO’s forecasting of demand flexibility (in demand-side participation forecasts) and energy
efficiency. Customer’s solar and battery devices may operate passively (such that they operate without regard to
the broader power system conditions but instead with a customer-centric behaviour) but also may have the
‘smarts’ to actively manage and minimise a customer’s energy import and export from the grid.

AEMO’s CER forecasts include small-scale embedded generation such as residential and commercial rooftop PV
systems (less than 100 kilowatts [kW]), battery storage, and EVs. Larger PV systems between 100 kW and 30 MW

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 56

Inputs and assumptions

(referred to as PV non-scheduled generation, or PVNSG) may also be installed by larger energy consumers and
are included in this section; rooftop PV and PVNSG forecasts are referred to as distributed PV.

Given the importance of CER in the energy transition, AEMO commissioned two expert consultants – CSIRO and
Green Energy Markets (GEM) – to support the development of the CER forecasts. The two consultant forecasts
use the same scenario narratives, and both use uptake models that focus on purchase decisions from an
economically rational consumer-focused behaviour perspective.

AEMO’s forecasts of CER per scenario have been consolidated from the two consultants’ forecasts according to
Table 9 below, with ‘average’ indicating a simple average of GEM and CSIRO. AEMO proposes this scenario
mapping, considering that this selection maintains the integrity of the drivers of CER uptake presented in each
consultant’s forecast, while matching appropriately to the expected contributions from CER within each scenario’s
key parameters (outlined earlier in Table 2). In general, GEM’s forecasts reflect a more buoyant outlook, whereas
CSIRO’s forecasts reflect a relatively more conservative consumer adoption.

Table 9 Consultant scenario mapping for CER

Scenario Green Energy Step Change Progressive Change

Rooftop PV forecast mapping Average Average CSIRO

PVNSG forecast mapping GEM GEM CSIRO

Battery and VPP forecasts mapping Weighted average Weighted average CSIRO
(1/3 GEM + 2/3 CSIRO) (1/3 GEM + 2/3 CSIRO)

Details of the key assumptions and methodologies of each consultant’s forecast are provided in the consultant
reports that supplement this IASR (see Appendix A2). The forecasts reflect up-to-date views on actual
installations, and reflect the economic and population forecasts (in Section 3.3.8). The forecasts also consider
each consultant’s updated views on tariff options, technology costs, and system size projections.

AEMO notes stakeholder interest in how distribution network limitations may impact the growth and operation of
CER. Each consultant’s forecast approach focuses on the economic value for PV and battery installation. That
value is primarily derived from reducing or avoiding electricity purchases from the grid, with very low payback
from grid exports given low feed-in-tariffs. The approach does not explicitly consider distribution network
constraints. The National CER Roadmap is providing renewed focus on the challenges and opportunities to
integrate CER into the power system, and AEMO’s adjusted ISP Methodology in response to the Energy and
Climate Ministers’ ISP Review86 will begin to explore distribution network interaction with CER operation. AEMO
considers that the forecasting approach that does not consider distribution constraints, coupled with the ISP
Methodology, will appropriately capture opportunities for distribution investments and other distributed resources
in each scenario’s development opportunities in the ISP.

86
See https://www.energy.gov.au/energy-and-climate-change-ministerial-council/energy-ministers-publications/energy-ministers-response-
review-integrated-system-plan.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 57

Inputs and assumptions

Distributed PV

This section comprises rooftop PV and PVNSG forecasts, which together make up total distributed PV. The Draft
2025 Inputs and Assumptions Workbook provides greater detail on each CER component, including system count
and system size assumptions.

Current installed capacity estimates for distributed PV are sourced from the Clean Energy Regulator87, with
AEMO’s DER Register available as a comparison. The forecasts were based on the latest actual installation data
available at the time of production (end of June 2024), with 20.6 GW of installed capacity for rooftop PV in the
NEM (23.2 GW including the WEM), and 1.48 GW for PVNSG in the NEM (1.53 GW including the WEM).
Consumers have continued to install larger PV systems, with the average rooftop PV system size now being
approximately 8.5 kW per installation (although the most common installation size remains approximately 6-7 kW
per installation). This trend of larger systems is expected to continue as consumers increase their electricity
consumption with electrification (particularly for EVs). It is expected that system sizes will reach a natural limit over
time, as roof space availability and/or the size of the customer load will eventually cap the current trend.

Rooftop PV
AEMO forecasts that the market penetration of rooftop PV will continue to rise. PV system penetration on houses
and semi-detached dwellings (prime candidates for PV installations) currently sits at around 39%, and in 2050 that
is projected to increase to 69% (for the Step Change scenario). While there is no defined saturation point in
AEMO’s forecasts, the effect of shading, dwelling size and consumer’s financial capacity to invest in these
resources will limit uptake to well below 100%.

Figure 6 below demonstrates the forecasts for each scenario in terms of rooftop PV capacity.

Figure 6 Actual and forecast rooftop PV installed capacity (NEM and WEM), 2016-17 to 2054-55 (GW [degraded])

Progressive Change
Step Change or casti ss tio s at
Green Energy Exports ra t
Actuals

87
Latest data is provided by the Clean Energy Regulator directly to AEMO and is complemented with data available through their website:
https://cer.gov.au/markets/reports-and-data/small-scale-installation-postcode-data.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 58

Inputs and assumptions

The forecasts moderate those that were provided in AEMO’s 2024 Forecasting Assumptions Update, particularly
in the longer term, as AEMO has considered the causes for CSIRO’s lower uptake forecast are appropriate to
have a greater influence in the forward trend than was previously available. While average system size is still
forecast to grow, AEMO considers that the growth of system sizes is more likely to reflect a trend between the
forecasts of each consultant, and in applying this lesser system size growth trajectory, the uptake trajectory in
some scenarios (particularly Step Change) is lower.

PV non-scheduled generation
Growth in larger-scale PV systems (on commercial or industrial facilities for example) is expected to provide a
growing contribution as technology costs decline, however at a much lower scale than rooftop PV systems. As
shown in Figure 7, there is reasonable uncertainty captured by the scenario spread, with PVNSG’s overall capacity
forecast at up to 8-22% of the rooftop PV capacity across scenarios by end of June 2050

Figure 7 Actual and forecast PVNSG capacity (NEM and WEM), 2016-17 to 2054-55 (GW [degraded])

Progressive Change
Step Change or casti ss tio s at
Green Energy Exports ra t
Actuals

Aggregate distributed PV
Figure 8 below aggregates the rooftop PV and PVNSG components, to construct the total aggregate distributed
PV forecast.

Figure 9 shows a breakdown between rooftop PV and PVNSG for the Step Change scenario, demonstrating that
rooftop PV provides the majority of distributed solar installations.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 59

Inputs and assumptions

Figure 8 Actual and forecast distributed PV installed capacity (NEM and WEM), 2016-17 to 2054-55 (GW
[degraded])

Progressive Change
Step Change or casti ss tio s at
Green Energy Exports ra t
Actuals

Figure 9 Actual and forecast rooftop PV and PVNSG installed capacity (NEM and WEM) for the Step Change
scenario, 2016-17 to 2054-55 (GW [degraded])
120
Historical
100

80

60

40

20

Rooftop PV PVNSG

Embedded energy storage

Distributed residential and commercial battery systems are an emerging consumer energy resource, and one that
provides significant opportunity to increase the flexibility of consumer load. Investment, and in particular
coordination, of these assets (and other controllable devices) can provide a means to change the demand profile
of the power system, reducing the magnitude of maximum demands and reducing the challenges associated with
operating during minimum load conditions.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 60

Inputs and assumptions

AEMO’s forecast of embedded energy storages considers the insights provided by each of the CER consultants:

• GEM’s forecasts assumed that battery costs to consumers will fall significantly in the next 10 years, while
battery systems will increase in size, to approximately 20 kilowatt hours (kWh) by 2050. Much of this growth is
anticipated as consumers are financially rewarded to embrace coordination, through VPPs.

• CSIRO forecasts a more gradual cost reduction, approximately half the rate of decline to GEM, with battery
system growth largely mirroring the pace of PV system size growth.

AEMO has considered these broad trajectories and propose to weight the two forecasts to produce each
scenario’s outlooks, as per Table 9 above. This approach recognises the slower growth in CSIRO’s forecasts for
Progressive Change, while recognising greater potential development in the other two scenarios. AEMO does not
propose to evenly weight the two forecasts, considering that the scale of positive change required to produce
GEM’s outcomes as ambitious. Considering the potential opportunity for the ISP to identify distribution
investments and distributed resources beyond the CER forecasts, AEMO considers this approach retains an
appropriate trajectory with further upside potential.

The resulting forecasts are shown in Figure 10 below, which includes non-aggregated and aggregated batteries:

Figure 10 Distributed battery capacity forecast for the NEM+WEM (GW), including non-aggregated and
aggregated batteries
60

50

40

30

20

10

Progressive
2024 Change
FAU Green Energy Exports 2025 Green
Step Change or casti ss Energy
tio s Exports
at
2024 FAU Progressive Change ra t 2025 Progressive Change
Green
2024 Energy
FAU StepExports
Change 2025 Step Change

Battery operation is likely to be a mix of simple “solar shifting” and more sophisticated time-based or price-based
operation to maximise the value to the householder. In practice, there may be little difference between the
operating modes with most charging occurring during periods of high solar PV output and most discharging
occurring at periods of high consumption.

AEMO’s forecasts include a significant proportion of consumers will choose to join VPPs to gain greater (potential)
financial reward from their batteries via the coordination provided by their retailer or a third-party aggregator. This
is described in the section below.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 61

Inputs and assumptions

Community batteries
An emerging sector for energy storage is "community" (or “neighbourhood”) batteries, which typically refers to
sub-utility-scale batteries installed in the distribution networks. Batteries at this scale are expected to help support
the distribution networks in managing volatility in local demand, driven largely by the ongoing uptake of rooftop
solar installations. The majority of community batteries expected to be installed in the short term are funded by
federal and state government programs. AEMO’s CER forecasting approach does not specifically identify
community battery installations, but the ISP may identify distributed resources to complement the CER forecasts.

Aggregated energy storage – virtual power plants

A VPP broadly refers to the involvement of an aggregator to coordinate (or ‘orchestrate’) CER via software and
communications technology, to deliver energy services similar to large-scale inverter-based generation and
storage developments. This contrasts with household battery installations which are configured to offset
household energy costs by reducing the volume of grid-supplied energy and increase self-consumption of
complementary PV generation.

While battery operation and management will be very similar for each approach, AEMO’s modelling
methodologies assume that VPP aggregators can improve the that batteries can provide to discharge when most
valuable to the power system during tight supply conditions, and charge when most valuable to the power system
during low load conditions.

If CER is coordinated at scale and in a predictable and reliable manner, there may be a significant reduction for
the scale of network and utility-scale investments needed to firm renewable energy supplies to maintain reliable
and secure supply.

There are currently around 20 VPP providers in the NEM+WEM, and technical work programs (for example by
Project Symphony88 and by Project EDGE89) have demonstrated the feasibility and end-to-end technical
capabilities of the technology.

Despite the long-term potential, the uptake of VPP products to date has been modest. AEMO’s forecasts provide a
wide band between the scenarios to reflect the uncertainty of both uptake and relative scale of coordination. The
companion reports from AEMO’s consultants demonstrate differing views of success, with success hinging on
what support is provided to consumers to adopt battery systems, considering the various state government
policies supporting battery uptake. Likewise, the National CER Roadmap is also focused on improving CER
integration, which may influence the social licence and technical capability of battery systems to be coordinated in
the manner that is forecast.

The VPP capacity outlook reflecting AEMO’s consolidation of the consultant inputs is shown in Figure 11 below.
For Step Change, the 2025 scenario is purposefully designed to recognise the slower embrace of battery uptake,
and has a slower pace of adoption as compared with the 2023 IASR scenarios, and the most recent forecasts.
Slower adoption also is anticipated for Green Energy, although the magnitude of that forecast is closer to the
previous forecasts.

88
See https://aemo.com.au/en/initiatives/major-programs/wa-der-program/project-symphony.
89
See https://aemo.com.au/en/initiatives/major-programs/nem-distributed-energy-resources-der-program/der-demonstrations/project-edge.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 62

Inputs and assumptions

Figure 11 Aggregated VPP capacity for NEM+WEM (GW)

40

30

20

10

Progressive
2024 Change
FAU Green Energy Exports
Step Change or2025
castiGreenssEnergy
tio Exports
s at
2024 FAU Progressive Change ra t 2025 Progressive Change
Green Energy Exports
2024 FAU Step Change 2025 Step Change

Matters for consultation

• Are the CER forecasts suitable for their respective scenarios? What strategic factors do you consider may
influence CER projections?

Electric vehicles

This section will be updated in Stage 2 of the Draft IASR.

3.3.8 Economic and population forecasts

Input vintage October 2024

Status Final draft

Source • Deloitte Access Economics (DAE)

• ABS

Update process Forecasts may be rebased using the latest release of the national accounts if required, prior to
the publication of the Final 2025 IASR.

In 2024, AEMO engaged Deloitte Access Economics (DAE) to develop long-term economic forecasts for each
Australian state and territory. DAE developed the economic forecasts using its proprietary macro-econometric
model, which is described in more detail in its report 90. Inputs and drivers to the economic model include factors
such as domestic production, labour market conditions, and prices and wages, in addition to physical91 and

90
Deloitte Access Economics: Economic forecasts 2024-25, at https://aemo.com.au/consultations/current-and-closed-consultations/2025-iasr
91
Physical risks associated with climate change in Australia cover the damages that are likely to affect land, labour, and capital.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 63

Inputs and assumptions

transition92 risks associated with climate change. The economic forecasts are used as a key input to AEMO’s
energy and demand forecasts.

Across all scenarios over the forecast period, assumed variations in the drivers of economic growth (demographic
profiles, labour productivity growth, decarbonisation pathways, and global conditions) result in divergent economic
futures. Table 10 details the key assumptions and summary results for the three scenarios, including both variants
of the Green Energy scenario. In total, four projections are therefore provided.

Table 10 Economic forecast details by scenario

Scenario Forecast annual Scenario details

economic growth
(GDP)

Step 1.8% • Step Change is the central scenario for the economic forecasts.
Change • An ageing population and declining productivity growth place downward pressure on economic
growth over the forecast period.
• Australia’s decarbonisation pathway limits emissions and constrains economic growth. States and
territories with emissions intensive industries see lower rates of economic growth relative to the
national average.

Progressive 1.3% • Progressive Change is a downside scenario relative to Step Change.

Change • Progressive Change assumes slower population and productivity growth, as well as reduced
climate change action coordination.
• A smaller and less productive economy (relative to Step Change) contends with a heavier climate
change burden.
Green 2.5% • Green Energy Exports is an export orientated upside scenario relative to Step Change.
Energy • Green Energy Exports assumes higher population growth and productivity growth and lower
Exports climate change costs relative to Step Change.
• Global decarbonisation efforts support Australia’s green hydrogen industry. Mining activity slows,
but critical minerals output increases due to strong demand and targeted industrial policy.
• Investment in renewable energy infrastructure and hydrogen production supports the construction,
manufacturing, and utilities industries.

Green 2.5% • Green Energy Industries is a variation to the Green Energy Exports scenario.
Energy • Green Energy Industries is underpinned by the same population and productivity assumptions as
Industries Green Energy Exports, but also assumes that Australia does not export renewable hydrogen.
• By the end of the forecast period, manufacturing industry output is smaller by 12% relative to the
Green Energy Exports scenario.

Across all scenarios, the economic composition of the Australian economy is expected to change over time.
Throughout the forecast period, the share of Gross Value Added (GVA) attributed to the manufacturing and mining
industry is expected to decline, as industries which are relatively emissions-intensive come under pressure from
the physical and transition risks associated with climate change. Conversely, the share of GVA attributed to
commercial services is expected to increase.

Figure 12 illustrates the predicted economic composition of the NEM over the forecast period for the Step Change
scenario.

92
Transition risks arise from the mitigating actions taken in response to climate change, including policy and regulatory change, technological
developments, or shifting consumer preferences.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 64

Inputs and assumptions

Figure 12 Economic composition of the NEM, Step Change scenario

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

Commercial Services Division A Agriculture Forestry Fishing

Division B Mining Division C Manufacturing
Division D Electricity Gas and Water Supply Division E Construction
Division I Transport Postal and Warehousing

Population growth rates underpin rates of economic and productivity growth. Lower population growth has the
effect of Australia’s population ageing more rapidly. An ageing population weighs on productivity growth as labour
force participation decreases. Population assumptions are varied across the scenarios. Relative to the
Step Change scenario, the Green Energy Exports and Green Energy Industries scenarios forecast higher rates of
population growth, whereas the Progressive Change scenario forecasts reduced population growth consistent
with the scenario’s exploration of weaker economic activity (see Figure 13).

Figure 13 Population growth in the NEM by scenario

40
35

30
25
20

15
10

5
0

Actual Green Energy Industries

2024 Green Energy Exports Green Energy Exports
2024 Step Change Step Change
2024 Progressive Change Progressive Change
Note: The Green Energy Industries forecast follows a similar trajectory to Green Energy Exports, so it is not clearly visible in the figure above.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 65

Inputs and assumptions

Economic growth is expected to remain relatively slow throughout 2024-25 due to tight monetary policy, cost-of-
living pressures, and weakness in dwelling construction activity. In the short term, expected reductions in inflation
and interest rate pressures are forecast to increase Household Disposable Income (HDI) (see Figure 14) and
support economic growth as household consumption of goods and services accelerates throughout the economy.
HDI is driven by employment and wages growth, and limited by cost of living pressures. Higher HDI particularly
benefits industries producing discretionary and luxury goods, such as retail and hospitality. In the longer term, in
the Green Energy Exports and Green Energy Industries scenarios in particular, higher levels of forecast
productivity growth drive faster wage growth and consequently higher levels of HDI relative to the Step Change
and Progressive Change scenarios.

Figure 14 NEM household disposable income per capita by scenario

100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000

Actual Green Energy Industries

2024 Green Energy Exports Green Energy Exports
2024 Step Change Step Change
2024 Progressive Change Progressive Change

Note: The Green Energy Industries forecast follows a similar trajectory to Green Energy Exports, so it is not clearly visible in the figure above.

Economic growth diverges across the scenarios over the forecast period (see Figure 15). Higher population and
productivity growth, alongside targeted industrial policy and investments in renewable energy infrastructure, drive
increased economic growth in the Green Energy scenario variants (Green Energy Exports and Green Energy
Industries). Lower population growth, lower productivity growth, and increased climate change costs decrease
expected economic growth in the Progressive Change scenario.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 66

Inputs and assumptions

Figure 15 NEM aggregated Gross State Product by scenario

Actual Green Energy Industries

2024 Green Energy Exports Green Energy Exports
2024 Step Change Step Change
2024 Progressive Change Progressive Change

Note: The Green Energy Industries forecast follows a similar trajectory to Green Energy Exports, so it is not clearly visible in the figure above.

3.3.9 Households and connections forecasts

Input vintage June 2024

Status Current view

Source • ABS
• DAE
• AEMO meter database

Update process Will be updated in mid 2025 with the latest dwellings forecast and AEMO’s latest actual
connections data

Get involved FRG discussion in March/ April 2025 (WEM) and May 2025 (NEM)

AEMO’s forecast of underlying residential electricity consumption is mainly driven by forecast growth in electricity
connections. As Australia’s population increases, so does the expected number of new households which require
electricity connections.

AEMO estimates the number of new residential electricity connections by combining existing dwelling stock
information from the ABS and AEMO metering data, with forecast dwelling completions (newly constructed
dwellings net of dwelling demolitions) sourced from the economic consultancy.

AEMO uses the current number of connections as the starting point. The 2024 forecasts for the NEM (used in the
2024 NEM ESOO) started at a lower level compared to the 2023 forecasts, in part due to adjustments in how
existing connections were reported, as well as low dwelling completions at the time.

In the short term (3-5 years), lower dwelling completions persist, before recovering to an annual growth rate of
around 1.5%. In the Step Change scenario, connections are forecast to grow to around 15 million connections by

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 67

Inputs and assumptions

2054, which is approximately 800,000 more than forecast in the 2023 Step Change scenario. These additional
connections are backed by a higher population forecast in the longer term, compared to the 2023 forecasts.

The distribution of new connections is different between regions across the NEM, with increased connections in
New South Wales, Victoria and Queensland and reduced activity in the Australian Capital Territory, South
Australia and Tasmania compared to the 2023 forecasts.

Figure 16 shows the 2024 residential connections actual and forecast for all scenarios in the NEM. The
connections forecasts for the NEM and WEM will be updated in time for the final 2025 IASR.

Figure 16 2024 Actual and forecast NEM residential connections, all scenarios, compared to the 2023 forecast

3.3.10 Large industrial loads

Input vintage June 2024

Status Current view

Source • Surveys/Interviews
• AEMO meter database
• Network service providers
• LIL forecasts of multi-sectoral modelling
• Economic outlook
• Media search/announcements

Update process Will be updated in mid-2025 following AEMO’s industrial load surveying processes

Get Involved FRG discussion in March/ April 2025 (WEM) and May 2025 (NEM)

AEMO forecasts LILs independent of smaller medium and commercial business customers (termed the business
mass market [BMM] customer segment), to better account for their considerable energy consumption and specific
business circumstances, avoiding potential limitations of more general econometric models. Industrial loads also
tend to exhibit a different time-of-day and seasonal load profile to other electricity customers.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 68

Inputs and assumptions

The Electricity Demand Forecasting Methodology 93 defines LILs as loads that are over 10 MW at least 10% of the
latest financial year.

AEMO currently sources information regarding LILs from:

• Historical data at the NMI level.

• Surveys and interviews, with surveyed loads provided with forecast conditions consistent with the economic
outlook for each scenario, to increase survey consistency.

• Information request responses from NSPs on prospective and newly-connecting loads.

• Media searches and company announcements, such as on the ASX for Australian listed companies.

LIL forecasts therefore cover the projected energy consumption of all significant industrial customers, including
existing ones, new market entrants, and prospective projects.

The LIL forecasts include prospective projects that are considered committed loads, and take into account start
dates and likely growth rates over the outlook period. AEMO proposes to broaden the consideration of
prospective loads that are not currently committed, but are likely to impact electricity consumption in the medium
to longer term. A detailed description of AEMO’s consideration of prospective projects is described in the
Electricity Demand Forecasting Methodology 94.

When information on the expected energy consumption of prospective projects is not available, AEMO applies the
load factor of similar existing industrial loads to the rated demand. Further, based on information from NSPs and
media searches, AEMO may reduce annual consumption and rated demand depending on the likelihood of a
project being developed, and revise the timing of projects if delays are identified. AEMO may also consider
gradually ramping up consumption of a prospective project, if the full load is not likely to be reached shortly after
commissioning.

Figure 17 and Figure 18 compare the 2023 and 2024 LIL electricity consumption forecasts for the NEM and WEM,
respectively. These forecasts will be updated in time for the final 2025 IASR, acknowledging the opportunity for
engagement via the FRG outlined in the table at the start of this section.

Existing NEM LILs accounted for 27% of the total delivered electricity in 2023-24. Based on the 2024 forecasts,
LIL growth is expected to be primarily driven by data centres, mining, and manufacturing expansions. In the
medium to long term, the forecasts are informed by projected growth from mining and manufacturing sectors
identified by multi-sectoral modelling, driven by decarbonisation objectives and declining electricity costs,
particularly from renewables.

The Progressive Change scenario for the NEM shows drops in consumption in the short to medium term,
accounting for challenging economic conditions resulting in closure risks for major electricity consumers. That
scenario explicitly includes closures of major industrial facilities across the NEM to enable investigation of

93
AEMO is presently consulting on the Electricity Demand Forecasting Methodology, and while a change to this definition is not anticipated,
the LIL definition will be determined in that document. The Draft 2025 IASR describes the current definition, and any changes to the method
will be reflected in future LIL forecast updates.
94
See Section 2.1 of the 2022 Electricity Demand Forecasting Methodology for criteria on committed projects, at https://aemo.com.au/-
/media/files/electricity/nem/planning_and_forecasting/nem_esoo/2022/forecasting-approach-electricity-demand-forecasting-
methodology.pdf. This methodology is currently under consultation and may change – see https://aemo.com.au/consultations/current-and-
closed-consultations/2024-electricity-demand-forecasting-methodology-consultation.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 69

Inputs and assumptions

over-investment risks in the ISP. The scenario is not forecasting the possible closure of key facilities, but is
assuming possible closure outcomes to enable appropriate exploration of investment risks. This is a key feature of
the scenario’s narrative.

Existing WEM LILs accounted for 32% of total delivered electricity in the Capacity Year95 2023-24. WEM LIL growth
in the 2024 forecasts is driven by expansions in lithium mining and refining, and a proposed desalination plant.

Figure 17 2024 NEM LIL electricity consumption forecast compared to the 2023 forecast (terawatt hours [TWh])

Notes:
• A number of industrial sites were re-classified as LILs for the 2024 NEM ESOO, lifting the forecast and historical data compared to the 2023 NEM
ESOO.
• The forecasts contain loads from existing and committed data centres, however AEMO is proposing to treat data centres as a separate business
customer segment for 2025 publications onwards.

95
A capacity year is a 12-month period used for planning and accounting in the WEM, commencing in 08:00 Trading Interval on 1 October and
ending in 07:30 Trading Interval on 1 October of the following calendar year

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 70

Inputs and assumptions

Figure 18 2024 WEM LIL electricity consumption forecast compared to the 2023 forecast (TWh)

Liquified natural gas

Queensland’s LNG industry represents a substantial NEM load, consuming approximately 5% of AEMO’s total
business consumption category in the NEM in 2024-25. Due to their significance, AEMO forecasts LNG loads
separately for improved transparency.

Figure 19 shows the 2024 forecast for LNG electricity consumption.

The LNG forecasts estimate the expected electricity consumption drawn from the NEM by operations of coal seam
gas (CSG) fields, using data provided by the LNG consortia via the GSOO survey process. This data considers the
anticipated operating range of CSG facilities over the short to medium term until 2034-35. Beyond then, the
longer-term forecast is developed by extending the surveyed trend by scenario-dependent assumptions of global
natural gas production and LNG demand, particularly in the Asia Pacific. AEMO shaped the long-term trajectory of
scenarios in LNG forecasts based on trends observed in the 2023 IEA WEO96, whereby:

• The Progressive Change scenario has been aligned to the IEA’s Stated Policies Scenario (STEPS). Lower
global economic growth and reduced action towards global decarbonisation means LNG continues to be a
valued energy form and LNG export consumption stays flat post 2035.

• The Green Energy scenario features the greatest level of global decarbonisation action to reduce energy
sector emissions and assumes the Queensland LNG industry will consolidate to the equivalent of a single
remaining LNG train by 2050.

• The Step Change scenario features a moderate level of global decarbonisation ambition. In this scenario, LNG
export consumption falls between levels projected in the IEA’s Announced Pledges Scenario (APS) and
AEMO’s Green Energy scenario.

96
Where possible, AEMO’s LNG forecasts have been aligned with IEA forecasts of LNG export from Australia from the 2023 World Energy
Outlook (see https://www.iea.org/reports/world-energy-outlook-2023).

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 71

Inputs and assumptions

The international LNG market faces an uncertain near-term future, affected by geopolitical uncertainties in Europe
and the Middle East contributing to volatility, while large amounts of new liquefication capacity are forecast to
come online from Qatar and United States by 2030, as the transition towards cleaner energy and focus on energy
security are influenced by geographical locations. The degree of uncertainty regarding the future scale of LNG
export demand is reflected by the spread in forecast LNG electricity consumption across AEMO’s modelled
scenarios.

The Step Change and Green Energy scenarios are slightly higher in the short term than those forecast in the 2023
IASR, while the Progressive Change scenario remains the same.

Figure 19 LNG electricity consumption forecast

8
7
6
5
4
3
2
1
0

2023 Progressive Change 2024 Progressive Change

2023 Step Change 2024 Step Change
2023 Green Energy Exports 2024 Green Energy Exports
Actuals

3.3.11 Data centre forecast

Input vintage N/A

Status To commence early 2025

Source • Surveys/Interviews
• AEMO meter database
• NSPs
• Economic outlook
• Media search/announcements

Update process Will be developed in early to mid-2025

Get involved • AEMO’s Electricity Demand Forecasting Methodology consultation

• FRG consultation in March/ April 2025 (WEM) and May 2025 (NEM)

Data centres are a rapidly growing sector being driven by demand for cloud computing and artificial
intelligence-based applications. AEMO proposes to forecast data centres as a separate business customer

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 72

Inputs and assumptions

segment for 2025 publications onwards, and is consulting on this adjustment to its forecasting approach in the
Electricity Demand Forecasting Methodology 97.

Industrial-scale data centres that meet the definition of an LIL will be forecast at an individual site level. Key
parameters that may be considered include the ramp-up period (the duration for the new connection to reach full
load [which may take years]) and the load realisation factor (a scaling factor representing the amount of load that
will be realised, compared to the rated demand for that project).

For the remaining commercial-scale data centres, AEMO proposes to use either a regression-based approach
based on historical data (similar to the BMM methodology) or scenario-based assumptions supported by
consultant data.

Data centre sources of information include:

• Historical data at the NMI level.

• Surveys and interviews for large data centres (LIL size), with surveyed loads provided with forecast conditions
consistent with the economic outlook for each scenario, to increase survey consistency.

• Information request responses from NSPs regarding prospective and newly connecting loads.

• Media searches and company announcements, such as on the ASX for Australian listed companies.

• Public and commercially available records containing information on data centres.

AEMO proposes to publish an aggregated forecast comprising both industrial-scale and smaller commercial-scale
data centres, as a separate business customer segment.

3.3.12 Energy efficiency forecast

Input vintage Not included in this stage of the Draft 2025 IASR
Status In progress

Source • Strategy. Policy. Research. (SPR)

• CSIRO multi-sectoral modelling

Update process • SPR presented on preliminary policy-driven and autonomous energy efficiency forecasts to the FRG
in October 2024.
• Draft forecasts incorporating both consultancies to be published in Stage 2 of the Draft 2025 IASR.

Get involved FRG discussion in March/ April 2025 (WEM) and May 2025 (NEM)

AEMO has engaged two consultants, Strategy. Policy. Research. (SPR) and CSIRO, to model energy efficiency
forecasts for the 2025 IASR scenarios. SPR’s approach considers policy-led energy efficiency savings (expected
to be delivered by federal and state government measures) and market-led energy efficiency likely to occur
without policy intervention. CSIRO’s multi-sectoral modelling approach identifies the potential role of energy

97
For further details see https://aemo.com.au/consultations/current-and-closed-consultations/2024-electricity-demand-forecasting-
methodology-consultation.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 73

Inputs and assumptions

efficiency under varying decarbonisation pathways, using a combination of annual uptake rates by sector and
technology98, and scenario-specific variations based on relativities observed in the IEA WEO 2024 scenarios.

Both consultants use scenario-specific economic, population, dwellings and connections forecasts as inputs to
modelling energy efficiency, and these input assumptions drive further variation across the scenarios. In the case
of SPR, varying fuel shares over time will be informed by multi-sectoral modelling, and the forecasts may also
consider developments that exceed current levels of policy support, reflecting growth in market or (expanded)
policy-driven developments that are aligned to the scenario parameters.

Compared to the 2023 IASR, the updated modelling will incorporate the following key changes:
• Greater alignment between SPR’s approach to modelling energy efficiency and the energy efficiency estimates
developed by CSIRO as part of multi-sector modelling.

• Energy efficiency improvements that will assist Australia’s largest industrial facilities to reduce their emissions
are now influenced by reforms to the Safeguard Mechanism that came into effect in July 2023. Industrial
energy efficiency savings attributable to the Safeguard Mechanism will be higher than previous IASR
publications.

• Inclusion of Clean Energy Finance Corporation (CEFC) Household Energy Upgrades Fund (HEUF).

SPR presented preliminary forecasts for the three scenarios to the FRG in October 2024 99. Further modelling
results will be published in Stage 2 of the Draft 2025 IASR.

3.3.13 Appliance uptake forecast

Input vintage June 2024

Status Interim

Source • Department of Industry, Science, Energy and Resources (DISER), 2021 Residential Baseline Study for
Australia and New Zealand for 2000 – 2040, available at www.energyrating.gov.au
• Economic forecasts (Section 3.3.8)

Update process Update for latest economic forecasts

Get involved FRG discussion in March/ April 2025 (WEM) and May 2025 (NEM)

AEMO used data from the former Federal Government Department of the Environment and Energy (now the
Department of Climate Change, Energy, the Environment and Water [DCCEEW]) to forecast the growth in
appliances per connection in the residential sector. The data allowed AEMO to estimate changes to the level of
energy services supplied by electricity per households across the NEM.

98
Based on ClimateWorks Australia’s (2014) Deep Decarbonisation Pathways Project, at https://www.climateworkscentre.org/wp-content/
uploads/2014/09/climateworks_pdd2050_initialreport_20140923-1.pdf and ClimateWorks Australia’s (2016) Low Carbon. High Performance:
Modelling Assumptions, prepared for ASBEC (Australian Sustainable Built Environment Council), at https://www.asbec.asn.au/wordpress/wp-
content/uploads/2016/05/160509-ClimateWorks-Low-Carbon-High-Performance-Modelling-Assumptions.pdf.
99
See FRG Meeting #7 on 16 October 2024. Meeting materials are available for download at: https://aemo.com.au/en/consultations/industry-
forums-and-working-groups/list-of-industry-forums-and-working-groups/forecasting-reference-group-frg.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 74

Inputs and assumptions

Energy services here is a measure based on the number of appliances per appliance category, their usage hours,
and their capacity and size (see Appendix A5 of AEMO’s Electricity Demand Forecasting Methodology for details
on the methodology used).

Figure 20 shows the appliance uptake trajectories applied to the consumption forecasts for the 2024 NEM ESOO,
compared with the 2023 NEM ESOO. AEMO will update the trajectories before the release of the final 2025 IASR
for both the NEM and WEM, using the latest economic forecasts available.

Figure 20 Residential appliance uptake trajectories for the NEM, consumption change relative to base year (2024),
2023-24 to 2054-55 (TWh)

3.3.14 Electricity price indices

Input vintage June 2024

Status Current view

Source • AEMO internal wholesale price forecasts.

• Transmission costs from the 2024 ISP’s optimal development path100.
• ASX Energy Electricity Futures.
• AER Determinations and Access Arrangements101.
• Australian Energy Market Commission (AEMC) annual Residential Electricity Price Trends, 2024
report102,103.
• Australian Competition and Consumer Commission (ACCC) Inquiry into the National Electricity
Market report - November 2022104.
• Synergy wholesale prices (WEM)

100
At https://aemo.com.au/en/energy-systems/major-publications/integrated-system-plan-isp/2024-integrated-system-plan-isp.
101
At https://www.aer.gov.au/industry/registers/determinations.
102
At https://www.aemc.gov.au/market-reviews-advice/residential-electricity-price-trends-2024.
103
As outlined in Table 11, AEMO uses ASX Energy electricity futures to inform the short term wholesale price trends rather than the 2021
AEMC derived forecasts. An updated AEMC Residential Electricity Price Trends report was released in November 2024, and AEMO will
consider its insights before consulting on and finalising this component.
104
At https://www.accc.gov.au/about-us/publications/serial-publications/inquiry-into-the-national-electricity-market-2018-25-reports/inquiry-into-
thenational-electricity-market-report-november-2022.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 75

Inputs and assumptions

• Western Australia State Budget (WEM)

Update process • Retail price forecasts are updated with components from the latest available AER pricing
proposals and transmission determinations, AEMO wholesale price forecasts, and transmission
costs associated with the latest available ISP.
• Retail price forecasts are updated annually.

Get involved FRG consultation in May 2025 (NEM).

Electricity prices are assumed to influence consumption through short-term behavioural changes (such as how
electric-powered devices are used, or how energy consumption is managed), and through longer-term structural
changes (such as decisions to invest in CER).

Figure 21 illustrates the retail price indices determined for the 2023 and 2024 NEM ESOOs for the Progressive
Change, Step Change, and Green Energy scenarios. The retail price indices for the NEM and WEM will be
updated in time for the final 2025 IASR.

Figure 21 NEM Residential retail price forecasts, 2024-25 to 2054-55

1.200

1.000

0.800

0.600

0.400

0.200

0.000

2023 Green Energy Exports Green Energy Exports

2023 Step Change Step Change
2023 Progressive Change Progressive Change

Note: Price weighted by household consumption per region.

Prices are expected to trend downwards until the early 2030s as significantly more low-cost renewable energy
generation is expected to come online. Prices are expected to rise in 2028-29, driven by the expected retirement
of coal power stations and forecast delays to some VRE and battery storage projects. Some price volatility is
expected in the mid-2030s as traditional thermal generation is phased out and replaced by renewables with
firming from utility-scale battery storage. Modest increases in wholesale prices in the 2040s are projected due to
the increased penetration of flexible gas power generation. Gradual increases in network charges beyond the
2040s are driven by transmission investment costs required to meet the ISPs optimal development path for each
scenario. The difference in residential retail price trajectories between scenarios represents a differing pace and
pathway of decarbonisation, including the shift to renewables and the transformation of the transmission and
distribution networks.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 76

Inputs and assumptions

AEMO’s retail price forecasts are formed from bottom-up projections of the various components of retail prices.
Table 11 details the various price inputs used, and their incorporation into the 2024 scenarios. AEMO proposes a
similar treatment for the 2025 IASR scenarios, to apply in the 2025 ESOO and 2026 ISP, with updated inputs as
available prior to applying AEMO’s forecasting approach.

Table 11 Retail price input settings by scenario

Scenario Progressive Change Step Change Green Energy

Wholesale • Short term (up to FYE 2027): • Short term (up to FYE 2027): • Short term (up to FYE 2027):
component Blend of ASX Futures and 2024 ISP Blend of ASX Futures and 2024 ISP Blend of ASX Futures and 2024 ISP
Progressive Change. Step Change scenario. Green Energy Exports scenario.
• Longer term (FYE 2028 onwards): • Longer term (FYE 2028 onwards): • Longer term (FYE 2028 onwards):
Solely based on wholesale price Solely based on wholesale price Solely based on wholesale price
trends informed from the 2024 ISP. trends informed from the 2024 ISP. trends informed from the 2024 ISP.

Transmission • Short term (up to FYE 2029): AER • Short term (up to FYE 2029): AER • Short term (up to FYE 2029): AER
costs pricing proposals and pricing proposals and pricing proposals and
determinations actuals (latest determinations actuals (latest determinations actuals (latest
available). available). available).
• Longer term (FYE 2030 onwards): • Longer term (FYE 2030 onwards): • Longer term (FYE 2030 onwards):
Forecast charges based on forecast Forecast charges based on forecast Forecast charges based on forecast
transmission network transmission network transmission network
augmentations per the 2024 ISP augmentations per the 2024 ISP augmentations per the 2024 ISP
Progressive Change scenario. Step Change scenario. Green Energy Exports scenario.

Distribution • Short term (up to FYE 2029): AER • Short term (up to FYE 2029): AER • Short term (up to FYE 2029): AER
costs pricing proposals and pricing proposals and pricing proposals and
determinations actuals (latest determinations actuals (latest determinations actuals (latest
available). available). available).
• Longer term (FYE 2030 onwards): • Longer term (FYE 2030 onwards): • Longer term (FYE 2030 onwards):
Same growth trajectory as Same growth trajectory as Same growth trajectory as
transmission costs. transmission costs. transmission costs

Environmental AEMC (2021) to FYE 2024 then AEMC (2021) to FYE 2024 then AEMC (2021) to FYE 2024 then
costs decline to zero by FYE 2030. decline to zero by FYE 2030. decline to zero by FYE 2030.

Retail ACCC (2022) derived residual. ACCC (2022) derived residual. ACCC (2022) derived residual.
component

The retail price indices are only used to inform annual electricity consumption forecasts and consider the potential
response from consumers to price. Consumption forecasts consider the price elasticity of demand; that is, the
percentage change in demand for a given change in price. The underlying price elasticity of demand that is used
to give effect to the price indices and influence the consumption forecasts is as per the 2023 IASR. Table 12
below provides the price elasticities of demand adopted across the modelled scenarios, where negative values
indicate a reduction in consumption resulting from a price increase.

Table 12 Price elasticities of demand for various appliances and sectors

Scenario Progressive Change Step Change Green Energy

Residential: baseload appliances 0 0 0

Residential: weather-sensitive appliances -0.10 -0.10 -0.10

Business: all load components -0.10 -0.10 -0.05

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 77

Inputs and assumptions

3.3.15 Demand side participation (DSP)

Input vintage June 2024

Status Current view

Source Historical meter data analysis and information submitted to the DSP Information portal in April 2024.

Updates since 2023 IASR • Current levels and committed/planned changes updated after summer 2023-24 to reflect most recent
information.
• Target levels to be maintained.

Get involved FRG consultation in May 2025 (DSP and WDR)

AEMO’s forecasting approach considers DSP explicitly in its market modelling, meaning that demand forecasts
reflect what demand would be in the absence of DSP 105. DSP accounts for the demand flexibility which often does
not have a regular and repetitive pattern; it occurs in response to a price trigger (to avoid high market prices) or
lack of reserve (LOR) conditions (LOR2 or LOR3)106. Due to the often-irregular pattern of DSP responses, they are
not captured by AEMO’s demand or supply forecasts, so they need to be forecast separately. This approach, most
recently updated in December 2023, remains relevant, yet may require further updates to address whether the
assumed levels accurately reflect future DSP capabilities and are not overly conservative considering potentially
increasing demand-side capabilities in near future (for example, load flexibility offered by VPPs).

AEMO estimates the current level of DSP using information provided by registered participants in the NEM
through AEMO’s DSP Information portal (DSP IP), supplemented by historical customer meter data. DSP
responses are estimated for various price triggers and AEMO assumes the 50th percentile of observed historical
responses is a reliable, central estimate of the likely response when the various price triggers are reached. The
DSP forecast also includes Wholesale Demand Response (WDR) contributions based on the WDR dispatch data;
WDR estimates are calculated as a weighted average response of dispatched WDR for each price trigger. Finally,
to forecast the total reliability response, the estimated DSP response during reliability events (which AEMO
defines as cases where an actual LOR2 or LOR3 is declared) is added to the price-triggered response. This
process is completely documented in AEMO’s Demand Side Participation Forecast Methodology 107.

In accordance with this methodology, AEMO uses existing and committed DSP only for the ESOO, representing
the current level discussed above with adjustments for committed changes to DSP as reported to AEMO through
the DSP IP, or through policy targets with supporting legislation implemented. For long-term planning studies like
the ISP, the quantity of DSP is grown to meet a target level by the end of the outlook period; except for the
Progressive Change scenario which assumes no growth in the current level of DSP participation. The target level,
defined as the DSP’s proportion relative to maximum demand, is linearly interpolated between the beginning and
end of the outlook period. The target level at the end of the outlook period aims to reach 8.5% of maximum
demand adoption scenario, informed by an international review of demand response potential (primarily in the

105
For further details, see Appendix 6 of 2024 ESOO, at https://aemo.com.au/-/media/files/electricity/nem/planning_and_forecasting/
nem_esoo/2024/2024-electricity-statement-of-opportunities.pdf.
106
See AEMO’s reserve level declaration guidelines, at https://www.aemo.com.au/-/media/files/electricity/nem/security_and_reliability/
power_system_ops/%20reserve-level-declaration-guidelines.pdf.
107
See DSP methodology at https://aemo.com.au/-/media/files/stakeholder_consultation/consultations/nem-consultations/2023/dsp-forecasting-
methodology-and-dsp-information-guidelines-consultation/final-stage/2023-dsp-forecast-methodology.pdf.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 78

Inputs and assumptions

United and Europe)108,109. This 8.5% figure represents an upper estimate, allowing for growth drivers both from
technology and policy schemes (such as WDR).

The settings for the current IASR scenarios are provided in Table 13 below:

• The Green Energy110 scenario assumes high growth in DSP, representing a future with highly engaged
consumers who, in addition to embracing CER technologies, value the savings from orchestrated DSP
programs over the convenience of fixed tariffs and uncontrolled demand.

• The Step Change scenario assumes moderate growth in DSP, reflecting moderate economic growth and
technology-led change.

• The Progressive Change scenario assumes no growth in DSP, maintaining the current penetration level into
the future due to a relatively poor economic outlook that limits the capability to install new technologies to
increase flexibility, hampered also by supply chain issues affecting demand-side innovations.

For New South Wales, the Peak Demand Reduction Scheme (PDRS) policy 111 aims at creating a financial incentive
to reduce electricity consumption during peak demand times in summer112. AEMO includes this scheme in all of
the above scenarios. The PDRS has been applied since 2022-23 with the target growing to 10% of forecast peak
demand by 2029-30, slightly fluctuating due to reaching the end-of-life for some batteries, and remaining flat from
2039-2040 onward. It is assumed that 25% of the PDRS target will be met through energy efficiency and battery
storage rather than DSP, with DSP adjustments made to avoid double counting. For any given year in New South
Wales, the higher value between the PDRS target and standard DSP growth will be used.

Table 13 Mapping of DSP settings to scenarios

Scenario Green Energy Step Change Progressive Change

DSP growth target High growth to reach 8.5% of peak Moderate growth to reach 4.25% No change from current levels of
overall demand by 2050, then remains of peak demand by 2050, then DSP (0% growth).
flat. remains flat.
New South Wales Started in 2022-23 with target Started in 2022-23 with target Started in 2022-23 with target
PDRS growing to 10% of peak demand growing to 10% of peak demand growing to 10% of peak demand
by 2029-30 and remaining flat by 2029-30 and remaining flat by 2029-30 and remaining flat
afterwards (summer only). afterwards (summer only). afterwards (summer only).

Matters for consultation

• Are the long-term DSP settings, grown to meet a target level by scenario informed by international review,
suitable for use in AEMO’s planning publications?

108
See Federal Energy Regulatory Commission (FERC), “A National Assessment of Demand Response Potential” (at
https://www.ferc.gov/sites/default/files/2020-05/06-09-demand-response_1.pdf) validated against DSP uptake statuses across the United
States (from https://www.ferc.gov/power-sales-and-markets/demand-response/reports-demand-response-and-advanced-metering).
109
See https://www.sia-partners.com/en/news-and-publications/from-our-experts/demand-response-study-its-potential-europe.
110
Note that the DSP does not include the flexibility provided by electrolysers, which is modelled separately.
111
See https://www.energy.nsw.gov.au/nsw-plans-and-progress/regulation-and-policy/energy-security-safeguard/peak-demand-reduction-
scheme.
112
This is for the state of New South Wales only. The NEM region of New South Wales also includes the Australian Capital Territory, so
adjustments are made to ensure the target reflects the New South Wales state demand only.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 79

Inputs and assumptions

3.4 Existing generator and storage assumptions

3.4.1 Generator and storage data

Input vintage October 2024

Status Current view

Source Participant survey responses

Update process Updated quarterly

AEMO’s Generation Information page 113 publishes data on existing, committed, and anticipated generators and
storage projects (size, location, capacities, seasonal ratings, auxiliary loads, full commercial use dates and
expected closure years), and information provided to AEMO on the pipeline of future potential projects. This
information is updated quarterly, with the most recently available information adopted for each of AEMO’s
planning publications (and clearly identified in each publication). The Draft 2025 IASR Assumption Workbook
includes details from the October 2024 publication. Further updates will be made prior to the finalisation of the
2025 IASR, and these updates will be considered in the 2025 ESOO and Draft 2026 ISP (unless material changes
are observed during the course of ISP modelling).

The resource availability for existing, committed, and anticipated VRE generation is modelled using half-hourly
generation profiles as described in Section 3.6.2. Timings for generator closures and their application in AEMO’s
forecasting and planning approaches are described in Section 3.4.4.

3.4.2 Technical and other cost parameters (existing generators and storages)

Input vintage December 2024

Status Draft

Source Various, see below

Update process Updates will be dependent on feedback received on this Draft 2025 IASR

Updates since 2023 IASR Updated based on October 2024 Generation Information and Clean Energy Regulator’s Electricity sector
emissions and generation 2022-23.

AEMO has sourced the operating and cost parameters of existing generators and storages from several different
sources, including AEMO internal studies 114. They include:

• AEMO’s Generation Information page.

• Aurecon, 2020 to 2024 Energy Technology Cost and Technical Parameter Review.

• GHD, 2018-19 AEMO Energy Technology Cost and Technical Parameter Review.

• AEP Elical, 2020 Assessment of Ageing Coal-Fired Generation Reliability.

113
At https://aemo.com.au/en/energy-systems/electricity/national-electricity-market-nem/nem-forecasting-and-planning/forecasting-and-
planning-data/generation-information.
114
Consultant reports and data books from GHD, Aurecon and AEP Elical are available at https://aemo.com.au/consultations/current-and-
closed-consultations/2025-iasr.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 80

Inputs and assumptions

• Generator surveys.

• Clean Energy Regulator, Electricity sector emissions and generation 2022-23.

• Specific adjustments to the above sources if required, based on confidential or non-confidential engagement
with specific generators or developers.

The specific parameters obtained from these sources are summarised in Table 14 below.

Table 14 Sources for technical and cost parameters for existing generators

Source Technical and cost parameters used in AEMO’s inputs and assumptions

AEMO’s Generation Information page • Maximum capacities

• Seasonal ratings (10% probability of exceedance [POE] summer, typical
summer and winter)
• Auxiliary loads
• Reserves
• Commissioning and retirement dates

GHD 2018-19 AEMO Energy Technology Cost and • Heat rates

Technical Parameter Review (for use for existing • Maintenance rates
generators as of 2018)
• Fixed and variable operating and maintenance costs
• Ramp rates
• Minimum up and down time

Aurecon 2020 to 2024 Energy Technology Cost and • Heat rate curves used for calculating complex heat rates
Technical Parameter Review (primarily for new • Heat rates
entrant generators but also referred to for some
existing generators since 2019) • Fixed and variable operating and maintenance costs
• Ramp rates
• Minimum stable levels

Generator surveys • Unplanned outage rates

AEP Elical 2020 Assessment of Ageing Coal-Fired • Assessment of forward-looking coal-fired generator reliability
Generation Reliability

AEMO internal studies • Complex heat rates, informed by Aurecon and GHD
• Minimum stable levels
• Ramp rates
• Minimum and maximum capacity factors

Clean Energy Regulator, Greenhouse and energy • Scope 1 emission intensity for existing generators
information by designated generation facility 2022-23

DCCEEW, 2023 Australian National Greenhouse • Emission factor for biomass

Accounts Factors

The specific assumptions on the parameters documented in the above table are contained in the Draft 2025 Inputs
and Assumptions Workbook.

Capacity outlook model assumptions in the ISP

In long-term planning studies, AEMO applies assumptions related to operational characteristics of plant to project
future investment needs. Actual limits and constraints that would apply in real-time operations will depend on a
range of dynamic factors which may not be appropriate to incorporate without simplification to more static
assumptions.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 81

Inputs and assumptions

The relative coarseness of the ISP’s capacity outlook models requires that some operational limitations are applied
using simplified representations such as minimum stable levels or capacity factor limitations to represent technical
constraints and power system security requirements. This helps ensure that relatively inflexible generators, such
as coal-fired generators, are not dispatched in a manner that exceeds their technical capability or that would not
be commercially viable. The current view of these operational limits is described in the accompanying Draft 2025
Inputs and Assumptions Workbook. They may also be refined during the ISP as described in the ISP Methodology,
as an outcome of the iterative market modelling process.

Minimum stable levels for existing generators are based on AEMO’s analysis of historical generation and
operational experience. Minimum stable levels for new entrant generators are sourced from Aurecon. For the
purposes of the capacity outlook model, these minimum stable levels are converted into minimum capacity
factors.

In the ESOO, station-level auxiliary rates are applied based on the information provided in the Generation
Information survey. This information is kept confidential. For the ISP and other publications, technology
aggregated auxiliary rates are used so that they may be published in the accompanying Draft 2025 Inputs and
Assumptions Workbook while continuing to protect the confidentiality of information provided by participants.

Additional properties used in time-sequential modelling in the ISP

Additional technical limitations may be incorporated in the time-sequential models, including:

• Minimum up time and down times.

• Complex heat rate curves.

• Unit commitment optimisation and minimum stable levels, if the model granularity warrants the additional
complexity.

AEMO may apply these assumptions when performing specific analyses that warrant the higher degree of
technical complexity; they may not always be applied to balance the simulation complexity.

Further details on the implementation of these technical limitations can be found in AEMO’s ISP Methodology115.

3.4.3 Generator unplanned outage rates

Input vintage April 2024

Status Draft

Source Generator surveys, AEP Elical 2020, and Aurecon 2024 Cost and Technical Parameter Review

Update process Updates will be dependent on feedback received on this Draft 2025 IASR

Updates since 2023 IASR Unplanned outage rates were updated with latest data in April 2024 as part of data collection process for
the ESOO. The updates were presented to the FRG in June 2024.

In April 2024, AEMO collected outage information for existing scheduled generators, including storage units, on
the timing, duration, and de-rating of historical unplanned outages via an annual survey process. This data is then

115
At https://aemo.com.au/en/energy-systems/major-publications/integrated-system-plan-isp/2024-integrated-system-plan-isp/isp-
methodology. This methodology is also under consultation for the 2026 ISP, at https://aemo.com.au/consultations/current-and-closed-
consultations/2026-isp-methodology.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 82

Inputs and assumptions

used to forecast the full and partial unplanned outage rates116 (UORs) for each financial year, for each generator
over the ESOO horizon consistent with the ESOO and Reliability Forecasting Methodology 117. For small peaking
plants and hydro generator technology types, technology aggregates are applied to individual stations. Where
AEMO asked participants to provide outage rate projections, these projections were adopted in consultation with
the station owners/operators.

Outage modelling assumptions for existing generators for ESOO and other reliability purposes

Long duration unplanned outages

As described in the ESOO and Reliability Forecast Methodology, AEMO models outages with a duration longer
than five months (long duration outages) from historical outage data from 2010-11 to the most recent financial
year, prior to calculation of the expected unplanned outage rate. AEMO used an extended historical period of all
available data (all available years since 2010-11) to determine the (unplanned) long duration outage rates for each
region and technology class.

The long duration outages used in 2024 ESOO modelling, and in other reliability assessments such as Medium
Term Projected Assessment of System Adequacy (MT PASA) and Energy Adequacy Assessment Projection
(EAAP), are shown in Table 15.

Table 15 Existing generators – long duration outages

Fuel type/technology Long duration outage rate (%) Mean time to repair (hours)

All coal 0.91% 6,331

OCGT 0.73% 4,872

Hydro 0.17% 4,065

Other gas and liquid 0.54% 6,632

OCGT: Open cycle gas turbine.

Unplanned outage rate trajectories (excluding long duration outages)

The forecast equivalent full and partial unplanned outage rates by technology for 2024-25, the first year of the
forecast horizon period in the 2024 ESOO, are based on participant-provided information as shown in Table 16.

Table 16 Unplanned outage assumptions (excluding long duration outages) for 2024-25 financial year

Technology Full unplanned Partial unplanned Partial derating (% Mean time to Mean time to
outage rate (%) outage rate (%) of capacity) repair – full (hours) repair – partial
(hours)

Brown coal 7.39 15.45 17.39 92 37

Black coal NSW 5.22 27.08 17.67 136 28

Black coal QLD 5.37 13.70 24.03 160 44

OCGT 8.25 2.32 9.86 57 130

Small peaking plant* 8.65 0.35 28.29 201 323

116
Planned outages are not modelled in the ESOO, because these are assumed to be planned in lower demand periods or to shift if low
reserve conditions were to occur, and therefore not impact USE outcomes.
117
At https://aemo.com.au/en/energy-systems/electricity/national-electricity-market-nem/nem-forecasting-and-planning/forecasting-and-
reliability/nem-electricity-statement-of-opportunities-esoo.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 83

Inputs and assumptions

Technology Full unplanned Partial unplanned Partial derating (% Mean time to Mean time to
outage rate (%) outage rate (%) of capacity) repair – full (hours) repair – partial
(hours)

Hydro 4.56 1.06 13.30 51 436

Closed cycle gas

turbine (CCGT) and
gas-fired steam
turbine 6.71 1.25 13.25 54 38

Batteries 1.84 N/A N/A 141 N/A

*Small peaking plants are generally classified as those less than 150 MW in capacity, or with a very low and erratic utilisation (such as Colongra and Bell
Bay/Tamar peaking plant)

The 10-year projections for the equivalent full unplanned outage rate118 of all technology aggregates are shown in
Figure 22, Figure 23 and Figure 24, with and without the effect of long duration outages. The annual equivalent
unplanned outage rates are affected by changes to assumed reliability and retirements of generators over the
horizon. To protect the confidentiality of the individual station-level information used, unplanned outage
trajectories are provided for the first 10 years of the horizon for technology aggregates only. Due to the small
number of coal plants in later years, all regions have been further aggregated to an ‘All Coal’ value to protect
confidentiality.

Figure 22 Equivalent full unplanned outage rate projections for coal-fired generation technologies

118
Where equivalent full unplanned outage rate = Full outage rate + partial outage rate x average partial derating.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 84

Inputs and assumptions

Figure 23 Equivalent full unplanned outage rate projections for OCGT, CCGT and steam turbine generation and
small peaking plant technologies

Figure 24 Equivalent full unplanned outage rate projections for battery and hydro technologies

Outage modelling assumptions for existing generators for ISP purposes

For ISP purposes, the forced outage rate assumptions, which incorporate long duration outages, are held constant
past the first 10 years. Although reliability may degrade as a plant ages and nears retirement, it is difficult to
predict this trend with any accuracy beyond 10 years, particularly when timing of generation withdrawal may be
dynamic. It is a level of complexity that AEMO does not consider warranted as it is not expected to introduce a

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 85

Inputs and assumptions

material difference to ISP outcomes. More information on treatment of outage rates across AEMO’s modelling is
provided in the ISP Methodology119.

New entrant generation outage assumptions for all modelling purposes

The equivalent full forced outage rate (EFOR) for new entrants is provided by Aurecon. Calculations from Aurecon
follow the formulas defined in IEEE std 762 and source data is based on indicative industry values by technology,
like contractual or operational availability for onshore wind and solar. For new coal generation, Aurecon’s EFOR is
equally divided between full and partial outage/derating. Long duration outages are not applied to new entrant
technologies.

3.4.4 Generator retirements

Input vintage • Retirement costs: December 2024

• Retirement dates: Generation Information October 2024

Status Current view

Source • Generation Information

• GHD 2018

Update process Updated quarterly

Updates since 2023 IASR Expected closure years and closure dates have been updated to reflect the most recent data collection.

For existing generators, AEMO applies the expected closure year as provided by participants and published
through AEMO’s Generation Information120 page as a latest retirement date, as follows:

• In ESOO, MT PASA and EAAP, expected closure years are applied consistent with the participant-provided
information.

• In the ISP, retirements may be brought forward ahead of the expected closure year if it reduces overall system
costs, as described in the ISP Methodology. As discussed in more detail in that document, retirements may be
modelled to meet carbon budgets or broader policy constraints.

For reference, a closure date has the meaning specified in NER 2.10.1(c1) which specifies the date a generator
will cease to supply or acquire electricity in the market or trade directly in the market, while an expected closure
year is the year in which a generator expects to cease to supply electricity (as per NER 2.1B.3(a)). Generators in
relation to which there is an expected closure year tend to be projects that are scheduled to close in the near
term, over the next few years or so, and are published in the Generating Unit Expected Closure Year subset of the
Generation Information page.

As discussed in the ISP Methodology, if a generator has notified its closure date (as opposed to its expected
closure year) then earlier retirement of that unit is not considered. AEMO’s approach therefore recognises the
increased accuracy of closure date submissions, thereby locking these dates in across all analysis rather than
contemplating alternative economics-triggered closure timings.

119
At https://aemo.com.au/-/media/files/stakeholder_consultation/consultations/nem-consultations/2023/isp-methodology-2023/isp-
methodology_june-2023.pdf?la=en.
120
At https://www.aemo.com.au/energy-systems/electricity/national-electricity-market-nem/nem-forecasting-and-planning/forecasting-and-
planning-data/generation-information.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 86

Inputs and assumptions

Retirement costs by generation technology have been provided by AEMO’s technology cost consultants and are
presented in the accompanying Draft 2025 Inputs and Assumptions Workbook. A number of technologies
(biomass, solar thermal, offshore wind) do not have a retirement cost estimate. Given the development lead times
of these technologies (generally greater than six years) and the economic life (generally greater than 25 years),
retirement costs would be incurred beyond the end of the ISP modelling horizon. Retirement costs incorporate the
cost of decommissioning, demolition, and site rehabilitation and repatriation, excluding battery storage
technologies where disposal cost data is not known.

Matters for consultation

• Are the retirement cost assumptions detailed in the accompanying Draft 2025 Inputs and Assumptions
Workbook appropriate?

3.4.5 Hydro modelling

Input vintage June 2023

Status Current view

Source Inflows – hydro operators, considering insights regarding long-term rainfall trends from the Electricity
Sector Climate Information (ESCI) project121.

Update process Scheme inflows will be updated for the 2025 IASR.

Updates since 2023 IASR Hydro scheme inflows have been updated based on data received from participants in April and June of
2023.

Hydro scheme inflows

AEMO models each of the large-scale hydro schemes using inflow data for each generator, with aggregation of
some run-of-river generators.

Tasmanian hydro scheme

AEMO’s approach to modelling the existing Tasmanian hydro schemes relies on a 10-pond122 topology designed
to capture different levels of flexibility associated with the different types of storage outlined above (see Figure 25).

121
ESCI information available at https://www.climatechangeinaustralia.gov.au/en/projects/esci/.
122
The capacity outlook model may aggregate long-term storages together to reduce simulation time.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 87

Inputs and assumptions

Figure 25 Hydro Tasmania scheme topology

Tungatinah Tarraleah
Mersey Forth
Upper
Anthony
Pieman

Tungatinah Tarraleah Fisher,

G G G Lemonthyme

Bastyan,
Mersey Forth G Mackintosh,
Lower Reece, Tribute
Lower
Derwent

Cethana, Devils Gate,

G Wilmot
Liapootah, Wayatinah,
Catagunya, Meadowbank G

G Generator(s)

Mainland hydro scheme

Some of the Victorian hydroelectric generators are modelled using maximum annual capacity factor constraints on
each individual generator; these are West Kiewa and Bogong-Mackay123. The model schedules the electricity
production from these generators across the year such that system costs are minimised within this energy
constraint.

Other hydroelectric generators in Victoria and Queensland, as well as the Snowy scheme, are represented by
physical hydrological models, describing parameters such as:

• Maximum and minimum volume.

• Initial storage volume.

• Monthly reservoir inflow rates reflecting historical inflows.

Monthly storage inflows used in market modelling studies can be found in the Draft 2025 Inputs and Assumptions
Workbook.

Figure 26 presents a representation of the topology currently modelled for the Snowy scheme.

123
These generators are fed from a very large storage (Rocky Valley Dam), which effectively means they have an annual energy supply from
rain and snow that they can use flexibly throughout the year. Annual capacity factor constraints are therefore most appropriate to constrain
the generation from these units.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 88

Inputs and assumptions

Figure 26 Snowy Hydro scheme topology

Lake Upper
Tantangara Tumut

Murray
Pondage
Snowy 2.0
G (upon commissioning) P G Upper Tumut

Murray 1 / 2 G

Talbingo

G Lower Tumut P
G Generator

ounama P Pump

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 89

Inputs and assumptions

Figure 27 provides graphical representations of the other hydrological models used in the market simulations, as
well as the registered capacity of the adjoining generating units 124.

Figure 27 Hydro scheme topologies of other existing hydro power stations

Kuranda Weir Koombooloomba Dam Blowering

1387ML 184,500 ML 1,610,000 ML
895MWh 175 GWh 291 GWh

Barrron Gorge Kareeya Blowering

70MW Total 88MW Total G 80MW Total G
G (4x22MW) (1x80MW)
(2x35MW)

Hume Dam Guthega Eildon

3,040,000 ML 1400 ML 3,387,000 ML
203 GWh 743 GWh
1.25 GWh

Eildon
Hume Guthega 135MW Total G
58MW Total G 60MW Total (2x67.5MW)
(2x29MW) G
(2x30MW)

Fitzroy Falls Split ard Creek Dam

4400 ML 15,000 ML
6.05 GWh 3.61 GWh Dartmouth
3,906,000 ML
1560 GWh
Generation Pumping
Generation Pumping
Kangaroo 570MW Total G P 480MW Total
165MW Total G Valley PS
P 160MW Total
(2x240MW)
(2x285MW)
(2x82.5MW) (2x80MW)
Dartmouth
185MW Total G
(1x185MW)
Bendeela Pondage Lake Wivenhoe
780 ML 1,165,000 ML
222 MWh

Generation Pumping
82MW Total G BendeelaPS P 80MW Total
(2x41MW) (2x40MW)

Lake arrunga
36,000 ML

*Energy storage at Fitzroy Falls includes full drop through both power stations.

124
Storage capacities are defined in megalitres (ML).

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 90

Inputs and assumptions

The Draft 2025 Inputs and Assumptions Workbook provides the annual and seasonal variation in hydro inflows for
key hydro schemes. An example of this is shown in Figure 28 below, for Snowy Hydro. The data will be updated in
the 2025 IASR; it is updated based on observed inflows and participant received data, similar to other historical
data.

Figure 28 Hydro inflow variability across reference weather years – Snowy Hydro

Australia-specific climate information on regional changes in long-term average rainfall over time has been
estimated through close collaboration with CSIRO and the BoM as part of the Electricity Sector Climate
Information (ESCI) project, sponsored by the Federal Government125.

Streamflow change factor projection information was provided to AEMO as part of the ESCI project for 220
different natural streams in Australia. AEMO grouped many of these natural streams into three different areas
based on their proximity to existing hydro generators, and the statistical stability of the change factor projections.
The projections represent the median of an ensemble of streamflow projections and have been scaled to reflect
the inherent climate narratives relevant to each scenario.

The median hydro change factor projections are shown in Table 17 for the Step Change scenario, as an example.
Other scenario hydro climate factors are available in the Draft 2025 Inputs and Assumptions Workbook.

Table 17 Median hydro climate factors, Step Change scenario

Region 2020-21 2030-31 2040-41 2050-51

North Queensland 0% 0% 0% 0%

Southern Queensland, New South Wales, Victoria, -2.0% -5.0% -4.9% -5.3%
and South Australia

Tasmania -0.8% -2.0% -1.2% -0.4%

125
See https://www.climatechangeinaustralia.gov.au/en/projects/esci/.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 91

Inputs and assumptions

3.5 New entrant generator assumptions

3.5.1 Committed and anticipated projects

Input vintage October 2024

Status Current view

Source Participant survey responses

Update process Quarterly updated

Updates since 2023 IASR Updated to incorporate the October 2024 Generation Information.

New generator or storage developments that are announced to market are assessed against commitment criteria
published in AEMO’s Generation Information page 126. The commitment criteria cover five areas of a project’s
development, covering:

• Land/site acquisition.

• Contracts for major components.

• Planning and other approvals.

• Financing.

• Construction.

To classify the commitment status of generators or storages, AEMO uses information provided by both NEM
participants and project proponents. In reliability assessments, some projects are subject to delays to manage the
impact of commissioning risks in the short to medium term, whereas the ISP assumes that projects are delivered
on schedule so that any infrastructure needed to extract the full value of these projects for consumers can be
considered as part of the whole-of-system plan. The key classifications are defined as follows:

• In Commissioning are those projects that have met the requirements of the first commissioning hold point
(typically at least 30% capacity commissioned).

– For reliability and ISP assessment purposes, projects in commissioning are modelled as becoming fully
available at the Full Commercial Use Date (FCUD) submitted by the project proponent.

• Committed projects are projects that have fully met all commitment criteria but have not yet met the
requirements of their first commissioning hold point.

– For reliability assessment purposes, committed projects are included in the modelling at six months after
the FCUD submitted by the project proponent.

– For ISP assessment purposes, committed projects are assumed to proceed at the FCUD submitted by the
project proponent.

126
See https://aemo.com.au/en/energy-systems/electricity/national-electricity-market-nem/nem-forecasting-and-planning/forecasting-and-
planning-data/generation-information.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 92

Inputs and assumptions

• Committed* projects are those projects that satisfy land, finance and construction criteria plus either planning
or contracts criteria. Progress towards meeting the final criteria is also evidenced and construction or
installation has also commenced.

– For reliability assessment purposes, committed* projects are included in the modelling at six months after
the FCUD submitted by the product proponent.

– For ISP assessment purposes, committed* projects are assumed to proceed at the FCUD submitted by the
project proponent.

• Anticipated projects are those projects that have demonstrated progress towards meeting at least three of
the commitment criteria and have updated their submission to AEMO in the previous six months.

– For reliability assessment purposes:

○ To reflect the uncertainty in the commissioning of these projects, anticipated projects which have
provided an expected commissioning date are assumed to become fully available at the latest date of
either: one year after the date provided by the project proponent, or the first day after the T-1127 year for
Retailer Reliability Obligation (RRO) purposes.

○ Anticipated projects that are not yet sufficiently progressed to provide an expected commissioning date
are assumed to become fully available on the first day after the T-3128 year for RRO purposes.

– For ISP assessment purposes:

○ Anticipated projects for which an expected commissioning date has been provided are assumed to
proceed at the FCUD submitted by the project proponent.

○ Anticipated projects for which an expected commissioning date has not been provided are assumed to
become fully available two years after the publication of the IASR (that is, July 2027 for the purposes of
this IASR), subject to technology development lead time assumptions.

• Proposed projects are those projects that have not progressed sufficiently to meet the requirements of an
Anticipated or Committed project.

– Proposed projects are not considered explicitly in AEMO’s reliability or ISP assessments but may be
considered in sensitivities if relevant.

The Draft 2025 IASR uses the Generation Information as at October 2024. A summary of existing, committed, and
anticipated projects included in that release is provided in Figure 29 below.

127
T-1 refers to reliability assessments one year out. For example, for a reliability assessment conducted in August 2023, the T-1 period refers
to the 2024-25 financial year.
128
T-3 refers to reliability assessments three years out. For example, for a reliability assessment conducted in August 2023, the T-3 period
refers to the 2026-27 financial year.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 93

Inputs and assumptions

Figure 29 Generation and storage projects in October 2024 Generation Information page (MW)

In this figure, Committed* projects are included in the Committed category, and projects in commissioning are included in the Existing less Announced
Withdrawal category.

AEMO’s modelling will reflect the most up-to-date information available at the time the modelling commences and
will incorporate material updates if possible. Each publication will note what version of the Generation Information
was used in the assessment.

3.5.2 Candidate technologies

Input vintage December 2024

Source • CSIRO: GenCost 2024-25 Consultation Draft

• Aurecon: 2024 Energy Technology Costs and Technical Parameter Review
• GHD: 2018-19 Costs and Technical Parameters Review

Updates since 2023 IASR Updated to reflect Aurecon’s 2024 Energy Technology Cost and Technical Parameter Review

For the 2026 ISP’s capacity outlook modelling, a reduced list of technologies is considered based on technology
maturity, resource availability, and energy policy settings.

Table 18 below presents the list of technologies that will be used in 2024-25 publications.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 94

Inputs and assumptions

Table 18 List of generation and storage technology candidate

List of technologies for consideration in Commentary

the 2026 ISP

CCGT – with CCS –

CCGT – without CCS –

OCGT – dual fuel, without CCS, small unit As discussed in Aurecon’s 2024 Energy Technology Costs and Technical Parameters
size Review there is a trend for gas turbine developments to move towards low emission
solutions with either blending or firing completely on hydrogen. All new open cycle gas
turbine (OCGT) projects are expected to include provision/capability for hydrogen blending.
As such, AEMO is now modelling all OCGTs as capable of dual fuel.

OCGT – dual fuel, without CCS, large unit As discussed in Aurecon (2024) there is a trend for gas turbine developments to move
size towards low emission solutions with either blending or firing completely on hydrogen. All
new OCGT projects are expected to include provision/capability for hydrogen blending.
And as such, AEMO is now modelling all OCGTs as capable of dual fuel.

Solar PV – single axis tracking –

Solar thermal central receiver with The storage component will be increased from 15 hours to 16 hours, aligned with the 2024
storage (16 hr) Energy Technology Costs and Technical Parameter Review

Wind – onshore –

Wind – offshore (both fixed and floating) Both fixed and floating offshore wind turbine structures will continue to be considered as
distinct candidate options, with consideration for the ocean depth of the offshore REZ.

Biomass generation – electricity and heat Since the GenCost 2022-23 Final report and following stakeholder feedback, heat
generated from biomass generation for electricity has now been reflected; however, as
AEMO’s capacity outlook modelling does not consider demand for heat or location
explicitly, it is not able to consider the value of the heat generated from biomass.

Lithium-Ion battery storage AEMO includes storage sizes from one to 8 hours in its models. No geographical limits will
apply to available battery capacity given its small land footprint.

Pumped hydro energy storage (PHES) AEMO includes 10-hour (unlike in previous IASRs, which proposed an 8-hour option), 24-,
and 48-hour PHES options across the NEM. Six- and 12-hour PHES options are
consolidated into a 10-hour option to reflect likely future PHES developments across the
NEM. The increase in depth from 8-hour to 10-hour reflects Aurecon’s feedback on
developer interest.
These options are supplemented by announced projects where appropriate, for example
the 20-hour Cethana project in Tasmania.
This portfolio of candidates complements deep storage initiatives (such as the committed
Snowy 2.0 and the anticipated Borumba Dam Pumped Hydro) and existing traditional hydro
schemes.
A. At https://www.csiro.au/en/research/technology-space/energy/energy-data-modelling/gencost.

The following technologies are excluded from modelling considerations to keep problem size computationally
manageable:

• New brown coal generation (with or without carbon capture and storage [CCS]) and advanced
ultra-supercritical pulverised black coal (with and without CCS) – given federal and state existing policies
regarding net zero emissions, including this technology would present an internal inconsistency with those
policy requirements. Considering also that there are lower cost dispatchable alternatives offering greater
system flexibility, investment risks for new coal developments are therefore assumed to be too high to be
commercially viable.

• Reciprocating internal combustion engines – reciprocating engines fuelled by natural gas/diesel are not
modelled due to their high capital cost relative to open cycle gas turbines (OCGTs), as discussed in Aurecon’s
2024 Energy Technology Cost and Technical Parameters Review.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 95

Inputs and assumptions

• Hydrogen-only reciprocating engines or OCGTs – as discussed in Table 18, AEMO proposes not to model
hydrogen-only or natural gas-only technologies. Instead, dual fuel technologies that can run on natural gas or
hydrogen are proposed to be modelled, in line with current trends as discussed in Aurecon’s 2024 Energy
Technology Cost and Technical Parameters Review.

• Nuclear generation, including small-modular reactors – currently, Section 140A of the Environment
Protection and Biodiversity Conservation Act 1999 129 prohibits the development of nuclear installations.

• Geothermal technologies – geothermal technologies are considered too costly and too distant from existing
transmission networks to be considered a bulk generation technology option in the NEM.

• Solar PV fixed flat plate (FFP) and dual-axis tracking (DAT) technologies – while the best solar configuration
depends on each individual project, single-axis tracking (SAT) generally presents greater value on a
cost-per-energy-delivered basis given current cost assumptions. Presently, announced SAT projects also
provide more proposed capacity than DAT and FFP projects, and almost all recent project commitments for
large-scale solar are SAT130. Given this preference and the relative cost advantage, AEMO models all future
solar developments using SAT configuration.

• Tidal / wave technologies – this is not sufficiently advanced or economic to be included in the modelling.

• Hybrid technologies – these are not explicitly considered but the ISP Methodology sets out how AEMO
considers the benefits of co-locating VRE and storage in the assessment of potential actionable REZ
augmentations.

3.5.3 Candidate technology build costs

Capital cost trajectories

Input vintage December 2024

Status Draft
Source • CSIRO: GenCost 2024-25 Consultation Draft
• Aurecon: 2024 Energy Technology Costs and Technical Parameters Review
• Hydro Tasmania information on Cethana project

Update process Dependent on feedback received in this Draft 2025 IASR and the GenCost 2024-25 Consultation Draft

Updates since 2023 IASR Updated to reflect CSIRO’s GenCost 2024-25 Consultation Draft

AEMO’s generator and storage capital cost trajectories are informed by the GenCost publication series – an
annual publication of electricity generation technology cost projections conducted jointly through a partnership
between CSIRO and AEMO.

To support this forecast, Aurecon provided estimates of the current capital cost of each generation technology.
CSIRO uses these current capital cost estimates in the Global and Local Learning Model (GALLM) to produce
capital cost forecasts that are a function of global and local technology deployment.

129
At https://www.legislation.gov.au/Details/C2012C00248.
130
Based on November 2022 Generation Information, at https://aemo.com.au/en/energy-systems/electricity/national-electricity-market-
nem/nem-forecasting-and-planning/forecasting-and-planning-data/generation-information.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 96

Inputs and assumptions

GenCost estimates include consideration of global demand for each technology which relates to, among other
things, international policy and renewable targets. The GenCost scenarios have evolved over time to better reflect
the uncertainty in the speed of global emissions reduction, which improves the alignment with AEMO’s scenarios,
and consideration of easement of supply-chain pressures over time.

The build cost projections are given for three GenCost 2024-25 Consultation Draft scenarios: “Global NZE by
2050”, “Global NZE post 2050” and “Current Policies”. These scenarios are described in greater detail in CSIRO’s
GenCost 2024-25 Consultation Draft. AEMO maps the Draft 2025 IASR scenarios to the GenCost 2024-25
Consultation Draft scenarios based on the fit of the narratives against each other, as shown in Table 19.

Table 19 Mapping AEMO scenario themes to the GenCost 2024-25 Consultation Draft report scenarios

ISP scenario GenCost 2024-25 Explanation

Consultation Draft
scenario

Progressive Current Policies* Consistent with current commitments to the Paris Agreement, leading to the lowest
Change global emissions reduction ambition and a 2.5°C warming future.

Step Change Global NZE post 2050 Consistent with global action to limit temperature rises to less than 2°C, and with
industrialised countries targeting net zero emissions by 2050.

Green Energy Global NZE by 2050 The most ambitious global emissions reduction scenario, consistent with limiting
temperature rises to less than 1.5°C.
* While Progressive Change does increase its emissions reduction ambition, achieving net zero emission domestically by 2050, the scenario also delays
significant action to align with a higher warming future at a global scale and is not consistent with a “well below 2°” target.

Figure 30, Figure 31 and Figure 32 below present a comparison of GenCost 2024-25 Consultation Draft’s Global
NZE post 2050 compared with GenCost 2023-24 Final Report’s Global NZE post 2050 build cost projections
(excluding connection costs) for selected technologies. Cost projections for each technology and scenario are
available in the accompanying Draft 2025 Inputs and Assumptions Workbook.

In line with findings in the previous GenCost, costs over the period to 2030 are driven by short-term supply
pressures which result in higher costs relative to the cost paths determined by the CSIRO’s learning model. As
these impacts ease, costs converge closer to previous estimates in the longer term.

As detailed in Aurecon’s accompanying Energy Technology Cost and Technical Parameter Review131, since last
year, fixed offshore wind has seen a more significant drop in costs. Some caution needs to be applied when
translating these costs to an Australian context given these developments would be first-of-a-kind as highlighted in
both Aurecon’s Energy Technology Cost and Technical Parameter Review and the GenCost 2024-25 Consultation
Draft.

In recognition of this, AEMO proposes to modify the costs (as provided by GenCost) of offshore wind (both fixed
and floating) and CCS technologies by applying a first-of-its-kind premium as build cost multipliers. They reflect
the demonstrated tendency to underestimate actual costs for a first-of-a-kind unit. As discussed in GenCost, these
are observable when a proponent fails to deliver the first project for the cost that had been planned, and as such,
they are difficult to estimate. AEMO proposes that these factors, presented in Table 20 below, would be applied to
offshore wind and technologies with CCS. These factors have been sourced from the US Energy Information
Administration (US EIA)132.

131
At https://aemo.com.au/consultations/current-and-closed-consultations/2025-iasr.
132
More detail available at https://www.eia.gov/outlooks/aeo/assumptions/pdf/EMM_Assumptions.pdf.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 97

Inputs and assumptions

Table 20 First-of-its-kind generation cost premiums

Technology Factor Commentary

Wind – offshore (fixed) 1.25 It is proposed that this factor is applied to the year of built capacity of fixed offshore
wind developed by the model, and then reduced to 0.

Wind – offshore (floating) 1.25 It is proposed that this factor is applied to the year of built capacity of floating
offshore wind developed by the model, and then reduced to 0.

Technologies with CCS 1.04 Aligned with their use by the US EIA, This factor would be applied to the first year of
built capacity that is developed by the model, and then reduced to 0.

In recognition of the recent inflationary cycle and the resulting cost pressures, CSIRO modified its modelling
approach to better account for this influence. Taking Aurecon figures as a starting point, GenCost 2024-25
Consultation Draft now applies ‘basket-of-costs’ factors over the period to 2030 or 2027(depending on the
scenario) as less deployment in new technology in G Cost’s C rr t Polici s (applied in Progressive Change)
sees slower learning and less pressures on technology costs and a relaxation of supply chain constraints earlier.

In the medium and longer term, the technology costs reflect forecast cost savings due to learning rates that are
achieved through deployment.

Certain technologies – including but not limited to batteries, PV, and fixed offshore wind – have been observed to
have returned to pre-pandemic levels. As a result, these technologies do not apply the supply chain constraint
impacts, and rather apply the standard learning rate approach described in GenCost 2024-25 Consultation Draft.

Additionally, projections have been adjusted to recognise the fundamental scarcity of land and easements
following stakeholder feedback. Projections will be adjusted using locational cost factors published in the report by
Mott Macdonald underpinning figures in AEMO’s Transmission Cost Database in 2023 for the land and easement
component of the project cost.

As seen in Figure 31, GenCost 2024-25 Consultation Draft incorporates hydrogen fuel readiness for gas
generation, which results in an increase in costs relative to previous estimates. Figure 32 shows a decrease in the
cost of batteries, which, as discussed in GenCost 2024-25 Consultation Draft, are now at pre-pandemic levels in
real terms. Finally, build cost estimates from pumped hydro have been updated based on Aurecon’s assessment,
with 10-hour pumped hydro considered more expensive than 24-hour, and more in line with estimates for 48-hour
durations.

More information on methodology adjustments from GenCost 2023-24 to GenCost 2024-25 Consultation Draft can
be found in the GenCost 2024-25 Consultation Draft.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 98

Inputs and assumptions

Figure 30 2023 vs 2024 Global NZE post 2050: build cost trajectories forecasts for wind and large-scale solar
10,000
9,000
8,000
Build costs ($/kW)

7,000
6,000
5,000
4,000
3,000
2,000
1,000
0

2024 - Wind 2025 - Wind

2024 - Large scale Solar PV 2025 - Large scale Solar PV
2024 - Wind - offshore (fixed) 2025 - Wind - offshore (fixed)
2024 - Wind - offshore (floating) 2025 - Wind - offshore (floating)

Figure 31 2023 vs 2024 Global NZE post 2050: build cost trajectories forecasts for gas generation
7,000

6,000
Build costs ($/kW)

5,000

4,000

3,000

2,000

1,000

2024 - OCGT (small GT) 2025 - OCGT (small GT)

2024 - OCGT (large GT) 2025 - OCGT (large GT)
2024 - CCGT 2025 - CCGT
2024 - CCGT with CCS 2025 - CCGT with CCS

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 99

Inputs and assumptions

Figure 32 2023 vs 2024 Global NZE post 2050: build cost trajectories forecasts for selected storage technologies

9,000
8,000
7,000
Build costs ($/kW)

6,000
5,000
4,000
3,000
2,000
1,000
0

2024 - Battery storage (2hrs storage) 2025 - Battery storage (2hrs storage)
2024 - Battery storage (4hrs storage) 2025 - Battery storage (4hrs storage)
2024 - Pumped Hydro (8hrs storage) 2025 - Pumped Hydro (10hrs storage)
2024 - Pumped Hydro (24hrs storage) 2025 - Pumped Hydro (24hrs storage)
2024 - Pumped Hydro (48hrs storage) 2025 - Pumped Hydro (48hrs storage)

Note: As discussed in Table 19, pumped hydro 8-hour has been replaced with 10-hour following advice from Aurecon.

In GenCost 2024-25 Consultation Draft, current costs (a key input to develop the projections) represent current
typical contracting costs or costs demonstrated to have been incurred for projects completed in the current
financial year and does not represent quotes for potential projects or project announcements.

It should also be noted that when comparing GenCost 2024-25 Consultation Draft’s capital costs in $/kW with
Aurecon, the latter does not include the cost of land in its presentation of $/kW capital costs, whereas this is
included in the GenCost 2024-25 Consultation Draft and therefore by AEMO133.

Capital costs are not applied for existing, committed, and anticipated projects. AEMO does not have specific
estimates for the cost of these projects. Importantly, as these projects are included in all ISP development
pathways, including the counterfactual, the calculation of net market benefits are not influenced by the costs or
benefits of these projects, as they are netted off.

Matters for consultation

• Do you support the implementation of first-of-a-kind premiums for technologies that have not been deployed
in Australia and with the underlying assumptions appropriate?

• Do you have any comments regarding the draft build cost projections?

f v b v f b k O’ GenCost 2024-25 Consultation Draft report, please

separate feedback to it from feedback to this Draft 2025 IASR, so that AEMO (and CSIRO as needed) may
process both submissions as appropriate.

133
Build costs from GenCost are then weighted by regional costs factors (see the following section) where AEMO considers Aurecon’s cost of
land and other locational influences.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 100
Inputs and assumptions

Locational cost factors

Input vintage December 2024

Source • Aurecon: 2024 Energy Technology Cost and Technical Parameters Review
• AEMO revisions

Update process Locational cost factors have been updated based on Aurecon’s 2024 Energy Technology Cost and
Technical Parameters Review, proposed for consultation and feedback in response to this Draft 2025 IASR.
Land and development factors have been modified to reflect those applied from the 2023 update to
AEMO’s Transmission Cost Database, and will be updated again for the Final 2025 IASR following
consultation on the 2025 Network Expansion Options Report.
Updates since 2023 IASR Locational cost factors have been proposed to be updated to be REZ-specific as presented in Aurecon’s
2024 Energy Technology Cost and Technical Parameters Review. Locational cost factors for pumped hydro
have been modified to reflect greater disaggregation in Victoria and South Australia.

Get involved 2025 Network Expansion Options Report consultation

The breakdown of cost components for each technology is informed by updated data from Aurecon’s 2024
Energy Technology Cost and Technical Parameters Review, in line with the approach followed in previous IASRs.
These figures do not capture site-specific aspects of costs that are only known when detailed feasibility
investigations have been implemented. If site-specific cost information on particular projects becomes available,
AEMO may shift to adopting these values as appropriate. The updated breakdown of cost components is available
in the Draft 2025 Inputs and Assumptions Workbook.

In previous IASRs, AEMO used cost zones that are attributed to each generation and storage candidate to
estimate the capital costs of technologies developed in different locations. Each cost zone in each region has a
specific set of locational cost factors which provides multiplicative scalars to the cost components (equipment, fuel
connection, land and development, and installation) of each generation and storage technology type.

In 2023, AEMO commissioned Aurecon to update the locational cost factors as part of the 2023 Energy
Technology Cost and Technical Parameters Review. The factors now account for greater granularity by providing
a factor at a REZ level, relative to metropolitan areas in the NEM region, and are intended to be a multiplier to the
cost components resulting in a technology and location-specific multiplier.

The locational cost factors below, updated in the 2024 Energy Technology Cost and Technical Parameters
Review, consider the indicative cost of local accommodation, cost for resources, mobilisation and demobilisation
based on project duration, cost for materials delivery, and labour productivity in each of the REZs. REZ locational
cost factors were provided for a number of sub-regional areas within each REZ, which have been averaged to
arrive at the REZ-level estimates.

The factors for land and development have been updated from those provided by Aurecon to those underpinning
the update to AEMO’s Transmission Cost Database used in the 2023 IASR. AEMO will update these factors again
for the 2025 IASR following consultation through the 2025 Network Expansion Options Report, to ensure
consistent treatment of land and development factors across transmission, generation and storage.

Locational cost factors are relative to metropolitan areas with a de facto factor of one. AEMO proposes to assign a
locational factor of one to builds in sub-regional reference nodes. This will impact all/most builds not located within
a REZ. Offshore REZs also have a factor of one (although as discussed above, it is proposed that offshore wind
build costs will now be subject to a temporary first-of-a-kind premium).

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 101
Inputs and assumptions

The accompanying Draft 2025 Inputs and Assumptions Workbook provides additional details of these locational
cost factors, including the resulting regional technology cost adjustment factors.

Figure 33 shows the effective impact of the changes in locational cost factors for all REZs for onshore wind
generation. The greatest variance is in Queensland, with North Queensland Clean Energy Hub being 50% higher
than the benchmark, and in South Australia, where Roxby Downs is 19% higher than the benchmark. This
represents greater variation than in the 2023 IASR, with the change largely due to the factors being benchmarked
to the capital cities and rather than the nearest major port, due to greater differences for labour, installation, and
O&M cost components. Additionally, disaggregation by REZs (rather than more coarse regional segmentation)
further highlights underlying differences that may be masked by higher geographical aggregation. Further detail
on differences to previous values is in Aurecon’s accompanying 2024 Energy Technology Cost and Technical
Parameters Review report (see Appendix A2).

Figure 33 Weighted REZ locational cost factors for wind in the 2023 IASR and the 2025 Draft IASR
1.60
Weighted locational cost factor

1.50
1.40
1.30
1.20
1.10
1.00
0.90

2023 IASR Draft 2025 IASR

Weighted locational cost factor

1.60
1.50
1.40
1.30
1.20
1.10
1.00
0.90

2023 IASR Draft 2025 IASR

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 102
Inputs and assumptions

Figure 34 Weighted REZ locational cost factors for wind in the 2025 Draft IASR

AEMO proposes to further update the locational cost factors for the land and development cost component using
the updates that will be made to the AEMO Transmission Cost Database through the consultation process on the

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 103
Inputs and assumptions

Draft 2025 Network Expansion Options Report. These updated factors would be used in the Final 2025 IASR for
the land and development cost component of generation and storage technologies in REZs.

Matters for consultation

• Is it appropriate for modelling to shift to locational cost factors derived at a REZ level?

• Are the proposed values assigned to REZ locational cost factors reasonable (if relevant, refer to the
additional information provided in the accompanying consultant report)?

Locational cost factors for pumped hydro energy storages

In line with all other new entrant technologies, sub-regional locational cost factors are applied to PHES options.
Unlike those for other technologies, locational cost factors for PHES have been derived based on the relative cost
of the natural resource and geology available within each location for PHES development. The factors have been
sourced from Entura’s 2018 Pumped Hydro Cost Modelling report and remain consistent with previous IASRs.

These factors do not capture site-specific aspects of costs that are only known when detailed feasibility
investigations have been implemented. If site-specific cost information on particular projects becomes available,
AEMO may shift to adopting these values as appropriate. AEMO has adjusted these factors to account for the
further disaggregation of Victoria and South Australia to more sub-regions.

Table 21 presents the locational cost factors for PHES. Tasmanian facilities134 are at least approximately 25%
lower cost than Victorian alternatives, and the cost advantages of pumped hydro in Tasmania increase for deeper
storage sizes.

Table 21 Pumped hydro energy storage locational cost factors

ISP sub-region Region PHES: 10-hour PHES: 24-hours PHES: 48-hour

Northern Queensland (NQ) Queensland 1.02 0.88 0.86

Central Queensland (CQ) Queensland 1.02 0.88 0.86

Gladstone Grid (GG) Queensland Not applicable* Not applicable* Not applicable*

South Queensland (SQ) Queensland 1.10 0.96 0.88

Northern New South Wales (NNSW) New South Wales 0.87 0.82 0.62
Central New South Wales (CNSW) New South Wales 1.05 1.08 1.12

South New South Wales (SNSW) New South Wales 1.02 1.00 0.91

Sydney, Newcastle, Wollongong (SNW) New South Wales Not applicable* Not applicable* Not applicable*

West and North Victoria (WNV) Victoria 1.00 1.00 1.00

Greater Melbourne and Geelong (MEL) Victoria Not applicable* Not applicable* Not applicable*

South East Victoria (SEV) Victoria Not applicable* Not applicable* Not applicable*

Northern South Australia (NSA) South Australia 1.43 1.67 Not applicable*

Central South Australia (CSA) South Australia 1.43 1.67 Not applicable*

134
These factors apply only to generic Tasmanian projects, as specific cost assumptions are used for the Cethana project.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 104
Inputs and assumptions

ISP sub-region Region PHES: 10-hour PHES: 24-hours PHES: 48-hour

South East South Australia (SESA) South Australia Not applicable* Not applicable* Not applicable*

Tasmania (TAS) Tasmania 0.75 0.62 0.46

*Pumped hydro energy storage of this depth in this sub-region is not a credible candidate.

3.5.4 Storage-specific assumptions

Input vintage December 2024

Source • Aurecon: 2024 Energy Technology Cost and Technical Parameters Review
• CSIRO: GenCost 2024-25 Consultation Draft
• Entura: 2018 Pumped Hydro Cost Modelling
• Hydro Tasmania information on Cethana project

Updates since 2023 IASR Updated to reflect latest Energy Technology Cost and Technical Parameters Review, and GenCost 2024-25
Consultation Draft. Modified to reflect greater disaggregation in Victoria and South Australia.

AEMO includes a range of storage options in assessing the future needs of the power system. Storage expansion
candidates in each region include PHES, large-scale batteries, concentrated solar thermal (CST), and embedded
battery systems within AEMO’s CER forecasts.

Pumped hydro energy storage build limits

AEMO applies build limits for pumped hydro expansion candidates based on sub-regional estimates detailed by
the Entura 2018 Pumped Hydro Cost Modelling report135, modified where appropriate to reflect the latest
generator development announcements in Generation Information (or announced government development
policies).

AEMO has adjusted the limits to consider proposed projects across NEM regions since the publication of the
Entura report. AEMO subtracted the generation capacity of these projects from the relevant original limit while
maintaining Entura’s sub-regional breakdown. AEMO also disaggregated the limits to account for the new
sub-regions proposed for Victoria and South Australia, and adjusted limits to account for the modelling of 10-hour
PHES.

The effective PHES sub-regional limits are shown in Table 22.

Table 22 Pumped hydro sub-regional limits (in MW of generation capacity)

ISP sub-region Region PHES: 10-hour PHES: 24-hour PHES: 48-hour

Northern Queensland (NQ) Queensland 1,000 5,000 111

Central Queensland (CQ) Queensland 960 1,250 89

Gladstone Grid (GG) Queensland - - -

South Queensland (SQ) A Queensland 2,400 600 300

Northern New South Wales (NNSW) New South Wales 1,020 500 500

Central New South Wales (CNSW) New South Wales 2,006 167 83
B
South New South Wales (SNSW) New South Wales 2,000 583 167

135
Entura, Pumped Hydro Cost Modelling, at https://www.aemo.com.au/-/media/Files/Electricity/NEM/Planning_and_Forecasting/Inputs-
Assumptions-Methodologies/2019/Report-Pumped-Hydro-Cost-Modelling.pdf.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 105
Inputs and assumptions

ISP sub-region Region PHES: 10-hour PHES: 24-hour PHES: 48-hour

Sydney, Newcastle, Wollongong (SNW) New South Wales - - -

West and North Victoria (WNV) Victoria 2,160 700 400

Greater Melbourne and Geelong (MEL) Victoria - - -

South East Victoria (SEV) Victoria - - -

Northern South Australia (CSA) South Australia 540 200 0

Central South Australia (CSA) South Australia 135 - -

South East South Australia (SESA) South Australia - - -

Tasmania (TAS) C Tasmania 1,300 1,200 371

A. The South Queensland limits do not include Borumba Dam Pumped Hydro (2 GW), which will be modelled as a specific project.
B. Total value excludes the contribution of Snowy 2.0.
C. For Tasmania, this capacity does not include the Cethana project (750 MW).

The following considerations have been made in determining the pumped hydro sub-regional limits:

• New South Wales PHES limits are based on 24 energy projects shortlisted for potential development as part of
the New South Wales Government Pumped Hydro Roadmap 136. The limits have been further adjusted to
provide sufficient capacity to reflect five projects that have been awarded funding under the New South Wales
Pumped Hydro Recoverable Grants Program 137.

– Tasmanian PHES limits have been informed by analysis of the detailed project information within the Entura
report, provided by contributors to the report (but not published). This data avoids misinterpretation of
projects that may not be mutually exclusive and is aligned reasonably with Tasmanian PHES submissions to
Generation Information.

– Where applicable, PHES limits have been adjusted above Entura estimates to ensure proposed projects in
Generation Information submissions can be accommodated.

Batteries

AEMO employs the following assumptions pertaining to large-scale batteries:

• Large-scale battery expansion candidates are modelled with fixed power to energy storage ratios, but with
flexibility to charge and discharge to achieve the optimal outcome for the system within the fixed power to
energy storage ratio limit.

• Assumptions for battery storages of 1-hour, 2-hour, 4-hour, and 8-hour duration depths are based on data
provided by Aurecon in its 2024 Energy Technology Cost and Technical Parameter Review.

• Battery storage degradation, which Aurecon indicates is 1.8% annually, has been factored in by reducing the
storage capacity of all battery storage by 16% which is an estimate of the average storage capacity over the
battery life of 20 years after taking into account this degradation and estimated operating levels.

• AEMO’s technology cost assumptions consider the usable storage capacity in defining project costs as
sourced from Aurecon, and its modelling assumes a minimum and maximum state of charge of 0% and 100%
respectively in line with Aurecon’s advice.

136
See https://www.energy.nsw.gov.au/nsw-plans-and-progress/major-state-projects/pumped-hydro-roadmap#-pumped-hydro-roadmap-.
137
See https://www.nsw.gov.au/media-releases/pumped-hydro.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 106
Inputs and assumptions

• Exact storage locations are identified considering the storage needs of REZ and regional developments
through time-sequential dispatch and power flow modelling, using AEMO internal expertise to determine
suitable locations where transmission costs may be offset by locating storage.

Solar thermal technology

AEMO models new entrant solar thermal generators as a central tower and receiver with thermal storage. Based
on previous stakeholder feedback reflected in CSIRO’s GenCost 2022-23 Consultation Draft report, the capacity
of the thermal storage component remains at 16 hours.

AEMO’s capacity outlook modelling for previous ISPs used static discharge traces to represent operation.
Following stakeholder feedback, AEMO modified the static discharge traces such that they discharge at night and
during periods of high demand. If reasonable adoption of the technology occurs, subsequent simulations will
include it as a controllable storage object to better represent its operation.

3.5.5 Other technical and cost parameters for new entrants

Input vintage December 2024

Source • Aurecon: 2024 Energy Technology Cost and Technical Parameters Review
• CSIRO: GenCost 2024-25 Consultation Draft
• Entura: 2018 Pumped Hydro Cost Modelling
• Hydro Tasmania information on Cethana project
• 2024 October update Generation Information

Updates since 2023 IASR Updated inputs

Technical and other cost parameters for new entrant generation and storage technologies include:

• Unit size and auxiliary load.

• Seasonal ratings.

• Heat rate.

• Scope 1 emission factors.

• Minimum stable load.

• Fixed and variable operating and maintenance costs.

• Maintenance rates and reliability settings.

• Lead time, economic life, and technical life.

• Storage parameters (including cyclic efficiency and maximum and minimum state of charge).

Details of these parameters are published in the Draft 2025 Inputs and Assumptions Workbook as well as in the
supporting material from Aurecon.

For new entrant generators (assets that are not existing and are developed over the modelling horizon), the
technical life of each asset is observed such that new capacities will be decommissioned at the end of their
respective technical lives. Replacement may not require a ‘greenfield’ solution (a ‘brownfield’ redevelopment may
be appropriate for some assets), but technology improvements often mean that much of the original engineering

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 107
Inputs and assumptions

footprint of a project may require redevelopment. Given that a brownfield solution would likely require site-by-site
assessments and a more bespoke approach, AEMO applies no discount to asset redevelopments, with costs
consistent with new entry greenfield developments. Likewise, there is no requirement for a retired generator to be
replaced at similar location (except for a policy setting requiring a local response to meet a renewable energy
target, for example) so a retirement could be effectively replaced at another NEM location if that minimises costs.

The technical life assumed for new wind and solar projects is 30 years. This assumption has been validated
through the October 2024 Generation Information dataset, which shows that, on average, committed and
anticipated VRE projects have submitted a technical life (reflecting the time between commissioning date and the
expected closure year) of 31 years (solar projects) and 28 years (wind projects). AEMO considers this an
appropriate and supportive benchmark of the assumption.

3.6 Fuel and renewable resource assumptions

3.6.1 Fuel prices

AEMO sourced updated fuel price forecasts from ACIL Allen in November 2024, including natural gas, coal and
diesel prices. Biomethane and hydrogen projections are not available for this stage of the IASR’s release, and may
be included in the Stage 2 release. This section summarises key insights for each fuel; more information on the
derivation of these forecasts is provided in the accompanying ACIL Allen fuel price report (see Appendix A2).

Gas prices

Input vintage November 2024

Source ACIL Allen Consulting

Updates since the 2023 New gas price forecasts based on market analysis and modelling as at mid-2024
IASR

AEMO sourced updated natural gas price forecasts from ACIL Allen in November 2024. The gas price forecasts
consider fundamental inputs such as forecast gas production costs from existing and upcoming fields, reserves,
infrastructure and pipelines, in addition to international gas prices, oil prices and measures of the domestic
economy. The forecasts are also based on assumptions about the influence of international prices on east coast
gas prices through LNG netback pricing, and the local level of competition.

The Australian Domestic Gas Supply Mechanism (ADGSM) reforms commenced 1 April 2023 and are designed to
make the ADGSM more responsive to domestic gas shortfalls, while protecting established long-term contracts.
The effect of the ADGSM reforms and the Heads of Agreement with east coast gas exporters are considered in
the gas price forecasts.

These forecasts also consider the impact of the Federal Government’s mandatory Gas Market Code (Code). The
Code138 was published in July 2023, and includes a reasonable pricing framework of a $12/GJ price cap for
wholesale gas contracts and pricing rules for non-urgent transactions (outside three days) at the Gas Supply
Hubs. Small producers (less than 100 PJ per year) supplying the domestic market are exempt from the pricing

138
See https://www.energy.gov.au/government-priorities/energy-markets/gas-markets/mandatory-gas-code-conduct.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 108
Inputs and assumptions

rules, while other producers can apply for conditional exemptions. A review of the Code must occur by 1 July
2025.

Figure 35 compares industrial gas price forecasts at Melbourne across the scenarios against forecasts presented
in the 2023 IASR. The scenarios differ based on longer-term underlying costs of supply for each scenario and
international demand for LNG. The forecast gas prices are higher than those presented in the 2023 IASR, primarily
due to observed wholesale contract pricing since the introduction of the gas price cap in July 2023. Wholesale
contract prices have been anchored at or around the $12/GJ price cap since it was introduced, and this market
dynamic is expected to continue given tight supply conditions. Combined with rising costs of production, this
results in domestic gas prices remaining steadier throughout the 2020s, despite an expected decrease in global
LNG price due to increased supply from the United States and Qatar during this period.

All other regions are provided in the Draft 2025 Inputs and Assumptions Workbook.

Figure 35 Forecast industrial gas prices by scenario – Melbourne, 2024-25 to 2054-55 ($AUD/GJ)

Figure 36 demonstrates the relationship between regions for the Step Change scenario.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 109
Inputs and assumptions

Figure 36 Forecast industrial gas prices by location – Step Change, 2024 to 2055 ($AUD/GJ)

In the short term, prices are expected to remain largely influenced by the Federal Government’s Code and gas
price cap, with tight market conditions resulting in some price increases through 2026. Following this, the price
forecasts decline to a minimum in the early 2030s, largely driven by a forecast reduction in LNG netback prices139.
Gas prices in the long term are forecast to gradually increase, resulting from the combination of decreasing supply
and increasing real production costs. Brisbane prices diverge from Southern markets over the long term as a
result of the source of local gas supply assumed to concentrate in Queensland and the Northern Territory in these
projections, resulting in higher transportation costs and potential reliance upon higher cost LNG imports for
southern markets (depending on the infrastructure that is developed to provide access to additional supply to
southern customers).

These gas price forecasts assume that new gas production becomes available when required, and makes no
assumptions around access to finance for new gas developments. They also reflect the marginal cost for new
wholesale gas supply in each region.

The gas prices associated with each gas-powered generator are provided in the Draft 2025 Inputs and
Assumptions Workbook and the ACIL Allen fuel price report. The costs include regional pricing, considering the
supply options and the relevant cost of pipeline transmission.

Coal prices

Input vintage November 2024

Source ACIL Allen Consulting

Updates since the 2023 Forecasts updated to reflect expiry of coal price cap
IASR

139
See https://www.accc.gov.au/regulated-infrastructure/energy/gas-inquiry-2017-25/lng-netback-price-series.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 110
Inputs and assumptions

ACIL Allen’s approach considers each generator’s unique situation and takes into account mining costs, unique
mine operational processes (such as wash plant, open cut, underground), export price, and freighting/handling
costs.

In late 2022, the New South Wales and Queensland Governments agreed to implement temporary coal price caps
of $125 per tonne for power stations as part of the Federal Government’s Energy Price Relief Plan. This temporary
measure expired on 30 June 2024 and as a result the coal price forecasts for export exposed black coal
generators now reflect their estimated apparent contract positions.

Coal generators across the NEM source coal in various ways. The three typical pathways are coal sourced from
own mining supply, coal from netback linked contracts, and coal from export linked international spot markets.
Estimated coal prices for each generator consider the specific sources of supply because not all coal generators
are exposed to export pricing dynamics, particularly if they operate from captive mines, or are not using export or
near-export grade black coal.

In setting long run coal prices, the forecasts refer to the IEA 2024 WEO for the Japanese and Coastal China
regions which are most applicable to Australia.

The IEA coal forecasts are aligned to AEMO’s three scenarios as follows:

• Step Change – aligned to the IEA’s STEPS scenario.

• Progressive Change – aligned to the IEA’s APS scenario.

• Green Energy Exports – aligned to the IEA’s NZE scenario.

ACIL Allen’s analysis indicates that for the NZE scenario post 2030, and the APS scenario post 2040, the prices
forecast by the IEA are likely to be sub-economic under the assumed macroeconomic settings. As such, prices for
the preceding period are held constant for the remainder of the price projection representing an expectation that a
supply side response will occur to stabilise prices.

The coal price forecasts are provided in more detail in the Draft 2025 Inputs and Assumptions Workbook.

Figure 37 Forecast coal prices for existing generators in New South Wales, Step Change, 2024 to 2055 ($AUD/GJ)

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 111
Inputs and assumptions

Figure 38 Forecast coal prices for existing generators in Queensland – Step Change, 2024 to 2055 ($AUD/GJ)

Diesel prices

AEMO sourced diesel price forecasts from ACIL Allen to represent appropriate costs for the use of diesel at power
stations in the NEM that can, or could, use liquid fuels as a primary, secondary or backup fuel. ACIL Allen’s
approach evaluates projections of crude oil prices to provide projections of Terminal Gate Prices for automotive
diesel oil. A distributors’ margin is added to the price and a charge for transport from the nearest petroleum
terminal to the power station is calculated.

International oil price is the key consideration in forecasting diesel price, with the crude oil market in a period of
transition and experiencing a decline in the rate of growth in demand for oil globally. Uncertainties considered in
the price forecasts are:

• Outlook for economic growth in advanced, emerging market and developing economies.

• Rates of adoption of EVs, PHEVs and Hybrid light passenger vehicles.

• Progress in improving fuel efficiency in all modes of transport.

• Fuel-switching to biofuels, hydrogen in the longer term and oil to gas switching in the power sector in Middle
Eastern Countries over the medium to longer term.

• Strategies of producers in the Middle East to shore up their national budgets over the medium to longer term.

Figure 39 compares Victorian price forecasts for terminal gate plus distributors margin across the scenarios
against the single forecast presented in the 2023 IASR. Lower forecast diesel prices compared to the 2023 IASR
are due to a lower crude oil price outlook.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 112
Inputs and assumptions

Figure 39 Forecast price for diesel by scenario – terminal gate price plus distributors margin, Victoria, 2024 to 2055
($AUD/GJ)

3.6.2 Renewable resources

Input vintage December 2024

Source • Solcast irradiance and PV output analysis

• BoM
• AEMO SCADA data
• Other relevant reanalysis providers

Updates since 2023 Updated to include the 2023-24 reference year, added additional REZs
IASR

Renewable resource quality and other weather variables are key inputs in the process of producing generation
availability profiles for solar and wind generators. Resource quality data and other weather inputs are updated
annually to include the most recent reference years. This data is obtained from several sources, including:

• Wind speed (at a relevant hub height) from ERA5140 reanalysis data from European Centre for Medium-Range
Weather Forecasts.

• Solar irradiance reanalysis data from Solcast.

• Temperature and ground-level wind speed observation data from the BoM.

• Historical generation and weather measurements from SCADA data provided by participants.

AEMO uses resource-to-power conversion models to estimate VRE generation potential as a function of
meteorological inputs, and calibrates this to historical production levels for existing wind farms. Wind generation

140
At https://www.ecmwf.int/en/forecasts/dataset/ecmwf-reanalysis-v5.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 113
Inputs and assumptions

availability modelling, for example, uses an empirical machine learning model to estimate generator output as a
function of wind speed and temperature, capturing the impacts of high wind and high temperature events
observed in historical data (which may typically lead to generator cut-off protections). Participant information on
generator capabilities during summer peak demand temperatures are overlayed on top of these models. Further
detail on how AEMO estimates half-hourly generation availability profiles for existing, committed and anticipated
VRE generators is provided in the ESOO and Reliability Forecast Methodology 141.

For new entrant VRE generators, AEMO represents onshore wind resource quality in each REZ in tranches
representing sites of differing quality (typically two tranches per REZ), based on an assessment of all available
datapoints that are considered suitable for wind development. AEMO represents solar resource quality based on
an assessment of solar resource at a selection of existing and proposed solar generation sites within each REZ.

Capacity factors representing the resource potential for each REZ and technology are provided in the Draft 2025
Inputs and Assumptions Workbook. The methodology used to derive these will be further detailed and consulted
on in the 2025 ISP Methodology.

Wind and solar resource quality for each REZ is shown below in Figure 40 and Figure 41 respectively.

141
At https://aemo.com.au/-/media/files/electricity/nem/planning_and_forecasting/nem_esoo/2023/esoo-and-reliability-forecast-methodology-
document.pdf.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 114
Inputs and assumptions

Figure 40 Wind resource quality map – average wind speed (m/s) at 150 m hub height

Queensland
Q1
Q1 Far North Qld
Cairns Q2 North Qld Clean Energy Hub
Q2 Q3 Northern Qld
Q4 Isaac
Forsayth Q5 Barcaldine
Q3 Q6 Fitzroy
Townsville
Q7 Wide Bay
Q8 Darling Downs
Proserpine Q9 Banana
Q10
Q10 Collinsville
Mackay

Q5
Q4 New South Wales
N1 North West NSW
Longreach Rockhampton N2 New England
Gladstone N3 Central-West Orana
Q6 N4 Broken Hill
Q9
Bundaberg
N5 South West NSW
N6 Wagga Wagga
N7 Tumut
Q7
Q8 N8 Cooma-Monaro
N9 Hunter-Central Coast
N10 Hunter Coast
Brisbane
N11 Illawarra Coast
N12 Illawarra
Coober Pedy
N13 South Cobar
S6 N2
S6 N1

N4 Victoria
Armidale
N13
N3 V1 Ovens Murray
S5 Broken Hill V2 Murray River
Ceduna S3 N9
Dubbo V3 Western Victoria
V4 South West Victoria
S8 S2 Newcastle V5 Gippsland
S7 N5 Sydney
N10 V6 Central North Victoria
N6 Wollongong V7 Gippsland Coast
Port Lincoln Adelaide V2
N7 N12
V8 Southern Ocean
S4 N11
S1 V3 Canberra
V6

Bendigo South Australia

N8 S1 South East SA
V1
Ballarat
Mount Gambier Melbourne S2 Riverland
V5
S3 Mid-North SA
V4 S4 Yorke Peninsula
V8 V7 S5 Northern SA
S6 Roxby Downs
S7 Eastern Eyre Peninsula
T4 S8 Western Eyre Peninsula
T2
Launceston
T1
Queenstown
Tasmania
Hobart T1 North East Tasmania
T3
T2 North West Tasmania
T3 Central Highlands
T4 North Tasmania Coast

*Three sets of renewable energy resource profiles will be developed for REZ Q8 Darling Downs. They will be Darling Downs, Western Downs, and
Southern Downs.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 115
Inputs and assumptions

Figure 41 Solar resource quality map – average annual global horizontal irradiance (GHI) (kWh/m2/year)

Queensland
Q1
Q1 Far North Qld
Cairns Q2 North Qld Clean Energy Hub
Q2 Q3 Northern Qld
Q4 Isaac
Forsayth Q5 Barcaldine
Q3 Q6 Fitzroy
Townsville
Q7 Wide Bay
Q8 Darling Downs
Proserpine Q9 Banana
Q10
Q10 Collinsville
Mackay

Q5
Q4
New South Wales
Longreach Rockhampton N1 North West NSW
Gladstone N2 New England
Q6 N3 Central-West Orana
Q9
N4 Broken Hill
Bundaberg
N5 South West NSW
N6 Wagga Wagga
Q7
Q8 N7 Tumut
N8 Cooma-Monaro
N9 Hunter-Central Coast
Brisbane
N12 Illawarra
N13 South Cobar
Coober Pedy
S6 N2
S6 N1

N4
Armidale
N13
N3 Victoria
S5 Broken Hill V1 Ovens Murray
Ceduna S3 N9
Dubbo V2 Murray River
V3 Western Victoria
S8 S2 Newcastle V4 South West Victoria
S7 N5 Sydney
V5 Gippsland
N6 Wollongong V6 Central North Victoria
Port Lincoln Adelaide V2 N7
S4 N12
S1 V3 Canberra
V6

Bendigo South Australia

N8 S1 South East SA
V1
Ballarat
Mount Gambier Melbourne S2 Riverland
V5 S3 Mid-North SA
V4 S4 Yorke Peninsula
S5 Northern SA
S6 Roxby Downs
S7 Eastern Eyre Peninsula
T2 T1
S8 Western Eyre Peninsula
Launceston
Queenstown

Hobart Tasmania
T3 T1 North East Tasmania
T2 North West Tasmania
T3 Central Highlands

*Three sets of renewable energy resource profiles will be developed for REZ Q8 Darling Downs. They will be Darling Downs, Western Downs, and
Southern Downs.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 116
Inputs and assumptions

3.7 Financial parameters

3.7.1 Weighted average cost of capital and discount rate

Input vintage December 2024

Source Oxford Economics Australia

Updates since 2023 A macro-economic analysis and confidential survey of empirical cost of capital from across NEM stakeholders.
IASR

In the ISP, the weighted-average cost of capital (WACC) for a project is used in combination with the project’s
economic life to calculate the annuity payments required. As WACC reflects the cost of financing a project, it
impacts the overall project cost and the overall system costs. On the other hand, a discount rate is used to
compare costs and benefits received at different points in time as well as to calculate the present value of future
cash flows, accounting for the time value of money.

The AER’s Cost Benefit Analysis Guidelines142 state that the discount rate in the ISP is “required to be appropriate
for the analysis of private enterprise investment in the electricity sector across the NEM”, and that it should
promote competitive neutrality across investment options. For this reason, AEMO previously used the same rate
as both the discount rate for costs and benefits (to calculate the net present value) and the WACC for annualising
capital costs across all generation and transmission investments.

A WACC reflecting an average investor view about required return on investments in the NEM has been employed
in previous IASRs143. Following stakeholder feedback and using insights from a survey of developers in the NEM
regarding their cost of capital and other inputs144, AEMO proposes to use different values for WACCs for different
technologies to capture different financial assumptions appropriate for each technology. While WACCs may vary
by technology, the ISP must use a singular discount rate that promotes competitive neutrality between network
and non-network options, as required by the AER Cost Benefit Analysis Guidelines.

AEMO engaged Oxford Economics Australia (OEA) to examine three alternative approaches to determine the
latest WACC for each technology across the ISP forecast horizon, and to provide the appropriate discount rate.
OEA’s analysis revealed that some technologies may face higher hurdle rates if they are deemed risky due to
either the perceived lesser role in the energy transition such as coal plant and high-emitting assets, perceived
merchant risks such as battery energy storage systems, or higher construction risks such as pumped hydro
energy storages. Some technologies that have yet to be developed and penetrate the Australian market such as
offshore wind farms are considered lower risk due to available government offtake agreements.

The survey identified merchant risk and construction risk to be important considerations for greenfield
non-network energy projects. A project’s capital structure also impacts on the WACC. The other risk drivers
identified are revenue risk, grid connection risk, policy risk, and social licence. Survey results of pre-tax real
WACC estimates across asset types are shown in Table 23Table 23 below.

142
At https://www.aer.gov.au/system/files/2023-10/AER%20-%20CBA%20guidelines%20-%20final%20amendments%20%28clean%29%20-
%206%20October%202023_0.pdf.
143
At https://aemo.com.au/-/media/files/electricity/nem/planning_and_forecasting/isp/2021/synergies-discount-rate-report.pdf?la=en.
144
See OEA’s discount rate report – listed in Appendix A2.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 117
Inputs and assumptions

Given these findings, AEMO considers it appropriate to set different WACCs for different technology options as it
reflects the reality observed in capitals markets. Table 23 below shows the proposed lower, central, and upper
WACC for relevant technologies.

Table 23 Pre-tax real weighted average cost of capital

Technology Lower bound Central estimate Upper bound

OCGT (small gas turbine) 7.0% 9.0% 12.0%

OCGT (large gas turbine) 7.0% 9.0% 12.0%

A
CCGT 8.5% 10.5% 13.5%
A
CCGT with CCS 8.5% 10.5% 13.5%
A
Biomass 8.5% 10.5% 13.5%

Large scale Solar PV 5.0% 7.0% 10.0%

Solar Thermal (16hrs storage) 8.5% 10.5% 13.5%

Battery storage (1hr storage) 6.5% 8.0% 11.5%

Battery storage (2hrs storage) 6.5% 8.0% 11.5%

Battery storage (4hrs storage) 6.5% 8.0% 11.5%

Battery storage (8hrs storage) 6.5% 8.0% 11.5%

Pumped Hydro Energy Storage (10 hrs) 6.5% 8.5% 11.5%

Pumped Hydro Energy Storage (24 hrs) 6.5% 8.5% 11.5%

Pumped Hydro Energy Storage (48 hrs) 6.5% 8.5% 11.5%

Wind - onshore 5.5% 7.5% 10.5%

Wind - offshore (fixed) 5.5% 7.5% 10.5%

Hydrogen Electrolysers 6.0% 8.0% 11.0%

Electricity - Transmission and Distribution (Regulated) 3.0% 3.0% 4.5%

Electricity - Transmission and Distribution (Unregulated) 4.5% 6.5% 9.5%

Gas - Transmission and Distribution (Regulated) 3.0% 3.0% 4.5%

Gas - Transmission and Distribution (Unregulated) 5.5% 7.5% 10.5%

A. AEMO assumes that the WACC for CCGT, CCGT with CCS and Biomass are the same.

Considering the insights provided from the WACC survey, OEA has recommended that the appropriate discount
rate, for use in the 2025 IASR and 2026 ISP, that promotes competitive neutrality is 7% – based on their macro-
economic assessment. This choice of discount rate aligns with Infrastructure Australia’s guideline for economic
appraisal145, and is commensurate with commercially-orientated investments considered for technologies included
in the ISP.

Analysis of survey results and macro-economic studies found the pre-tax real WACC for non-regulated assets to
be 6.98%, which further reinforces that the assumption of 7.0% is reasonable. In addition, OEA found pre-tax real
WACC estimates ranged between 3% to 15% across asset types, with the WACC being reflective of the level of
risk of each technology.

145
At https://www.infrastructureaustralia.gov.au/sites/default/files/2021-
07/Assessment%20Framework%202021%20Guide%20to%20economic%20appraisal.pdf.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 118
Inputs and assumptions

For the lower bound of the discount rate, AEMO will base it on the most recent AER revenue determination at the
time of the final ISP. In the August 2024 return on debt update146, the AER set the pre-tax real WACC to be 3.00%.
This is consistent with the discretionary guidance in the AER’s CBA Guidelines. For the upper bound of the
discount rate, AEMO proposes to adopt 10% from Infrastructure Australia’s guideline for economic appraisal.

Table 24 presents the values for discount rates in this Draft 2025 IASR, with 2024 ISP values for comparison.

Table 24 Pre-tax real discount rates

Lower bound Central estimate Upper bound

2024 ISP 3.0% 7.0% 10.5%

Draft 2025 IASR 3.0% 7.0% 10.0%

Matters for consultation

• Is the proposed application of technology-specific WACC’s for different technology types appropriate and
reasonable for the ISP?

• Is the discount rate, including its upper and lower bounds, reasonable?

3.7.2 Value of customer reliability

Input vintage December 2023

Source • AER: 2019 Values of Customer Reliability Review
• AER Values of Customer Reliability – Annual adjustment – December 2023

Updates since VCR updated to reflect AER December 2023 update and adjusted to real June 2024 values.
2023 IASR

Values of Customer Reliability (VCRs) are usually expressed in dollars per kilowatt hour (kWh) and reflect the
value different customer types place on reliable electricity supply. VCRs are used in cost benefit analysis to
quantify market benefits arising from changes in involuntary load shedding when comparing investment options.

In accordance with the AER’s Cost Benefit Analysis Guidelines, AEMO is required to use the AER’s most recent
VCRs at the time of publishing the ISP Timetable. The AER releases annual updates to its VCRs based on the
Consumer Price Index for that year, with the most recent adjustment coming in December 2023147. The current
VCRs are summarised in Table 25 below.

Table 25 AER Values of distribution and transmission customer load-weighted VCR by state

New South Wales Victoria Queensland South Australia Tasmania

VCR ($/MWh) 50,359 49,271 47,861 51,687 38,451

146
Based on AER - Transgrid FD PTRM - 2024-25 RoD update - Humelink S2 - August 2024 - Public, at https://www.aer.gov.au/documents/aer-
transgrid-fd-ptrm-2024-25-rod-update-humelink-s2-august-2024-public.
147
At https://www.aer.gov.au/industry/registers/resources/reviews/values-customer-reliability-2019.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 119
Inputs and assumptions

3.7.3 Value of greenhouse gas emissions reduction (VER)

Input vintage February 2024

Source Value of greenhouse gas emission reduction (VER) to 2050 as agreed by Australia’s Energy Ministers and set out in
the AER Guidance May 2024.

Updates since Interpolated to convert to financial years and adjusted to account for inflation.
2023 IASR

Emissions reduction is a new class of benefits in the ISP and the RIT-T framework. This new benefit class reflects
the appropriate consideration of the amendments to the NEO and NER. The VER is calculated consistent with the
method agreed to by Australia’s Energy Ministers in February 2024, and set out in the AER’s explanatory
statement148.

Table 26 Value of greenhouse gas emissions reduction

Year VER ($/tonne CO2-e) Year VER ($/tonne CO2-e)

2024-25 75.26 2037-38 194.64

2025-26 80.45 2038-39 208.14

2026-27 85.12 2039-40 222.15

2027-28 89.80 2040-41 237.21

2028-29 95.51 2041-42 253.30

2029-30 103.81 2042-43 269.91

2030-31 113.67 2043-44 287.55

2031-32 123.53 2044-45 306.76

2032-33 134.43 2045-46 327.00

2033-34 145.85 2046-47 348.28

2034-35 157.27 2047-48 371.12

2035-36 169.21 2048-49 395.52

2036-37 181.67 2049-50 421.99

3.8 Climate change factors

The changing climate has an impact on a number of aspects of the power system, including consumer demand
response to changing temperature conditions, and generation and network availability. The impact of reduced
precipitation on dam inflows is described in Section 3.4.5. The following sections describe other impacts
considered in AEMO modelling.

AEMO recognises that a changing climate may also lead to greater potential challenges in maintaining the
operability of a NEM that is predominantly reliant on intermittent generation for its electricity production,
particularly during long periods of dark and still conditions that would lower renewable generation output. AEMO
recognises that geographic and technological diversity are key means to lower the impact of extreme conditions in

148
AER. Valuing emissions reduction – AER guidance and explanatory statement, at https://www.aer.gov.au/system/files/2024-05/AER%20-
%20Valuing%20emissions%20reduction%20-%20Final%20guidance%20and%20explanatory%20statement%20-%20May%202024.pdf.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 120
Inputs and assumptions

this regard, however it is possible that weather extremes will still impact the resilience of a renewable energy
system and increase the magnitude of extreme demand conditions as well, beyond that which is already
considered in AEMO’s forecasting approach which passes through forecast average temperature rise over time
(as described in the following section).

3.8.1 Temperature change impacts

Input vintage January 2019 (CMIP5)

Source BoM, CSIRO, ESCI (see ClimatechangeinAustralia.gov.au)

Updates since 2023 IASR No update since the 2023 IASR

AEMO incorporates climate change temperature change factors in its demand forecasts and transmission line
thermal ratings in forecasting models where constraints are applied. For demand, AEMO adjusts historical weather
outcomes to apply in future years based on the outcomes projected by forecast climate models. Climate data is
collected from ESCI data published on the CSIRO and BoM’s website Climate Change in Australia 149. For more
information on this, see Appendix A.2.3 of the Electricity Demand Forecasting Methodology 150.

For transmission line ratings, AEMO applies the most relevant temperature rating available for the equipment for
the projected weather outcome. At present, AEMO applies seasonal ratings for most regions, as published in the
transmission equipment ratings151, except for Victoria where forecast dynamic line ratings are available for some
transmission lines for application in the reliability forecasting models.

Climate Change in Australia and ESCI data projects gridded daily minimum and maximum temperatures for each
global climate model (GCM) for each of the RCP pathways (outlined in Section 3.2). Data is selected for the
closest available RCP to the scenario specification. Climate science considers that warming over the next 20 years
or so is largely locked in from historical emissions, so adjustments do not vary substantially between scenarios to
2050. Where the physical impacts associated with the RCPs referenced in the scenario narrative are not available,
results are scaled between available RCPs (often just 4.5 and 8.5) to reflect the likely outcome.

Figure 42 shows the change to summer maximum temperature anomaly ranges expected for Southern Australia
under two atmospheric greenhouse gas concentrations relevant to the scenario definitions 152. The figure uses the
lighter shaded lines to demonstrate uncertainty between climate models as represented by the 90 th and 10th
percentiles, however, shows a high level of agreement in the median (solid line) towards increasing temperatures
in AEMO modelling timeframes for the emissions scenarios included.

149
At https://www.climatechangeinaustralia.gov.au/en/climate-projections/explore-data/data-download/station-data-download/.
150
At https://www.aemo.com.au/-/media/files/stakeholder_consultation/consultations/nem-consultations/2020/electricity-demand-forecasting-
methodology/final-stage/electricity-demand-forecasting-methodology.pdf.
151
See https://www.aemo.com.au/energy-systems/electricity/national-electricity-market-nem/data-nem/network-data/transmission-equipment-
ratings.
152
Data sourced from www.climatechangeinaustralia.com.au.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 121
Inputs and assumptions

Figure 42 Southern Australia summer maximum temperature anomaly

3.9 Renewable energy zones (REZs)

REZs are areas where clusters of large-scale renewable energy can be developed using economies of scale. REZs
may include onshore and offshore areas and will be subject to jurisdictional land and environmental planning
approval processes. With the relevant government support, AEMO could trigger REZ Design Reports to require
the local TNSP to explore and report on any technical, economic or social issues that will need to be addressed
for the REZ to be a valuable, sustainable and welcome development. However, most states are currently exploring
state-based development schemes in preference to REZ Design Reports. AEMO will continue to coordinate with
jurisdictions as REZ plans develop, to ensure planning alignment.

An efficiently located REZ can be identified by considering a range of factors, primarily:

• The quality of its renewable resources, diversity relative to other renewable resources, and correlation with
demand.

• The cost of developing or augmenting transmission connections to transport the renewable generation
produced in the REZ to consumers.

• Its proximity to load, and the network losses incurred to transport generated electricity to load centres.

• The critical physical must-have requirements to enable the connection of new resources (particularly
inverter-based equipment) and ensure continued power system security.

REZ candidates were initially developed in consultation with stakeholders for the 2018 ISP, and used as inputs to
the ISP model. To connect renewable projects beyond the current transmission capacity, additional transmission
infrastructure will be required (for example, increasing thermal capacity, system strength, and developing robust

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 122
Inputs and assumptions

control schemes). Since the 2018 ISP, the REZ candidates have been continuously refined through the ISP
consultation process every two years up to and including the 2024 ISP. AEMO now proposes another evolution to
the candidate REZs.

This section describes the proposed parameters for REZs for input to the 2026 ISP. These parameters are:

• Geographic boundaries and resource areas – Section 3.9.1.

• Resource limits – Section 3.9.2.

• Transmission limits – Section 3.9.3.

• REZ augmentations and network costs – Section 3.9.4.

3.9.1 REZ geographic boundaries and resource areas

Input vintage December 2024

Status Draft
Source AEMO – based on 2018 DNV-GL report, ISP workshops, consultation with TNSPs and jurisdictions, and
written feedback to every ISP up to and including the 2024 ISP.

Update process Updates will be dependent on feedback received on this Draft 2025 IASR.

Updates since 2023 IASR Updated following joint planning and collaboration with TNSPs, jurisdictional bodies and governments. The
following revisions are proposed:
• New South Wales: Additional candidate REZ called South Cobar.
• Queensland: Additional candidate REZ called Collinsville, boundary changes for Far North Queensland and
Isaac candidate REZs, and addition of more wind resource tranches within the Darling Downs candidate
REZ.
• South Australia: Expansion of Northern South Australia candidate REZ to include the Whyalla West area,
and removal of South East South Australia Coast and Leigh Creek candidate REZs.

REZ candidates are geographic areas that indicate where new renewable energy generation might be developed
using economies of scale. These were initially developed through consultation to the 2018 ISP and subsequently
updated through ISP consultation every two years up to and including the 2024 ISP.

Geographic Information Systems (GIS) data

GIS data defining the candidate REZ boundaries is available on the 2025 IASR consultation page 153. When
accessing this data, please note:

• Only candidate REZ boundaries have been provided, not any GPS data for assets owned by third parties (for
example, generation and network data).

• The GIS data for candidate REZs is approximate in nature. The polygons were derived by replicating the
candidate REZ illustration (see Figure 43 below).

• As the REZ polygons are approximate in nature, they should not be used to determine whether a project is
within or outside of a candidate REZ.

153
See https://aemo.com.au/en/consultations/current-and-closed-consultations/2025-iasr.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 123
Inputs and assumptions

In some cases, jurisdictional REZ plans are still under development and boundaries may not have been identified.
Where updated REZ boundaries are available, AEMO will update its GIS data accordingly.

Candidate REZ identification

Ten development criteria were used to identify candidate REZs154:

• Wind resource – a measure of high wind speeds (above 6 m/s).

• Solar resource – a measure of high solar irradiation (above 1,600 kW/m 2).

• Demand matching – the degree to which the local resources correlate with demand.

• Electrical network – the distance to the nearest transmission line.

• Cadastral parcel density – an estimate of the average property size.

• Land cover – a measure of the vegetation, waterbodies, and urbanisation of areas.

• Roads – the distance to the nearest road.

• Terrain complexity – a measure of terrain slope.

• Population density – the population within the area.

• Protected areas – exclusion areas where development is restricted.

Using the resource quality and development criteria, along with feedback received from all four ISP consultations
as well as recent joint planning and consultation with TNSPs, jurisdictional bodies and governments, AEMO is
proposing 43 candidate REZs for inclusion in the 2026 ISP.

Proposed changes since the 2024 ISP

Based on AEMO analysis and recent feedback from existing and intending TNSPs and state and federal
governments, the following changes to the 2024 ISP candidate REZs are proposed:

• AEMO has revised the southern border of the Far North Queensland REZ to better cover locations with good
wind resources, as well as to better match the Queensland Government’s REZ Roadmap155 identification of a
Far North Queensland REZ location.

• AEMO has changed the boundary of the Isaac REZ, and added a nearby new candidate REZ – Collinsville REZ.
These changes allow for mapping of these REZs to the proposed revised Central and Northern Queensland
sub-region definitions (see Section 3.10.1), and to align with the Queensland Government’s REZ Roadmap
identification of REZs in that area.

154
See https://www.aemo.com.au/-/media/Files/Electricity/NEM/Planning_and_Forecasting/ISP/2018/Multi-Criteria-Scoring-for-Identification-of-
REZs.pdf.
155
Queensland Government, Queensland Renewable Energy Zone roadmap, March 2024. At
https://www.epw.qld.gov.au/__data/assets/pdf_file/0036/49599/REZ-roadmap.pdf

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 124
Inputs and assumptions

• AEMO proposes to include multiple resource areas for Darling Downs REZ 156, as well as expansion of the
north-west border, to better reflect the diversity of wind resource available across its large geographical area,
as identified in the Queensland Government’s REZ Roadmap.

• South Cobar, a new candidate REZ in the vicinity of Central West New South Wales, is proposed following joint
planning with Transgrid and EnergyCo, and in recognition of concepts explored in Transgrid’s 2024
Transmission Annual Planning Report. This new candidate REZ would allow exploration of the benefits of a
more westerly additional REZ in that jurisdiction.

• An expansion of the Northern South Australia REZ is proposed to include the Whyalla West area in the vicinity
of Central West South Australia. This is proposed to assess the potential benefits of renewable energy in the
areas identified in the South Australian Government’s land release framework for renewable energy.

• Removal of the offshore candidate REZ South East South Australia Coast, in recognition that this area is not
one of the Federal Government’s priority areas for offshore wind 157, and in recognition of the South Australian
Government’s statement that its immediate focus will be the identification of onshore locations for wind and
solar resource development, and that offshore renewable energy policy will not commence until after the first
onshore release areas have progressed158.

• Removal of the Leigh Creek REZ in acknowledgement of environmental, cultural and social concerns relating to
this location and recognising that it did not feature in the 2024 ISP under any scenario.

• Adjustment of the Northern South Australia and Mid North South Australia REZ borders to ensure they align
with the new Northern South Australia and Central South Australia sub-regional boundaries.

Further consultation on Victorian REZs

VicGrid is a division within the Victorian Government’s Department of Energy, Environment and Climate Action,
and is responsible for coordinating the planning and development of REZs in Victoria. VicGrid recently carried out
public consultation on a REZ study area for potential future REZs for inclusion in the 2025 Victorian Transmission
Plan (VTP)159. AEMO recognises that candidate REZs for inclusion in the 2026 ISP may need to change as the VTP
is finalised, and will continue to work closely with VicGrid between the release of the draft and final 2025 IASR and
as the 2025 VTP is prepared. VicGrid will publish a draft 2025 VTP for feedback in early 2025, and stakeholders
may wish to engage in that consultation process. AEMO will engage closely with VicGrid as the VTP consultation is
finalised and as the VTP outcomes are prepared, and will incorporate VTP outcomes in the final 2025 IASR where
appropriate.

156
This change is subject to the completion of AEMO’s review of its ISP Methodology. AEMO is proposing to change the methodology to
permit the use of additional wind resource tranches within a REZ, for example to reflect resource diversity across large geographical areas.
For more information about the ISP Methodology review, see https://aemo.com.au/consultations/current-and-closed-consultations/2026-isp-
methodology.
157
Federal Government. ‘Australia’s offshore wind areas’, accessed in November 2024. At https://www.dcceew.gov.au/energy/renewable/
offshore-wind/areas.
158
South Australia Government. ‘Offshore renewable energy development in South Australia’, August 2024. At Statement-on-offshore-
renewable-energy-generation_August-2024.pdf.
159
VicGrid. ‘Developing the 2025 Victorian Transmission Plan’, accessed in November 2024. At https://engage.vic.gov.au/victransmissionplan.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 125
Inputs and assumptions

Modelling renewable energy outside of REZs

When determining the economic benefits of a development path, AEMO must compare system costs against a
counter-factual where no transmission is built. In this counter-factual, transmission that expands the capacity of
REZs will generally not be allowed.

To conduct this analysis, it will become necessary to model renewable generation connecting to areas with
existing network hosting capacity, but which may also have lower quality resources. For this reason, resource
limits, resource quality, and network capacity are also determined for areas of the network that have existing
hosting capacity, or where generation retirement is expected to result in additional network capacity. These areas
are known as “non-REZs”. These lower quality resource areas are included in all simulations, in all scenarios, not
just the counterfactual studies. This ensures the ISP’s capacity outlook model can determine the optimal trade-off
between development of high-quality renewable resources in REZs, with associated network build, compared to
developing lower quality resources in areas with spare hosting capacity.

No changes have been made for non-REZs since the 2024 ISP. The inputs and assumptions relating to non-REZs
are provided in detail in the Draft 2025 Inputs and Assumptions Workbook.

Candidate REZ geographic boundaries

Figure 43 shows the geographic locations of REZ candidates. The location of generation symbols is illustrative
only – these symbols do not reflect the location of actual projects or the location where projects should be
developed.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 126
Inputs and assumptions

Figure 43 Candidate renewable energy zone map

Matters for consultation

• Do you have any specific feedback on the proposed updates to the candidate REZs?

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 127
Inputs and assumptions

3.9.2 REZ resource limits and social licence

Input vintage December 2024

Status Draft

Source AEMO. Resource limits were derived by AEMO based on 2018 DNV-GL report, ISP workshops, consultation
with TNSPs and jurisdictions, and written feedback to every ISP up to and including the 2024 ISP.

Update process Updates will be dependent on feedback received on this Draft 2025 IASR.

Updates since 2024 ISP The following revisions have been made to align resource limits with the proposed amendments to the REZ
geographic boundaries, and/or to reflect updated information received from TNSPs and jurisdictional bodies:
• New South Wales: Resource limits provided for the new South Cobar candidate REZ.
• Queensland: Revised resource limits for Isaac and Darling Downs candidate REZs, as well as limits for the
new Collinsville candidate REZ.
• South Australia: Resource limits amended to reflect revised boundary for the Northern South Australia
candidate REZ to extend to the Whyalla West area.
• Victoria: Addition of a wind resource limit for the Murray River candidate REZ.

REZ resource limits reflect the total available land for renewable energy developments, expressed as installed
capacity (MW). The availability is determined by existing land use (for example, agriculture) and environmental
and cultural considerations (such as national parks), as well as the quality of wind or solar irradiance.

AEMO adjusts REZ resource limits when the boundary of a REZ changes or when appropriate evidence becomes
available from localised consultation and studies. As desktop studies and stakeholder engagement have already
been completed to prepare the existing REZ resource limits, AEMO expects that any further changes will need to
be based on localised evidence as REZ projects are developed and delivered.

AEMO proposes the following changes since the 2024 ISP:

• Revised resource limits for Isaac REZ to reflect proposed updates to its geographical boundary, and included
resource limits for Collinsville REZ based on the original REZ resource limits, but scaled for the new land areas.

• Included resource limits for the additional proposed wind resource tranches in the Darling Downs REZ based
on advice from Powerlink with respect to diversity of resources and connection interest.

• Included resource limits for the proposed South Cobar REZ in New South Wales based on advice from
Transgrid, EnergyCo and developer interest.

• Included revised resource limits for the expanded Northern South Australia REZ to extend to the Whyalla West
area, based on advice from jurisdictional bodies.

• Added a wind resource limit for Murray River REZ based on updated TNSP advice around increased
connection interest from wind farm proponents in this zone.

The updated resource limits are shown in Figure 44 and provided in detail in the Draft 2025 Inputs and
Assumptions Workbook.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 128
Inputs and assumptions

Figure 44 REZ resource limits and initial transmission limits

30,000 70,000

25,000 60,000

Offshore REZ capacity (MW)

50,000
20,000
REZ Capacity (MW)

40,000
15,000
30,000
10,000
20,000

5,000 10,000

0 0
Tumut
Cooma-Monaro
Wide Bay

Banana
Fitzroy

Gippsland

Northern SA
Darling Downs
Northern Qld
Isaac

Broken Hill

Wagga Wagga

Riverland

Roxby Downs
North West NSW

Central-West Orana

South West NSW

Illawarra

North Tasmania Coast

Barcaldine

South Cobar
Ovens Murray

Central North Victoria

South East SA

Yorke Peninsula

North East Tasmania

North West Tasmania

Hunter Coast
Mid-North SA

Central Highlands
North Qld Clean Energy Hub

Collinsville

New England

Hunter-Central Coast

Murray River
Far North QLD

Western Victoria
South West Victoria

Gippsland Coast
Southern Ocean
Eastern Eyre Peninsula
Western Eyre Peninsula

Illawarra Coast
Solar Wind-Medium Wind-High Wind Offshore-Fixed Wind Offshore-Floating Initial Transmsssion Limit

Note: Offshore REZ capacities use right axis scale. The dotted purple line is to separate offshore and onshore REZs.

Onshore wind farm resource limits

Maximum REZ wind generation resource limits were initially calculated based on a DNV-GL160 estimate of:

• Typical wind generation land area requirements.

• Land available that has a resource quality of high (in the top 10% of sites assessed), and medium (in the top
30% of sites assessed, excluding high quality sites), and an assumption that only 20% of this land area will be
able to be utilised for wind generation, considering competing land and social limitations.

These resource limits have evolved through each ISP since the 2018 ISP to incorporate input from TNSPs,
changes to REZ geographic boundaries, and increased connection interest, and to include existing, committed,
committed* and anticipated generation in each REZ 161 (see Section 3.5.1 for more information on classification of
generation projects). In response to the latest updates of the committed and anticipated generation 162, AEMO
proposes to add an onshore wind resource limit to Murray River REZ in Victoria in recognition of increased
connection interest since the 2023 IASR.

The resource limits are shown above in Figure 44, and are further detailed in the Draft 2025 Inputs and
Assumptions Workbook.

160
Multi-Criteria-Scoring-for-Identification-of-REZs DNV-GL, 2018, at https://www.aemo.com.au/-/media/Files/Electricity/NEM/
Planning_and_Forecasting/ISP/2018/Multi-Criteria-Scoring-for-Identification-of-REZs.pdf.
161
AEMO, NEM Generation Information July 2021, at https://www.aemo.com.au/-/media/files/electricity/nem/planning_and_forecasting/
generation_information/2021/nem-generation-information-july-2021.xlsx.
162
AEMO. NEM Generation Information October 2024, at https://aemo.com.au/energy-systems/electricity/national-electricity-market-nem/nem-
forecasting-and-planning/forecasting-and-planning-data/generation-information.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 129
Inputs and assumptions

Solar farm resource limits

Maximum REZ solar generation resource limits (both CST and PV) have been calculated based on:

• Typical land area requirements for solar PV.

• An assumption that only 0.25% of the approximate land area of the REZs will be able to be used for solar
generation. This allocation is significantly lower than wind availability, as solar farms have a much larger impact
on alternative land use than wind farms, which require reasonable distance between wind turbines.

The initial resource limits were adjusted in each ISP since the 2018 ISP to incorporate input from TNSPs, changes
to REZ geographic boundaries, and increased connection interest, and to include existing, committed, committed*,
and anticipated generation in each REZ160.

No changes are proposed for the existing REZ resource limits for the 2026 ISP. The resource limits are shown in
Figure 44 above and are further detailed in the Draft 2025 Inputs and Assumptions Workbook.

Offshore wind resource limits

After considering announced projects and stakeholder feedback, AEMO included six candidate offshore REZs for
the 2024 ISP. These zones were broadly located based on public information on offshore wind projects. AEMO
now proposes to remove the South East South Australia Coast offshore candidate REZ for the 2026 ISP in
recognition of that this area is not currently listed as an offshore wind area on the Australian Government’s
offshore wind website.

Table 27 provides the specific resource limits for each offshore REZ for both fixed and floating offshore wind
turbine structures, prepared with consideration of the ocean depth of each offshore REZ.

Table 27 Offshore REZ resource limits

Offshore REZ Resource limits – fixed Resource limits – floating REZ area (km2)
structures (MW) structures (MW)

N10 – Hunter Coast 0 7,420 1,854

N11 – Illawarra Coast 148 5,696 1,022

V7 – Gippsland Coast 54,996 5,000 14,999

V8 – Southern Ocean 780 3,330 1,030

T4 – North Tasmania Coast 14,400 26,150 10,136

The maximum offshore REZ wind generation resource limit in Table 27 was calculated based on:

• Assumed turbine capacity density of 5 MW/km 2.

• Allowing for 80% of the offshore REZ area to be developed.

• Fixed offshore wind turbine structures assumed to be built up to a depth of 70 metres.

• Floating offshore wind turbine structures are assumed at a depth above 70 metres but less than 1,000 metres.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 130
Inputs and assumptions

Land use penalty factors in REZs allow for increases in resource limits

Land use reviews with governments indicate that the expansion of REZs is likely to become constrained by social
licence factors, as opposed to purely on land availability (although varying between REZs).

In the 2024 ISP, AEMO applied an additional land use penalty factor of $0.29 million/MW to all new VRE build
costs in a REZ, which applies only if generation is modelled above the original REZ total resource limits. This
penalty factor was applied to capture the expected increase in land costs or difficulties in obtaining land.

For the 2026 ISP, AEMO proposes a land use penalty factor of $0.3 million/MW, which has been adjusted to
account for inflation since the 2023 IASR.

By using the REZ land-use penalty factor, AEMO can model a staged increase in land costs, reflecting more
complicated arrangements required for planning approvals and engagement with community and traditional
landowners as more renewable generation goes into a REZ.

It is vital that developers and TNSPs identify key stakeholders and commence engagement on land and access as
early as possible for AEMO’s assessments of future REZ potential. This includes engagement with communities,
title holders, and Traditional Owners. Early indications of sensitivities in proposed future REZ areas will assist in
the assessment of potential expansion opportunities or limits, thereby improving the projections of future potential
in the ISP candidate paths.

Even with a land use penalty factor, an upper land use limit is also applied to the REZ resources. For the 2024 ISP,
this was based on 5% of land area within a REZ for wind resources and 1% of land area for solar resources, which
AEMO proposes to apply for the 2026 ISP also.

The land area within a REZ can be found in the Draft 2025 Inputs and Assumptions Workbook.

Social licence

In early 2024, Energy Ministers published their Response to the Review of the Integrated System Plan which
included an action on AEMO to have regard to community sentiment when identifying the ISP’s optimal
development path (see Breakout box 1).

Breakout box 1 – Actions in the Energy Ministers’ response to the Review of the ISP –
Incorporating community sentiment

AEMO should have regard to community concerns or sensitive locations in the identification of the ODP, and
consider existing and available data on community sentiment, where available for the 2026 ISP (for example,
from CSIRO surveys or as the result of Tra s issio N twork rvic Provi rs’ co ity a t as
part of preparatory activities).

‘Social licence’ is commonly used to refer to local community acceptance of new infrastructure development. The
efficient and effective transition of the energy sector will rely on both government and the energy industry
understanding and delivering the community's ambition and needs for the future power system, both broadly in
the community, and in the places that host new development. Conversely, a lack of social licence could lead to

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 131
Inputs and assumptions

significant project delays and increased cost. Information about ‘community sentiment’ can broadly be considered
as one indicator of social licence relating to new infrastructure development.

AEMO will include input and feedback from external stakeholders in its overall consideration of social licence and
community sentiment matters for the ISP. In November 2022, AEMO established an Advisory Council on Social
Licence (ACSL), consisting of a diverse cohort of consumer and community organisation representatives and
respected advocates with expertise and understanding in the energy sector, to serve as a strategic advisory body
on social licence matters, including the 2024 ISP. In July 2024, the ACSL evolved into a new format known as the
Consumer and Community Reference Group (CCRG), and membership for a new cohort of the CCRG was
finalised in September 2024. AEMO proposes to seek input and advice from the CCRG for the 2025 IASR and
2026 ISP where appropriate, in addition to undertaking extensive joint planning with TNSPs on this matter.

In the 2024 ISP, AEMO included social licence and community sentiment in a number of ways, as listed below. In
this Draft 2025 IASR, AEMO welcomes stakeholder views and advice on how any of these considerations can be
enhanced for the 2026 ISP.

• Selection of forecasting and planning scenarios, and their narratives (see Section 2).

• Selection of sensitivity analyses, including a ‘social licence’ sensitivity for the Draft 2024 ISP.

• Selection of transmission augmentation options, including cost, estimates, conceptual design and broad
location, and application of transmission network augmentation costs and generator connection costs. For
example, social licence consideration may require longer routes, additional landowner compensation and
consideration for under grounding of some overhead components. Additional cost can also include the cost
associated with engagement activities with land holders and communities.

• Consideration of community engagement in project lead times.

• Selection of locations for candidate REZs through consultation, and through map overlay with the ‘National
Native Title Tribunal, Native Title Determinations and Claimant Applications’.

• Preparation of REZ parameters, including land use limits (and a land use penalty factor for exceedance)
(see above), and resource limits (above). For example, the use of land-use penalty factors is a reflection that
REZ development is likely to be limited by social licence rather than renewable resources.

AEMO will consult on transmission and distribution augmentation cost, generator connection costs and project
lead times in the 2025 Network Expansion Options Report consultation (formerly known as the Transmission
Expansion Options Report). However, AEMO is also seeking stakeholders’ views on how community sentiment can
be incorporated in the development of these parameters in this Draft 2025 IASR consultation.

Matters for consultation

• Do you have specific feedback on the proposed REZ resource limits?

• Is the maximum land use assumption of 5% for the REZ hard limits appropriate?

• Do you have specific feedback on the incorporation of community sentiment in the development of REZs?

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 132
Inputs and assumptions

3.9.3 REZ transmission limits

Input vintage December 2024

Status Draft

Source Based on the 2023 Transmission Expansion Options Report and feedback to the 2023 ISP Methodology
consultation

Update process Updates will be dependent on feedback received on this Draft 2025 IASR.

Updates since 2024 ISP The following revisions have been made to align REZ transmission limits with the proposed amendments to
the REZ geographic boundaries, sub-regional flow path definitions, and/or to reflect updated information
received from TNSPs and jurisdictional bodies:
• New South Wales: transmission limits provided for the new South Cobar candidate REZ and the SWNSW1
secondary transmission limit has been updated to incorporate the N4 Broken Hill REZ contribution. South
West NSW REZ limit has been revised consistent with updates to SWNSW1.
• Queensland: transmission limits for Isaac REZ have been updated to reflect the new REZ boundary, and
the Northern Queensland REZ limit will be represented by NQ1 group constraint, replacing NQ2. A new
group constraint CQ1 has been added to account for generation south of Isaac REZ. Limits for the new
Collinsville REZ will be modelled with the CQ-NQ sub regional limit. Finally, the SWQLD1 group constraint
has been updated to reflect the additional resource traces in Darling Downs REZ.
• South Australia: transmission limits amended to reflect revised boundary for the Northern South Australia
REZ to extend to the Whyalla West area. The MN1 North and S1-TBMO limits have been replaced
respectively by the new CSA-NSA and SESA-CSA flow paths. Eastern Eyre Peninsula REZ has been
updated based on revised line ratings.
• Victoria: the SEVIC1 group constraint has been replaced by the new SEV-MEL flow path limit.

Individual REZ transmission limits

Network studies were undertaken to identify REZ transmission limits of the existing network. Since the 2022 ISP,
REZ transmission limits have reflected total transmission limits rather than surplus hosting capacity. The REZ
transmission limit is expressed as an inter-temporal generation constraint. The purpose of the constraint is to limit
the generation dispatch up to the transmission limit which can be increased when it is economically optimal.

Where flows across the transmission limit in a REZ are affected by generation, AEMO applies a generation
constraint to reflect this dependency within the REZ. This was consulted on through the 2023 ISP Methodology.

The following changes are proposed to the 2025 IASR transmission limits and generation constraints:

• The new Collinsville REZ limit will be modelled as part of the Central Queensland – North Queensland
sub-regional limit.

• The Isaac REZ modelling has been revised to consider the updated REZ boundary and will be modelled as part
of the CQ1 group constraint limit.

• Northern Queensland REZ limit will now be modelled as part of the NQ1 group constraint limit.

• Limits are now provided for the new South Cobar REZ.

• The South West NSW REZ limit has been updated consistent with updates to the SWNSW1 secondary
transmission limit.

• The Eastern Eyre Peninsula REZ limit has been reviewed based on updated ratings.

• In some cases, offshore REZ resources are anticipated to connect through to the transmission network via an
onshore REZ. These resources will all be modelled within the individual REZ transmission limit for the onshore
REZ.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 133
Inputs and assumptions

Table 28 REZ transmission limit constraints

Transmission REZ Co-efficient Constraint terms Transmission-

constraint limited total
name build (MW)

Darling 0.12 Generation in Western Downs area 2,600

Downs
0.36 Generation in Darling Downs area

0.95 Generation in Southern Downs area

SWQLD1
0.78 North New South Wales to South Queensland flow (Queensland –
New South Wales Interconnector [QNI])

-0.09 South Queensland to Central Queensland flow

Secondary transmission limits within a REZ

Where there are significant transmission limits that apply to only a subset of generation within a REZ, a secondary
transmission limit can be modelled. It is noted that the inclusion of an additional limit can significantly impact on
simulation complexity. These are only included where impacts are deemed significant, such as where existing
generation is already seeing network congestion. No new additional secondary limits are proposed.

The following change is proposed to the 2025 IASR Secondary transmission limits:

• The SWNSW1 secondary limit has been updated to incorporate the Broken Hill REZ contribution as an explicit
term, based on TNSP feedback.

Table 29 REZ secondary transmission limits

REZ Constraint terms Transmission Transmission limit (summer peak/summer

constraint typical/winter reference) in MW

N5 (Existing) • Limondale 1 & 2 Solar Farm SWNSW1 1,200/1,200/1,200

• Sunraysia Solar Farm
• Coleambally Solar Farm
• Finley Solar Farm
• Darlington Point Solar Farm and Battery
Energy Storage System (BESS)
• Hillston Sun Farm
• Riverina BESS 1 and 2

• Broken Hill Solar Farm and BESS

N4 (Existing) • Silverton Wind Farm
• Silver City Energy Storage

• Refer to Draft 2025 Inputs and Assumptions V3-EAST 600/600/800

V3
Workbook for full constraint definitions V3-WEST 780/780/980

Matters for consultation

• Do stakeholders have any other suggestions for representation of REZ transmission limit constraints and the
secondary REZ transmission limits?

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 134
Inputs and assumptions

Group constraints

The transmission network is a complex and interconnected system. Transmission flows are influenced by
generation and system services across multiple locations. Within AEMO’s capacity outlook model, simplifications
are needed to represent the power system to keep the optimisation problem tractable, which may rely on flow
limits being influenced by single REZ outcomes.

To address this need, “group constraints” are applied. These constraints combine either the generation from more
than one REZ, or the generation within a REZ with the power flow along a flow path, to reflect network limits that
apply to multiple areas of the power system. Table 30 below shows the group constraints that apply in the capacity
outlook model. These have been developed by considering the limits observed from power system analysis, and in
consultation with TNSPs.

Based on AEMO analysis and recent feedback from existing and intending TNSPs, the following changes to the
REZ group constraints are proposed:

• With the Central Queensland – Northern Queensland (see Section 3.10.5) sub-region boundary regional
reference node shifting south from Chalumbin 275 kV to Ross 275 kV, the NQ2 group constraint will be
removed and the Northern Queensland limits will be represented by the NQ1 group constraint previously
included in the 2022 ISP.

• A new group constraint CQ1 will be added to reflect the network limits south of Q4 Isaac.

• The SEVIC1 group constraint will be removed and instead represented via the new South East Victoria –
Greater Melbourne and Geelong (SEV-MEL) flow path.

• The MN1 North group constraint will be replaced by the new Central South Australia – North South Australia
(CSA-NSA) flow path.

• The MN1 South group constraint will be updated to include an NSA to CSA sub-regional flow term.

• The SWQLD Darling Downs REZ Group Constraint will be updated to include separate terms and coefficients
for the additional resource trace locations.

• The S1-TMBO limit will be removed as the change to the SESA-CSA boundary now incorporates this cut-set
limit.

Table 30 REZ group transmission constraints

Generator/REZ ID/ Generator / REZ name/Flow path name Group constraint Transmission-limited total build
Flow path name (MW) (summer peak/summer
typical/winter reference)

Q1 Far North Queensland NQ1 2,420/2,420/2,650

Q2 North Queensland Clean Energy Hub

Q3 Northern Queensland

-1 x CQ-NQ Central Queensland - North Queensland CQ1 1,700/1,700/2,070

Q4 Isaac

-0.5 x SQ-CQ Central Queensland - South Queensland SQ1(Before 1,400/1,400/1,400

Queensland
Q7 Wide Bay SuperGrid)

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 135
Inputs and assumptions

Generator/REZ ID/ Generator / REZ name/Flow path name Group constraint Transmission-limited total build
Flow path name (MW) (summer peak/summer
typical/winter reference)

Q7 Wide Bay SQ1 (After -

Queensland
0.42 x Q8 Darling Downs SuperGrid)
-0.82 x CQ-SQ CQ-SQ sub-regional flow

0.75 x BPH Borumba Pumped Hydro

0.51 x Q8_Coal Existing South West Queensland coal and gas

generation (Tarong, Tarong North, Kogan Creek,
Darling Downs, Braemar)

-VIC-SA Heywood Interconnector SWV1 1,850/1,850/1,850

V4 South West Victoria

V8 Southern Ocean

S3 Mid-North SA MN1 1,630/1,630/1,860

S4 Yorke Peninsula

NSA-CSA Flow from NSA to CSA

0.75 x S5 Northern SA new entrant VRE NSA1 585/585/585

S5 West Existing generation in west of S5

S7 Eastern Eyre Peninsula

S8 Western Eyre Peninsula

-CSA Export H2 Electrolyser load in NSA area
Electrolyser load

-0.34 NSA demand Industrial load in NSA area

- 0.75 x S5 Northern SA new entrant VRE NSA1 North 590/590/590

- S7 Eastern Eyre Peninsula

- S8 Western Eyre Peninsula

- S5 West Existing generation in west of S5

CSA Export H2 Electrolyser load in NSA area
Electrolyser load

0.34 NSA demand Industrial load in NSA area

T1 North East Tasmania NET1 1,600/1,600/1,600

T4 North Tasmania Coast

Matters for consultation

• Do stakeholders have any other suggestions for representation of inter-related constraints across multiple
REZs and/or REZs and flow paths?

Modifiers due to committed and anticipated transmission augmentations

This section focuses on REZ transmission limit uplifts due to committed and anticipated transmission
augmentations. REZ transmission limits can change due to either:

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 136
Inputs and assumptions

• Flow path augmentations – a flow path is the portion of the transmission network used to transport significant
amounts of electricity across the backbone of the interconnected system. When flow paths traverse REZs, flow
path upgrades can improve a REZ’s access through the shared transmission network.

• REZ network augmentations – the REZ network connects renewable generation in areas where large-scale
renewable energy can be developed using economies of scale. REZ network augmentations increase, at an
efficient cost, transmission access from the REZ to the NEM shared transmission network.

Committed and anticipated network augmentation projects may increase REZ transmission limits. The REZ
transmission modifiers as a result of committed and anticipated network augmentations are presented in the ‘Build
limits’ tab of the Draft 2025 Inputs and Assumptions Workbook. Committed and anticipated transmission
augmentation projects are defined in Section 3.10.3 and Section 3.10.4.

3.9.4 REZ augmentations and network cost

Input vintage July 2024

Source AEMO internal – Based on the Transmission Cost Database and TNSP data

Update process Transmission Cost Database update and the 2025 Network Expansion Options Report consultation

Get involved 2025 Network Expansion Options Report consultation

For the 2024 ISP, AEMO published the 2023 Transmission Expansion Options Report with an expanded scope of
the earlier 2021 Transmission Cost Report. This report included:

• Transmission augmentation options for flow paths and for REZs including:

– A description of the network option.

– The expected increase in transfer capacity/network capacity.

– For REZs, any modifiers due to flow path augmentations.

– The project cost, including the class of estimate and associated accuracy.

– Project lead time, including consideration for community engagement and establishment of social licence.

• REZ connection costs.

• System strength remediation costs.

For the 2026 ISP, AEMO will continue this initiative by publishing a Network Expansion Options Report with a
scope including transmission network augmentation options and costs as well as some aggregated distribution
network augmentation information. This expanded scope responds to an action on AEMO in the Energy Ministers’
Response to the ISP Review, to optimise demand-side modelling and enhance demand forecasting (see Breakout
box 2, Section 3.10.8). The draft report will be published in early May 2025, followed by a period of consultation.
AEMO will then publish the final 2025 Network Expansion Options Report alongside the 2025 IASR in July 2025.

For the 2025 IASR, AEMO is proposing to allocate the efficient level system strength remediation costs to REZ
connection costs, to form a collective connection point limit cost. This proposed change seeks to align with the

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 137
Inputs and assumptions

recently updated system strength framework163, which states that generally, system strength remediation schemes
must be implemented behind connection points where NSPs are required to undertake system strength impact
assessments. Minimum fault level remediation costs are proposed to also be modelled, in addition to the efficient
level of system strength costs, and are detailed in Section 3.11.1.

Matters for consultation

• Do stakeholders agree with the proposed approach to allocate system strength remediation costs to REZ
connection costs, consistent with the updated System Strength Impact Assessment Guidelines?

3.10 Network modelling

This section outlines the key inputs and assumptions relating to notional power transfers between different parts of
the electricity transmission and distribution networks, as well as the status of nominated network projects and the
capabilities and costs of potential augmentation of the networks. The inputs and assumptions are grouped into the
following categories:

• ISP sub-regions – the power system is modelled in different ways depending on the analysis being performed.
A 15 sub-region structure is proposed to provide more granularity of diverse load patterns for optimisations
that were previously assessed across 12 sub-regions across the NEM (see Section 3.10.1).

• Existing network capacity – this section summarises the existing capacity of the transmission network with
relation to transferring power between sub-regions and includes the changes proposed for the revised sub-
regional definition (see Section 3.10.2).

• Committed transmission projects – these projects are included in all scenarios. Once a project meets five
criteria, the projects are classified as committed and will be modelled in all scenarios (see Section 3.10.3).

• Anticipated transmission projects – major transmission projects that are in the process of meeting three of
the five commitment criteria are classified as anticipated. The treatment of anticipated transmission projects
can vary depending on the type of modelling being performed (see Section 3.10.4).

• Flow path augmentation options – this will be consulted on through the Draft 2025 Network Expansion
Options Report and will include transmission upgrades that are not committed or anticipated, which will be
assessed in the 2026 ISP (see Section 3.10.5).

• Transmission augmentation costs – the costs of transmission augmentation options and the building blocks
used to estimate new augmentations as the need may arise. This will be updated and consulted on through the
Draft 2025 Network Expansion Options Report (see Section 3.10.6).

• Preparatory activities – the 2024 ISP did not trigger preparatory activities for any of the identified future ISP
projects (see Section 3.10.7).

163
AEMO. System Strength Impact Assessment Guidelines, June 2024, at https://aemo.com.au/-/media/files/stakeholder_consultation/
consultations/nem-consultations/2024/ssiag/system-strength-impact-assessment-guidelines-v22.pdf?la=en.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 138
Inputs and assumptions

• Distribution capabilities and potential augmentations – the 2026 ISP will include analysis of distribution
network capabilities and opportunities for CER and other distributed resources. Distribution network service
provider (DNSP) inputs will be consulted on through the Draft 2025 Network Expansion Options Report (see
Section 3.10.8).

• Non-network options – AEMO considers potential non-network options alongside network solutions to
develop an efficient power system strategy (see Section 3.10.9).

• Loss flow equations – loss flow equations are used to reflect the energy lost when transferring energy
between regions, and between sub-regions where appropriate (see Section 3.10.10).

• Marginal loss factors (MLFs) – these values are used to reflect network losses and the marginal pricing
impact of bids from a connection point to the regional reference node (see Section 3.10.11).

• Transmission line unplanned outage rates – forced outage rates of inter-regional transmission elements are
critical inputs for AEMO’s reliability assessments (see Section 3.10.12).

3.10.1 ISP sub-regions

Input vintage December 2024

Status Draft

Source AEMO internal – based on 2024 ISP inputs, and adjusted based on AEMO assessments, supplemented by
advice from TNSPs via joint planning

Update process Updates will be dependent on feedback received on this Draft 2025 IASR

Updates since 2023 IASR Updates proposed to:

• Create three sub-regions for the Victoria region.
• Create a third sub-region in South Australia and amend the definition between the existing sub-regions in
South Australia.
• Amend the definitions of the North Queensland and Central Queensland sub-regions.

The power system is modelled in different ways depending on the analysis being performed. In market and
economic modelling, the electricity network is represented as either a regional or sub-regional topology:

• In the regional topology, each of the five NEM regions is represented by a single reference node. In this
topology, all loads are placed at the respective regional reference nodes, with generation represented across
the power system considering the REZ transmission limits and group constraints described previously.

• The sub-regional topology breaks down some of the NEM regions into smaller sub-regions. In this topology, the
regional load and generation resources are appropriately split between the different sub-regions. Flow path
transmission constraints are added to reflect the capability of the network.

AEMO proposes to make the following changes to the sub-regional topology since the 2024 ISP:

• Separating Victoria into three sub-regions – AEMO proposes to divide the Victorian region from the 2024
ISP into three sub-regions, namely Greater Melbourne and Geelong (MEL), South East Victoria (SEV) and West
and North Victoria (WNV). These changes are intended to improve visibility of constraints in the network for
meeting Greater Melbourne and Geelong demand, and better represent the load diversity in different parts of
Victoria.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 139
Inputs and assumptions

• Separating Central South Australia sub-region into two sub-regions – AEMO proposes to divide the
Central South Australia sub-region into two sub-regions, Northern South Australia (NSA) and Central South
Australia (CSA). This new sub-regional model would better represent the load diversity and patterns in
Northern South Australia distinct from the rest of South Australia, and assist to better capture network
limitations on power transfers towards Northern South Australia and the Eyre Peninsula region.

• Amending the sub-regional boundary of Central Queensland (CQ) to Northern Queensland (NQ) – AEMO
proposes to change the sub-regional boundary between Central Queensland and Northern Queensland, to
move the border to be south of Nebo. This updated boundary is to align and maintain consistency for
measuring and reporting flows on flow paths across planning documents for Queensland. It is also expected to
better represent flows from potential pumped hydro projects into the Northern Queensland sub-region.

• Amending the sub-regional boundary of South East South Australia (SESA) to Central South Australia
(CSA) – AEMO proposes to change the sub-regional boundary between South East South Australia and
Central South Australia, to better align the sub-regional and REZ boundary of South East South Australia and
provide improved visibility of constraints between the South East South Australia REZ and the Adelaide load
centre.

Table 31 lists all the regions and sub-regions that AEMO proposes to use in its studies (and their corresponding
reference nodes). The nodes in bold are those used as reference nodes in the regional topology.

Table 31 NEM regions, ISP sub-regions, reference nodes and REZs

NEM region ISP sub-region Reference node REZs

Queensland Northern Queensland (NQ) Ross 275 kV Q1, Q2, Q3 and Q10

Central Queensland (CQ) Broadsound 275 kV Q4, Q5 and Q6

Gladstone Grid (GG) Calliope River 275 kV -

South Queensland (SQ) South Pine 275 kV Q7, Q8 and Q9A

New South Wales Northern New South Wales (NNSW) Armidale 330 kV N1 and N2
Central New South Wales (CNSW) Wellington 330 kV N3, N9 and N13

Southern New South Wales (SNSW) Canberra 330 kV N4, N5, N6, N7 and N8

Sydney, Newcastle, Wollongong (SNW) Sydney West 330 kV N10, N11 and N12

South Australia Northern South Australia (NSA) Davenport 275 kV S5, S6, S7 and S8

Central South Australia (CSA) Torrens Island 66 kV S2, S3, S4

South East South Australia (SESA) South East 132 kV S1

Tasmania Tasmania (TAS) George Town 220 kV T1, T2, T3 and T4

Victoria Greater Melbourne and Geelong (MEL) Thomastown 66 kV -

South East Victoria (SEV) Hazelwood 500 kV V5 and V7

West and North Victoria (WNV) Moorabool 220 kV V1, V2, V3, V4, V6 and V8
Note: Bold reference nodes are those used for whole of region modelling, for example in the ESOO. In such studies, all regional loads are represented at
the regional reference nodes.
A. In scenarios with large hydrogen export development, Q9 will be modelled within CQ.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 140
Inputs and assumptions

Capacity outlook model representation

In the 2024 ISP, AEMO used a 12-area sub-regional model for capacity outlook modelling. For the 2026 ISP,
AEMO is proposing a 15-area sub-regional model. The sub-regional model provides more granular information on
key intra-regional transmission limitations and augmentations which are not well approximated by interconnectors
and REZ limits. The sub-regional representation and flow paths are presented and described in Figure 45 and
Table 32. For each flow path, AEMO models the alternating current (AC) and direct current (DC) interconnectors
separately, which can result in multiple parallel flow paths.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 141
Inputs and assumptions

Figure 45 ISP sub-regional model

Table 32 Existing network flow path representation between sub-regions

Flow path definition Inter-zonal flow path (forward direction of power flow)
CQ – NQ Bouldercombe – Nebo 275 kV (1 circuit)

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 142
Inputs and assumptions

Flow path definition Inter-zonal flow path (forward direction of power flow)
Broadsound – Nebo 275 kV (3 circuits)
Dysart – Peak Downs/Moranbah 132 kV (1 circuit)
Dysart – Eagle Downs 132 kV (1 circuit)

CQ – GG Bouldercombe – Calliope River 275 kV (1 circuit)

Raglan – Larcom Creek 275 kV (1 circuit)
Calvale – Wurdong 275 kV (1 circuit)
Gin Gin – Calliope River 275 kV (2 circuits)
Teebar Creek – Wurdong 275 kV (1 circuit)

SQ – CQ Woolooga – Teebar Creek 275 kV (1 circuit)

Woolooga – Gin Gin 275 kV (2 circuits)
Halys – Calvale 275 kV (2 circuits)
NNSW – SQ (QNI) Dumaresq – Bulli Creek 330 kV (2 circuits)
NNSW – SQ (Terranora) Terranora – Mudgeeraba 110 kV (2 circuits)

CNSW – NNSW Muswellbrook – Tamworth 330 kV (1 circuit)

Liddell – Tamworth 330 kV (1 circuit)
Hawks Nest tee – Taree 132 kV line (1 circuit)
Stroud – Taree 132 kV line (1 circuit)

SNSW – CNSW Crookwell – Bannaby 330 kV (1 circuit)

Yass – Marulan 330 kV (1 circuit)
Collector – Marulan 330 kV (1 circuit)
Capital – Kangaroo Valley 330 kV (1 circuit)
Yass – Cowra 132 kV (2 circuits)
CNSW – SNW Wallerawang – Ingleburn 330 kV (1 circuit)
Wallerawang – Sydney South 330 kV (1 circuit)
Bayswater – Sydney West 330 kV (1 circuit)
Bayswater – Regentville 330 kV (1 circuit)
Liddell – Newcastle 330 kV (1 circuit)
Liddell – Tomago 330 kV (1 circuit)
Bannaby – Sydney West 330 kV (1 circuit)
Marulan – Avon 330 kV (1 circuit)
Marulan – Dapto 330 kV (1 circuit)
Kangaroo Valley – Dapto 330 kV (1 circuit)
Stroud – Brandy Hill 132 kV (1 circuit)
Stroud – Tomago 132 kV (1 circuit)
Hawks Nest tee – Tomago 132 kV (1 circuit)
Singleton – Rothbury 132 kV (1 circuit which is normally open)

WNV – SNSW Murray – Upper Tumut 330 kV (1 circuit)

Murray – Lower Tumut 330 kV (1 circuit)
Wodonga – Jindera 330 kV (1 circuit)
Red Cliffs – Buronga 220 kV line (2 circuits)
Jindabyne – Guthega 132 kV (1 circuit)
Geehi Dam – Guthega 132 kV (1 circuit)
SNSW – CSA Buronga – Bundy 330 kV (2 circuits)
MEL – WNV Sydenham – Moorabool 500 kV (2 circuits)
Sydenham – Bulgana 500 kV (2 circuits) – post Western Renewables Link (WRL)
Geelong – Moorabool 220 kV (2 circuits)
South Morang – Dederang 330 kV (2 circuits)
Thomastown – Eildon 220 kV (1 circuit)
Geelong – Winchelsea 66 kV (1 circuit)

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 143
Inputs and assumptions

Flow path definition Inter-zonal flow path (forward direction of power flow)
Brooklyn – Bacchus Marsh 66 kV (1 circuit)
SEV – MEL Hazelwood – South Morang 500 kV (2 circuits)
Hazelwood – Rowville 500 kV (1 circuit)
Hazelwood – Cranbourne 500 kV (1 circuit)
Hazelwood – Rowville 220 kV (2 circuits)
Yallourn – Rowville 220 kV (4 circuits)
WNV – SESA (Heywood) Heywood – South East 275 kV (2 circuits)
WNV – CSA (Murraylink) Red Cliffs – Monash HVDC cable
SESA – CSA Tailem Bend – Tungkillo 275 kV (2 circuits)
Tailem Bend – Mobilong 132 kV (1 circuit)
CSA – NSA Bungama – Davenport 275 kV (1 circuit)
Brinkworth – Davenport 275 kV (1 circuit)
Mt Lock – Davenport 275 kV (1 circuit)
Belalie – Davenport 275 kV (1 circuit)

TAS – SEV George Town – Loy Yang HVDC cable

Representation of load and generation within each of the sub-regions is presented in Table 33. Sub-region loads
are represented at the sub-region reference node. The reference node for each sub-region is located close to the
sub-region’s major load centre, except in North and Central Queensland where the nodes have been selected to
capture intra-regional loss equations, and in West and North Victoria where the node has been proposed to
support enhanced visibility of constraints in the network for meeting Greater Melbourne and Geelong demand.

Table 33 Load and generation representation within the sub-regional model

Sub-region Sub-region reference node Load and generation representation

Northern Queensland (NQ) Ross 275 kV All load and generation including and north of Nebo, Eagle
Downs, Peak Downs and Moranbah.

Central Queensland (CQ) Broadsound 275 kV All load and generation including and north of Calvale, Gin Gin
and Teebar Creek substations, except load and generation in
GG and NQ sub-regions.

Gladstone Grid (GG) Calliope River 275 kV All load and generation at Calliope River, Boyne Island, Larcom
Creek and Wurdong substations.

South Queensland (SQ) South Pine 275 kV All Queensland load and generation except load and generation
in CQ, GG and NQ sub-regions.

Northern New South Wales (NNSW) Armidale 330 kV Within New South Wales, all load and generation including and
north of Tamworth substation.

Central New South Wales (CNSW) Wellington 330 kV Within New South Wales, all load and generation including west
of Wallerawang, Wollar, Bayswater, Liddell, Muswellbrook and
Bannaby substations.
South New South Wales (SNSW) Canberra 330 kV Within New South Wales, all load and generation including and
south of Gullen Range, Marulan and Kangaroo Valley
substations.
All load and generation in South West New South Wales.

Sydney, Newcastle and Wollongong Sydney West 330 kV All New South Wales region load and generation except load
(SNW) and generation in CNSW, SNSW and NNSW sub-regions.

West and North Victoria (WNV) Moorabool 220 kV Within Victoria, all load and generation including and north and
west of Moorabool, Eildon, Dederang, Winchelsea and Bacchus
Marsh substations.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 144
Inputs and assumptions

Sub-region Sub-region reference node Load and generation representation

South East Victoria (SEV) Hazelwood 500 kV Within Victoria, all load and generation in Gippsland region
including at Hazelwood, Loy Yang, Yallourn, Jeeralang and
Morwell substations.

Greater Melbourne and Geelong Thomastown 66 kV All load and generation within Victoria, except in WNV and SEV
(MEL) sub-regions.

Northern South Australia (NSA) Davenport 275 kV All load and generation including and north of Davenport and
Eyre Region.

Central South Australia (CSA) Torrens Island 66 kV All load and generation within South Australia except NSA and
SESA sub-regions load and generation.

South East South Australia (SESA) South East SA 132 kV All load and generation including and south of Tailem Bend
within South Australia.

Tasmania (TAS) George Town 220 kV All load and generation within Tasmania.

Matters for consultation

• Does the proposed sub-regional model reasonably represent the network?

Detailed transmission constraint representation for time-sequential models

In the ESOO, and where required in the ISP time-sequential models, AEMO applies a more detailed transmission
representation that is overlaid to the regional model. The NEM transmission network is represented using detailed
transmission constraint equations over a regional topology, similar to what is used in the NEM Dispatch Engine
(NEMDE). These constraints:

• Consider the NEM’s network at 220 kV or above, and other transmission lines under this voltage level that run
parallel to the network at 220 kV or above.

• Calculate the network flow capability (intra- and inter-regional) and the available generator output capacity in
every dispatch interval of the model.

• Are constantly updated to reflect changing power system conditions and outages.

• Are modified to cater for different transmission development pathways and scenarios assessed in an ISP.

3.10.2 Existing transmission capability

Input vintage December 2024

Status Current view

Source AEMO internal supplemented by advice from TNSPs via joint planning

Update process Updates will be dependent on feedback received on this Draft 2025 IASR

Updates since 2024 ISP Updated to reflect the transmission capability of the flow paths proposed to define the boundaries between
the new and amended sub-regions discussed in section 3.10.1. These transmission capabilities were
prepared by reviewing historical transfer performance and undertaking power system analysis, as well as
through joint planning with TNSPs.

Transfer capability across the transmission network is determined by thermal capacity, voltage stability, transient
stability, small signal stability, frequency stability and system strength. It varies throughout the day with generation

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 145
Inputs and assumptions

dispatch, load and weather conditions. In time-sequential market modelling, limits are represented through
network constraint equations. For capacity outlook modelling, notional transfer limits between the regions or
sub-regions are represented at the time of maximum demand in the importing region or sub-region.

AEMO proposes the following changes since the 2024 ISP:

• Revision of flow path limits between Central Queensland (CQ) and Northern Queensland (NQ) to align with the
proposed updated sub-region boundaries.

• Revision of flow path limits between Northern New South Wales (NNSW) and Southern Queensland (SQ) to
reflect the change in Queensland – New South Wales Interconnector (QNI) and Terranora limits (consistent
with the April 2024 Interconnector Capabilities164 report).

• Inclusion of flow path limits between Greater Melbourne and Geelong (MEL) and West and North Victoria
(WNV) to align with the proposed new sub-region boundaries.

• Inclusion of flow path limits between South East Victoria (SEV) and Greater Melbourne and Geelong (MEL) to
align with the proposed new sub-region boundaries.

• Revision of flow path limits between South East South Australia (SESA) and Central South Australia (CSA) to
align with the proposed updated sub-region boundaries.

The proposed Draft 2025 IASR notional transfer limits are in Table 34. They reflect current assessments and may
change as further power system analysis is undertaken, or as the sub-regional representation is refined.
Interconnector transfer capabilities are a subset of this information, and are listed in the Draft 2025 Inputs and
Assumptions Workbook.

Table 34 Notional transfer capabilities between the sub-regions of the existing network (December 2024)

Flow paths Forward direction capability (MW) Reverse direction capability (MW) Comments
(forward power
flow direction) Summer Typical Winter Summer Typical Winter
peak summer reference peak summer reference

CQ – NQ 1,200 1,200 1,400 1,440 1,440 1,910 Amended flow path boundary
proposed in this Draft 2025 IASR.
No change to CQ – NQ forward
capability since 2024 ISP.
Limits were determined with the
inclusion of a minor Strathmore to
Ross line upgrade.
AEMO is working with Powerlink
to further investigate possible
voltage or transient stability limits
associated with CQ – NQ reverse
flow capability.

CQ – GG 700 700 1,050 750 750 1,100 No changes to 2024 ISP.

SQ – CQ 1,100 1,100 1,100 2,100 2,100 2,100 The maximum power transfer
from CQ to SQ grid section is
limited by transient or voltage
stability following a Calvale to
Halys 275 kV circuit contingency.
It is assumed Powerlink will
establish a new substation at

164
AEMO. Interconnector Capabilities, April 2024. At https://aemo.com.au/-/media/files/electricity/nem/security_and_reliability/congestion-
information/2024/interconnector-capabilities.pdf.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 146
Inputs and assumptions

Flow paths Forward direction capability (MW) Reverse direction capability (MW) Comments
(forward power
flow direction) Summer Typical Winter Summer Typical Winter
peak summer reference peak summer reference
Karana Downs for teeing-in both
Blackwall – Rocklea 275 kV lines
to South Pine.
The maximum transfer capability
from SQ to CQ is limited by
thermal capacity of the Blackwall
– South Pine 275 kV line following
a credible contingency.

NNSW – SQ 950 950 950 1,450 1,450 1,450 These amended transfer limits
“Q ” include the completion of the QNI
minor project. QNI Minor is
currently undergoing inter-
network testing to release the
designed maximum capacity.
Queensland to New South Wales
transfer limit is influenced by
generation output from Sapphire
Wind Farm and Tilbuster Solar
Farm.
AEMO is working with Transgrid
to further refine this limit for the
final 2025 IASR.
NNSW – SQ 0 50 50 130 150 200 No changes to 2024 ISP.
“ ” The maximum transfer capability
from NNSW to SQ is limited by
thermal capacity of Lismore –
Dunoon 132 kV lines and from
SQ to NNSW is limited by thermal
capacity of Mudgeeraba 275/110
kV transformers.

CNSW – NNSW 910 910 910 930 930 1,025 No changes to 2024 ISP.
These transfer limits include the
completion of the QNI Minor
project.
AEMO is working with Transgrid
to further refine this limit for the
final 2025 IASR.

SNSW – CNSW 2,700 2,700 2,950 2,320 2,320 2,590 No changes to 2024 ISP.

CNSW – SNW 4,490 4,490 4,730 4,490 4,490 4,730 No changes to 2024 ISP.
Northern limit This limit has been formulated for
the detailed long term capacity
outlook model and should not be
used for other applications. For
detailed long term capacity
outlook modelling, the CNSW-
SNW transfer limit can be
represented as two limits. One as
CNSW-SNW_South and other as
CNSW-SNW_North. For DLT
modelling, this limit is to be
represented with generator
coefficients for generators in
NNSW, CNSW and SNSW. These
generator coefficients are
presented in the “Network
capability” worksheet in the Draft
2025 Inputs and Assumptions
Workbook.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 147
Inputs and assumptions

Flow paths Forward direction capability (MW) Reverse direction capability (MW) Comments
(forward power
flow direction) Summer Typical Winter Summer Typical Winter
peak summer reference peak summer reference
See the Draft 2025 Inputs and
Assumptions Workbook for more
details on CNSW-SNW transfer
limit improvement with Waratah
Super Battery (WSB) network
augmentations and System
Integrity Protection Scheme
(SIPS) control and Central-West
Orana REZ Network Infrastructure
Project.
Power is not expected to
frequently flow from SNW to
CNSW since the major load
centre is SNW. Forward direction
transfer limit will be assessed if of
material importance.

CNSW – SNW 2,540 2,540 2,720 2,540 2,540 2,720 No changes to 2024 ISP.
Southern limit This limit has been formulated for
the DLT model and should not be
used for other applications. For
detailed long term capacity
outlook modelling, CNSW-SNW
transfer limit can be represented
as two limits. One as CNSW-
SNW_South and other as CNSW-
SNW_North. For detailed long
term capacity outlook modelling,
this limit is to be represented with
generator coefficients for
generators in NNSW, CNSW and
SNSW. These generator
coefficients are presented in the
“Network capability” worksheet in
the Draft 2025 Inputs and
Assumptions Workbook.
See the Draft 2025 Inputs and
Assumptions Workbook for more
details on CNSW-SNW transfer
limit improvement with Waratah
Super Battery (WSB) network
augmentations and System
Integrity Protection Scheme
(SIPS) control and Central-West
Orana REZ Network Infrastructure
Project.
Power is not expected to
frequently flow from SNW to
CNSW since the major load
centre is SNW. Forward direction
transfer limit will be assessed if of
material importance.

WNV – SNSW 870 1,000 1,000 400 400 400 No changes to 2024 ISP.
WNV-SNSW transfer limits
assumes the full capacity
provided by VNI Minor.
Victoria SIPS with 250 MW
battery storage in western side of
Melbourne raises the thermal
capacity in the reverse direction
of Victoria – New South Wales
interconnector. SNSW to WNV

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 148
Inputs and assumptions

Flow paths Forward direction capability (MW) Reverse direction capability (MW) Comments
(forward power
flow direction) Summer Typical Winter Summer Typical Winter
peak summer reference peak summer reference
transfer limit during summer peak
periods reduces to 250 MW from
400 MW on conclusion of the VNI
SIPS agreement 31 March 2032.

MEL – WNV 2,300 2,550 4,880 2,300 2,550 4,880 New flow path proposed in this
Draft 2025 IASR.
Generation from MEL is not
expected to supply WNV
(Forward direction) at times of
high demand periods. The
forward direction transfer limits
are assumed to be equal to
reverse direction limits. These
limits will be reviewed in
collaboration with AEMO
(Victorian Planning) and VicGrid.
Transfer limits associated with
post Western Renewables Link
are available in the “Network
Capability” worksheet in the Draft
2025 Inputs and Assumptions
Workbook.

SEV – MEL 7,100 7,430 8,170 7,100 7,430 8,170 New flow path proposed in this
Draft 2025 IASR.
This limit is applicable for the
existing network before
retirement of Yallourn Power
Station.
Power is not expected to
frequently flow from MEL to SEV
since the major load centre is
MEL. Reverse direction transfer
limit will be assessed if material
importance.
Transfer limits with Western
Renewables Link and post
Yallourn power station closure
are available in the “Network
Capability” worksheet in the Draft
2025 Inputs and Assumptions
Workbook.

WNV – SESA 650 650 650 650 650 650 No changes to 2024 ISP.
“ w ” Heywood interconnector
currently operates at 600 MW
forward capability and 550 MW
reverse capability. AEMO and
ElectraNet work towards to
release the transfer capability to
its designed capability of 650 MW
in both directions.

WNV – CSA 165 220 220 100 200 200 Murraylink forward direction is
(Murraylink) limited by HVDC cable thermal
capability which is provided in the
“Network Capability” worksheet
in the Draft 2025 Inputs and
Assumptions Workbook.
SNSW – CSA 150 150 150 150 150 150 This is the design limit of Project
EnergyConnect Stage 1. WNV -
CSA and SNSW - CSA combined

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 149
Inputs and assumptions

Flow paths Forward direction capability (MW) Reverse direction capability (MW) Comments
(forward power
flow direction) Summer Typical Winter Summer Typical Winter
peak summer reference peak summer reference
(Project maximum transfer limit is 750 MW
EnergyConnect in forward direction (import into
Stage 1) SA) and 700 MW in reverse
direction (export from SA).
This transfer limit will increase
with full capacity release of
Project EnergyConnect (Stage 2
completion). Additional transfer
capacity after Stage 2 are
available in the “Network
Capability” worksheet in the Draft
2025 Inputs and Assumptions
Workbook.

SESA – CSA 750 750 800 790 790 820 Amended flow path boundary
proposed in this Draft 2025 IASR.
This transfer limit considers
Project EnergyConnect Stage 1 in
service.
The transient and oscillatory
stability limits may be applicable
on this flow path. AEMO is
working with ElectraNet to refine
this limit for the final 2025 IASR.

CSA – NSA 1,070 1,070 1,230 1,150 1,150 1,200 New flow path proposed in this
Draft 2025 IASR.
A transient or voltage stability
limit lower than the thermal limit
may be applicable for this flow
path.
AEMO is working with ElectraNet
to further refine this limit for the
final 2025 IASR.

TAS – SEV 594 594 594 478 478 478 No changes to 2024 ISP.
Basslink interconnector currently
operates at a peak transfer
capability of 594 MW in forward
direction and 478 MW in the
reverse direction with allowable
capability limited by a daily
energy throughput limit as
outlined in the Draft 2025 Inputs
and Assumptions Workbook.

Committed and anticipated projects may increase the capability of flow paths or result in new flow paths. The flow
path uplift factors and new flow paths as a result of committed and anticipated projects are presented in the
‘Network capability’ tab of the Draft 2025 Inputs and Assumptions Workbook.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 150
Inputs and assumptions

Matters for consultation

• Do you have any specific feedback on the existing and proposed flow path transfer capabilities?

• Do you have any feedback on the uplift factors applied to flow paths as a result of committed and anticipated
projects?

3.10.3 Committed transmission projects

Input vintage December 2024

Status Current view

Source AER and TNSPs – AER’s approval of Contingent Project Application and advice from TNSPs on the status of
projects meeting the commitment criteria

Update process As projects receive committed status, these are updated in the Input and Assumptions Workbook and the
Transmission Augmentation Information page.

Updates since 2024 ISP Yass-Wagga Line Overload Scheme (LOLS) Expansion (NCIPAP) project by Transgrid received committed
status.

AEMO applies the five-criteria definition of a committed project from the AER’s regulatory investment test 165;
specifically, a committed transmission project must meet all the following criteria:

• The proponent has obtained all required planning consents, construction approvals and licences, including
completion and acceptance of any necessary environmental impact statement.

• Construction has either commenced or a firm commencement date has been set.

• The proponent has purchased/settled/acquired land (or commenced legal proceedings to acquire land) for the
purposes of construction.

• Contracts for supply and construction of the major components of the necessary plant and equipment (such as
transmission towers, conductors, terminal station equipment) have been finalised and executed, including any
provisions for cancellation payments.

• Necessary financing arrangements, including any debt plans, have been finalised and contracts executed.

This Draft 2025 IASR applies the committed projects listed in the Transmission Augmentation Information page 166,
December 2024 release. For further details on these projects please see the Draft 2025 Inputs and Assumptions
Workbook or the Transmission Augmentation Information page.

Some projects currently categorised as anticipated (see Section 3.10.4) may become committed before ISP
modelling commences. AEMO intends to update this list of committed projects if a project becomes committed
during the development of the ISP.

165
At https://www.aer.gov.au/system/files/AER%20-%20Regulatory%20investment%20test%20for%20transmission%20-%2025%20August
%202020.pdf.
166
At https://aemo.com.au/energy-systems/electricity/national-electricity-market-nem/nem-forecasting-and-planning/forecasting-and-planning-
data/transmission-augmentation-information.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 151
Inputs and assumptions

3.10.4 Anticipated transmission projects

Input vintage December 2024

Status Current view

Source AER and TNSPs – AER’s approval of Contingent Project Application and advice from TNSPs on the status of
projects meeting the commitment criteria

Update process As projects receive anticipated status, these are updated in the Input and Assumptions Workbook and the
Transmission Augmentation Information page.

Updates since 2024 ISP HumeLink has advanced to anticipated status.

Anticipated transmission projects are transmission augmentations that are not yet committed but are highly likely
to proceed and could become committed soon. AEMO applies the criteria set out in the AER’s regulatory
investment test to determine anticipated projects. These projects must be in the process of meeting three out of
the five committed project criteria (described in Section 3.10.3). Such projects could be network or non-network
augmentations and could be regulated or non-regulated assets.

The Reliability Forecasting Methodology 167 defines which categories of transmission projects are included
(considered to be committed) in reliability assessments. This may include anticipated projects that have received
regulatory approval and minor upgrades that are not subject to the RIT-T but judged to be committed for reliability
assessment purposes. For ISP modelling, anticipated projects will be included in all scenarios.

Generally, transmission projects will be classified as anticipated once they have passed a contingent project
application or similar funding approval. AEMO intends to update the status of anticipated projects if any other
project becomes committed during the development of the ISP.

This Draft 2025 IASR applies the anticipated projects listed in the Transmission Augmentation Information page168,
December 2024 release. For further details on these projects please see the Draft 2025 Inputs and Assumptions
Workbook or the Transmission Augmentation Information page.

3.10.5 Flow path augmentation options

Input vintage June 2024

Status Interim

Source AEMO, 2024 ISP, TNSP

Updates process 2025 Network Expansion Options Report consultation and through further TNSP engagements

Get involved 2025 Network Expansion Options Report consultation

Flow paths are a feature of power system networks, representing the main transmission pathways over which bulk
energy is shipped. They are the portion of the transmission network used to transport significant amounts of
electricity across the backbone of the network to load centres. Flow paths change as new interconnection is

167
At https://aemo.com.au/en/energy-systems/electricity/national-electricity-market-nem/nem-forecasting-and-planning/scenarios-inputs-
assumptions-methodologies-and-guidelines/forecasting-and-planning-guidelines.
168
At https://aemo.com.au/energy-systems/electricity/national-electricity-market-nem/nem-forecasting-and-planning/forecasting-and-planning-
data/transmission-augmentation-information.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 152
Inputs and assumptions

developed, as a result of shifting large amounts of generation into new areas (such as in the case of major REZ
development).

Flow path augmentation options represent new network and non-network options to increase the transfer
capability between ISP sub-regions. Each option is a candidate to be built during capacity expansion modelling.
While many flow path augmentation options increase REZ network capacities, distinct options to expand the
network capacity within individual REZs are modelled through a separate process, outlined in Section 3.9.

When identifying flow path augmentation options across ISP sub-regions to connect REZs and pumped hydro
storage, AEMO considers credible options including the following technologies:

• High voltage alternating current (HVAC) technology.

• High voltage direct current (HVDC) technologies.

• Virtual transmission lines (using grid-scale batteries).

AEMO will consult on flow path augmentation options, including the capacity gained and lead time to deliver the
project, through the Draft 2025 Network Expansion Options Report. Please see Section 3.9.4 for more details.

3.10.6 Transmission augmentation costs

Input vintage June 2024

Status Interim

Source • Actionable projects: RIT-T data with factors applied

• Projects with Preparatory activities: TNSP cost data, cross checked with AEMO’s Transmission Cost
Database
• Future projects: AEMO’s Transmission Cost Database

Update process 2025 Network Expansion Options Report consultation

Get involved 2025 Network Expansion Options Report consultation

For the 2024 ISP, AEMO engaged independent expert consultant Mott MacDonald to update AEMO’s
Transmission Cost Database for use by AEMO in developing cost estimates. It comprised a Cost and Risk
Databook and cost estimation tool, as well as a transmission cost forecasting methodology.

For the 2026 ISP, to reflect the latest changes in the market, AEMO has engaged expert consultant GHD to update
the Transmission Cost Database. The update to the Transmission Cost Database will include:

• Review and update the cost and risk data to align with latest changes in market costs.

• Review and update the cost forecasting tool and methodology.

• Incorporate the latest transmission project information in the update and calibrate escalation factors.

• Prepare an updated Cost and Risk data workbook and forecasting tool, and associated reporting.

AEMO is undertaking extensive joint planning and collaboration with TNSPs and jurisdictional bodies to update the
Transmission Cost Database. The updated Transmission Cost Database will be used to develop draft cost
estimates for transmission augmentation options for use in the 2026 ISP.

AEMO will release the draft updated Transmission Cost Database, and associated cost estimates, for consultation
as part of the Draft 2025 Network Expansion Options Report in April 2025. Outcomes of the consultation will be

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 153
Inputs and assumptions

incorporated in the final 2025 Network Expansion Options Report and final 2025 Inputs and Assumptions
Workbook.

3.10.7 Preparatory activities

Input vintage June 2024

Status Final
Source TNSPs

Update process Not applicable

Preparatory activities are activities to design and investigate the costs and benefits of actionable ISP projects,
future ISP projects and REZ stages (as applicable) 169, including:

• Detailed engineering design.

• Route selection and easement assessment work.

• Cost estimation based on engineering design and route selection.

• Preliminary assessment of environmental and planning approvals.

• Engagement with stakeholders who are reasonably expected to be affected by the development of the
actionable ISP project, future ISP project, or project within a REZ stage (including local landowners, local
council, local community members, local environmental groups and traditional owners) in accordance with the
community engagement expectations 170.

While TNSPs must commence preparatory activities as soon as practicable for actionable ISP projects (if not yet
already commenced)171, an ISP may specify whether preparatory activities must be carried out for future ISP
projects and the timeframes for carrying out those activities. These are typically projects which may become
actionable ISP projects, but more detailed information is required, such as improved cost estimates, network
designs, and initial appraisal of land considerations. The initial high-level design and costing in preparatory
activities reports is necessarily approximate, as the detailed requirements for robust costings and plant design will
not yet have been undertaken.

AEMO did not trigger preparatory activities for any of the future ISP projects identified in the 2024 ISP. The TNSPs
identified as a RIT-T proponent for a newly actionable ISP project in the 2024 ISP should commence preparatory
activities as soon as practicable, if not already commenced.

The projects for which preparatory activities reports have been previously made available by TNSPs are outlined
in Table 35. The TNSPs’ preparatory activities reports are published on the AEMO website172.

169
These terms are defined in NER 5.10.2 and Chapter 10. At https://www.aemc.gov.au/regulation/energy-rules/national-electricity-rules.
170
Preparatory activities and community engagement expectations are both defined in NER 5.10.2.
171
NER 5.22.6(c)&(d)(1)
172
At https://aemo.com.au/consultations/current-and-closed-consultations/2023-transmission-expansion-options-report-consultation.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 154
Inputs and assumptions

Table 35 Preparatory activities

Project Indicative timing Responsible TNSP(s)

(2024 ISP)

South East South Australia REZ expansion N/A ElectraNet

Darling Downs REZ Expansion 2030-31 to 2034-35 Powerlink

Gladstone Grid Reinforcement 2030-31 Powerlink

Mid-North South Australia REZ Expansion 2029-30 to 2030-31 ElectraNet

QNI Connect (500 kV option) Powerlink and Transgrid

2034-35
QNI Connect (330 kV option – New South Wales scope) Transgrid

South West Victoria REZ Expansion 2032-33 to 2033-34 AEMO Victorian Planning (AVP)

Sydney Ring South (Reinforcing Sydney, Newcastle and 2028-29 to 2029-30 Transgrid
Wollongong Supply)

3.10.8 Distribution network capabilities

Input vintage April 2025

Status Not started

Source DNSPs

Update process 2025 Network Expansion Options Report

Updates since 2024 ISP These inputs have not been included in previous ISPs

Get involved 2025 Network Expansion Options Report

AEMO considers CER to be of critical importance to the energy transition. By investing in CER, households and
businesses are playing a transformative role in the future energy system, and will need to be supported by
distribution networks, coordination systems and markets.

Energy Ministers’ response to the Review of the ISP 173 included an action for AEMO to consider the role of
distribution network capabilities and opportunities to support CER and other distributed resources in the future
energy system (see: Breakout Box 2). The AEMC is currently considering a rule change to implement information
provision arrangements to support the delivery of this action174. As such, AEMO is currently considering how to
introduce representation of distribution network capabilities and opportunities into the ISP models.

173
ECMC. Response to the Review of the Integrated System Plan, April 2024. At https://www.energy.gov.au/energy-and-climate-change-
ministerial-council/energy-ministers-publications/energy-ministers-response-review-integrated-system-plan.
174
AEMC. Improving consideration of demand-side factors in the ISP. At https://www.aemc.gov.au/rule-changes/improving-consideration-
demand-side-factors-isp.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 155
Inputs and assumptions

Breakout box 2 – Actions in the Energy Ministers’ response to the Review of the ISP –
Enhanced demand forecasting, and optimising for the demand side

AEMO should enhance demand forecasting in the 2026 ISP by:

• Undertaking targeted stakeholder engagement to enhance assumptions underpinning CER and distributed
resources projections in the ISP. The assumptions should reflect a comprehensive view of initiatives
affecting CER and distributed resources uptake and evaluate the implications for operational demand.

• Subject to available information, analysing how DNSP investments, programs and annual plans, may impact
CER and distributed resources development, and thereby the ODP for transmission, and include these
findings in the ISP in order to send clearer signals to inform DNSP planning.

AEMO will engage extensively with DNSPs to understand existing and future distribution network capabilities and
opportunities for incorporating CER and other distributed resources. This will include the existing distribution
network capabilities as they relate to the operation of CER such as rooftop solar and batteries – that is,
understanding how network capabilities may impact CER operation with respect to exporting generation, as well
as charging and discharging where relevant. The representation of these capabilities will be informed by inputs
from the DNSPs, to be gathered and consulted on through AEMO’s Draft 2025 Network Expansion Options
Report, which will also include cost curves for potential distribution network augmentations associated with
accommodating higher levels of CER operation. AEMO expects that this data will necessarily evolve and improve
over successive ISPs.

3.10.9 Non-network options

Input vintage September 2024

Status Draft

Source Previous projects, stakeholder submissions

Update process 2025 IASR and progression of RIT-Ts

Get involved 2025 Network Expansion Options Report

Non-network options are defined in the NER (Chapter 10, glossary) as a means by which an identified need can be
fully or partly addressed other than by a network option. Non-network options include a range of technologies, for
example:

• Generation investment (including embedded or large-scale).

• Storage technologies (such as battery storage and pumped hydro).

• Demand response.

AEMO will seek input on and consider non-network options in preparing the 2026 ISP.

As per Section 3.4.3 of the CBA Guidelines, prior to the Draft ISP, AEMO is required to:

• Undertake early engagement with non-network proponents to gather information in relation to non-network
options, and

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 156
Inputs and assumptions

• If there are any credible non-network options identified through early engagement and joint planning, but not
included in a TAPR, include these in its process for selecting development paths.

AEMO must seek proposals for non-network options for actionable ISP projects identified in a Draft ISP.

In the ISP, AEMO considers potential non-network options alongside network solutions to develop an efficient
power system strategy. Depending on their relative costs and benefits, the capital costs of large network
augmentation could be deferred or avoided by delivering a non-network solution.

At this stage, AEMO is seeking information on non-network technologies or proponents so ISP modelling can flag
opportunities for competitive non-network investment. In order to model non-network technologies, AEMO is
seeking information on:

• Specific non-network concepts and proposals.

• The resultant network capacity gained.

• Cost of the non-network solution.

• Project lead time.

Matters for consultation

• Is there any information on non-network technologies or proponents regarding opportunities for
competitive non-network investment?

• Given that non-network investments generally involve commercial arrangements with plant with multiple
revenue streams, how should AEMO estimate their cost transparently?

3.10.10 Network losses

Input vintage December 2024

Status • Current view for existing network inter-regional loss factor equations, loss equations and proportioning
factors.
• Interim view for future inter-regional/intra-regional loss factor equations, and loss equations and
proportioning factors.
• Draft view for existing network intra-regional loss factor equations, and loss equations and proportioning
factors.

Source AEMO Marginal Loss Factors Report 2024-25 Financial Year and internal processes

Update process • Updated in line with AEMO’s Marginal Loss Factors Report published in July 2024.
• For existing network intra-regional loss factor equations, loss equations and proportioning factors, the Draft
2025 Inputs and Assumptions Workbook has been updated.
• For future augmentation options, the draft and final 2025 Network Expansion Options Report.

Updates since 2024 ISP • Added new intra-regional loss and loss factor equation for Central South Australia (CSA) to Northern South
Australia (NSA).
• Updated the Central Queensland (CQ) to Northern Queensland (NQ) and Southern Queensland (SQ) to
Central Queensland (CQ) loss and loss factor equations to reflect the revised sub-regional boundary
definition.

Get involved 2025 Network Expansion Options Report consultation

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 157
Inputs and assumptions

This section describes the loss equations, loss factor equations and proportioning factors inter-regional and intra-
regional flows for use in studies such as the ISP and ESOO. While the sub-regional model does split some regions
into smaller sub-regions, inter-regional losses will continue to be modelled across regional boundaries – consistent
with the design of the NEM. Where inter-regional losses do not sufficiently account for geographically remote
sub-regional flow paths (for example Far North Queensland, Central Queensland and Northern South Australia),
additional sub-regional losses have been modelled.

Inter-regional loss equations, loss factor equations and proportioning factors

Inter-regional loss equations are used to determine the amount of losses on an interconnector for any given
transfer level. These are used to determine net losses for different levels of transfer between regions so NEMDE or
AEMO’s capacity expansion model and time-sequential market model can ensure the supply-demand balance
includes losses between regions.

Inter-regional loss factor equations describe the variation in loss factor at one regional reference node (RRN) with
respect to an adjacent RRN. These equations are necessary to cater for the large variations in loss factors that
may occur between RRNs as a result of different power flow patterns. This is important in minimising the distortion
of economic dispatch of generating units.

Interconnector loss proportioning factors are used to separate the inter-regional losses into the amount belonging
to each of the two regions. The existing network inter-regional loss equations, loss factor equations and
proportioning factors are sourced from the Marginal Loss Factors for the 2024-25 Financial Year175 report and are
presented in the ‘Network losses’ tab of the Draft 2025 Inputs and Assumptions Workbook.

For committed, anticipated and future projects that impact interconnector flows, AEMO will be consulting on these
inter-regional loss equations, loss factor equations and proportioning factors through the 2025 Network Expansion
Options Report, for inclusion in the final 2025 Inputs and Assumptions Workbook.

Intra-regional loss and loss factor equations

Inter-regional loss factor equations describe the variation in loss factor at one RRN with respect to an adjacent
RRN. These equations are necessary to cater for the large variations in loss factors that may occur between RRNs
as a result of different power flow patterns. This is important in minimising the distortion of economic dispatch of
generating units.

In addition, AEMO models intra-regional loss equations in some cases to capture the change in network losses as
more generation connects to capture declining MLFs as large generation is developed in parts of the network
remote from demand centres. Another instance for defining an intra-regional loss equation is to capture the
change in network losses when a new sub-region is created which is remotely located from the reference node of
that region.

In the 2024 ISP, AEMO identified Northern Queensland as being remote from load centres under all scenarios
except Green Energy, based on insights from the 2022 ISP’s Hydrogen Superpower scenario outcomes. AEMO
used the sub-regional model to capture the network losses through intra-regional equations, between the

175
At https://aemo.com.au/-/media/files/electricity/nem/security_and_reliability/loss_factors_and_regional_boundaries/2024-25-financial-
year/mlfs-for-the-2024-25-financial-year.pdf.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 158
Inputs and assumptions

Northern Queensland, Central Queensland and Southern Queensland sub-regions. This approach was applied to
Far North Queensland and Queensland Clean Energy Hub in all scenarios except the Green Energy scenario.

In this Draft 2025 IASR, AEMO is proposing the addition of a new Northern South Australia (NSA) sub-region. In
this case, AEMO has identified that the sub-regional reference node for NSA would be remote from the regional
reference node for South Australia. As such, AEMO proposes to add a new intra-regional loss equation between
Northern South Australia and Central South Australia to ensure losses associated with the transfers between
these two sub regions are catered for.

The Draft 2025 Inputs and Assumptions Workbook ‘Network losses’ worksheet captures the proposed
intra-regional loss factor equations.

3.10.11 Marginal loss factors (MLFs)

Input vintage April 2024

Status Current view

Source AEMO Marginal Loss Factors Report 2024-25 Financial Year and internal processes

Update process Updated in line with AEMO’s latest Marginal Loss Factors Report

Network losses occur as power flows through transmission lines and transformers. Increasing the amount of
renewable energy connected to the transmission network remote from load centres will increase network losses.
As more generation connects in a remote location, the power flow over the connecting lines and on the AC system
increases, and so do losses.

Electrical losses are a transport cost that need to be priced and factored into electrical energy prices. MLFs are
used to adjust the price of electricity in a NEM region, relative to the RRN, in a calculation that aims to recognise
the relationship between a generator’s output and the energy that is actually delivered to consumers. The NEM
uses marginal costs as the basis for setting spot prices in line with the economic principle of marginal pricing. The
spot price for electrical energy is determined, or is set, by the incremental cost of additional generation (or
demand reduction) for each dispatch interval. Consistent with this, the marginal loss is the incremental change in
total losses for each incremental unit of electricity. The MLF of a connection point therefore represents the
marginal losses to deliver electricity to that connection point from the RRN.

In dispatch and settlement in the NEM, the local price of electricity at a connection point is equal to the regional
price multiplied by the MLF. A renewable generator’s revenue in the NEM wholesale market is directly scaled by
its MLF, through both electricity market transactions and any revenue derived from large-scale renewable
generation certificates (LGCs) created if accredited under the Large-scale Renewable Energy Target (LRET).

MLFs are an outcome of applying the methodology for the calculation of Forward-Looking Transmission Loss
Factors (updated in December 2024), and are updated every financial year with the publication of AEMO’s
Marginal Loss Factors report176. AEMO updated the MLFs to reflect the latest available version of this report.
Where a committed or anticipated generator does not have an MLF calculated in the Forward-Looking
Transmission Loss Factors report, a ‘shadow’ generator is used. This is a generator which is located electrically

176
At https://aemo.com.au/en/energy-systems/electricity/national-electricity-market-nem/market-operations/loss-factors-and-regional-
boundaries.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 159
Inputs and assumptions

close to the generator in question, and where possible, is the same technology. This same concept is applied to
generic new entrant generators.

See the ‘Marginal Loss Factors’ worksheet in the Draft 2025 Inputs and Assumptions Workbook.

3.10.12 Transmission line unplanned outage rates

Input vintage June 2024

Status Current view

Source AEMO Network Outage Schedule and other AEMO sources

Update process Updated in June 2024 as part of data collection process for the ESOO

Get involved FRG Consultation in June 2025

AEMO models some outages on a limited selection of transmission flow paths that are required for inter-regional
power transfer. Information is collected on the timing, duration, and severity of the transmission outages to inform
transmission unplanned outage rate forecasts. Table 36 shows the rates and method used in the 2024 ESOO,
consistent with the ESOO and Reliability Forecast Methodology. Transmission line unplanned outage rates apply
only to some reliability modelling. The ISP capacity outlook modelling does not include transmission outage rates,
given their low probability.

Table 36 Inter-regional transmission flow path outage rates

Flow path ESOO 2024 ESOO 2024 Mean time Outage rate method
transmission to repair (hours)
UOR (%)

Liddell – Bulli Creek (QNI) Credible Contingency 0.2 16 Annual static

Liddell – Bulli Creek (QNI) Reclassification 1.62 4 Annual static

Murraylink – Credible Contingency 1.37 72 Annual static

Basslink – Credible Contingency 5.27 192 Annual static

Mortlake – South East (Victoria to South Australia) 0.03 2 Annual, set to 0% post Project
Credible Contingency EnergyConnect (PEC) stage 2

Mortlake – South East (Victoria to South Australia) 0.01 5 Annual, set to 0% post PEC
Reclassification stage 2

3.11 Power system security

Planning studies focus on the reliability and security of the future power system under system normal conditions
and following the first credible contingency, including the continued availability of various system services to be
able to restore the power system to a secure operating state within 30 minutes following a contingency.

New generation and transmission investments may change the scale and location of services needed for power
system security. A changing mix of technologies, from synchronous generation towards inverter-based resources
(IBR)177, creates both challenges and opportunities for planning the future power system.

177
IBR include wind farms, solar PV generators, and batteries. They do not have moving parts rotating in synchronism with the grid frequency,
but instead are interfaced to the power system via power electronic converters which electronically replicate grid frequency.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 160
Inputs and assumptions

Planning assumptions for power system security are applied when developing the ISP. These must cater to
uncertainties in future operation of synchronous generating units, demand levels, regulatory change, operational
measures, emerging technology, and new innovations that may enable IBR to provide sought-after system
services. AEMO’s Power System Requirements document178 describes power system security services in more
detail, and the capabilities of various technologies to supply these services.

This section describes the inputs and assumptions made for the following power system security issues:

• System strength requirements and costs.

• Inertia requirements.

• Other system security limits.

3.11.1 System strength requirements and cost

Input vintage December 2024

Status Draft

Source AEMO internal, System Strength Report, Transmission Cost Database, and Network Expansion Options
Report

Update process Minimum system strength requirements updated to reflect latest System Strength Report and the 100%
renewable study in the 2023 NSCAS Report, costs and technology options will be updated to reflect the
latest Transmission Cost Database and Network Expansion Options Report.

Update since 2024 ISP • Assumptions and methodology updated to explicitly model fault current requirements and the cost impacts
of system strength solutions towards meeting both the minimum and efficient level requirements.
• Existing system strength standards for the NEM are provided at https://aemo.com.au/energy-
systems/electricity/national-electricity-market-nem/nem-forecasting-and-planning/system-security-planning
and may be further updated following the release of AEMO’s annual System Strength Report (or
subsequent updates to requirements in response to changing circumstances). The Draft 2025 Inputs and
Assumptions Workbook has been updated with latest system strength remediation costs.

System strength describes the ability of the power system to maintain and control the voltage waveform at a given
location, both during steady state operation and following a disturbance. System strength is often approximated by
the amount of electrical current available during a network fault (fault level), however the concept also
encompasses a collection of broader electrical characteristics and power system interactions.

Key aspects of system strength include steady state voltage management, voltage dips, fault ride-through, power
quality and operation of protection.

Under the current system strength framework, AEMO assesses and maintains a system strength specification for
the NEM, updated annually. This defines a set of physical locations on the transmission network (system strength
nodes) at which AEMO must specify two system strength requirements:

• A minimum fault level requirement – intended to represent a secure operability requirement that, when met,
ensures correct operation of network protection systems, appropriate operation of voltage control devices, and
overall system stability following credible contingencies or protected events.

– This requirement is specified as a fault level value and must be met by solutions capable of delivering
protection-quality fault current. Technology options may include synchronous condensers, contracts with

178
At https://aemo.com.au/-/media/files/electricity/nem/security_and_reliability/power-system-requirements.pdf.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 161
Inputs and assumptions

market participants to provide fault level services, or the conversion of existing thermal units into
synchronous condensers.

• An efficient level requirement – intended to deliver additional investment in system strength, at optimised
network locations, sufficient to accommodate and encourage future IBR connections near those locations.

– This requirement is specified as a capacity of IBR that must be able to connect without voltage stability or
synchronisation issues, assuming all other generator performance standards are met. As such, it can be
met by any existing or new technology capable of improving the resilience of the local voltage waveform.
This could include synchronous machines, as well as dynamic reactive devices, network reconfigurations,
or grid-forming technology customised to the needs of specific network locations.

There are currently 23 system strength nodes defined in the NEM, and the process AEMO follows to develop
minimum and efficient level requirements for each is outlined in the System Strength Requirements
Methodology179. From 1 December 2025, regional System Strength Service Providers (SSSPs) are required to
take all necessary steps to ensure both requirements are met at all times.

As part of the 2026 ISP, AEMO is proposing to model the cost of both components of system strength.

Minimum fault level requirements

The 2024 ISP used a set of declining unit commitment constraints to reflect an initial need to rely on thermal
generation for meeting minimum fault level requirements. This constraint was relaxed over time to reflect that
SSSPs will gradually procure or contract with alternative sources of fault current to meet their obligations. SSSPs
may source from a portfolio of network solutions (in the form of synchronous condensers), or non-network
solutions (in the form of commercial arrangements with gas, hydro, or eventually new grid-forming battery energy
storage system [BESS] providers).

For the 2026 ISP, AEMO proposes to continue to use a declining unit commitment constraint, and to also include
an additional cost component to retiring thermal generation to represent the cost of replacing their fault current
contributions towards the minimum fault level requirements. This has the effect of providing the optimisation
engine with a more reflective system security cost impact when withdrawing existing thermal units from service.

To calculate the effective system strength remediation cost component for each unit, AEMO will implement
outcomes from the 2022 and 2023 Network Support and Control Ancillary Services (NSCAS) reports, which found
a need for approximately 22 strategically located synchronous condensers180 to operate the system under 100%
renewable conditions (that is, without coal-fired generation online).

The cost of these synchronous condensers is allocated to the retirement cost of existing coal-fired generating
units in proportion to its rated fault current contribution, as a percentage of the total regional requirement.

Although AEMO expects that a mixture of technologies will be applied to meet minimum fault level requirements,
synchronous condenser costs are being used as a proxy to represent an upper bound as a known and proven

179
See https://aemo.com.au/-/media/files/electricity/nem/security_and_reliability/system-strength-requirements/system-strength-requirements-
methodology.pdf.
180
This is additional to synchronous condensers being added in the network for committed augmentations such as Project Energy Connect
and Central-West Orana REZ Network Infrastructure Project, as well as no fossil fuel units such as hydro being online.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 162
Inputs and assumptions

technology. Options such as retrofitting existing units, adding clutches to gas turbines, or leveraging grid-forming
technology in the medium term181 are all likely to contribute towards these requirements.

The Power System Security tab of the Draft 2025 Inputs and Assumptions Workbook presents the assumed cost
of system strength remediation for the minimum fault level requirements over time required to replace each coal
unit. The average of this cost in the NEM is approximately $50 million per coal unit retirement. These costs, and
the underlying technical parameters of synchronous condensers, will be updated to reflect the latest Transmission
Cost Database and Network Expansion Options Report.

See the ‘Power System Security’ worksheet in the Draft 2025 Inputs and Assumptions Workbook.

Efficient level requirements

In the ISP modelling, AEMO incorporates a $/kW efficient level cost as an addition to the IBR connection costs
within a REZ, noting that in practice these would be funded directly by the TNSP rather than the connecting party
themselves.

AEMO proposes to use a weighted182 cost trajectory approach to model these remediation costs as an added
component to IBR connections. The effectiveness of grid-forming BESS towards these requirements is assumed
to be 1.7 times lower than an equivalently sized synchronous condenser (that is, a 17 megavolt ampere [MVA]
grid-forming BESS provides equivalent voltage stabilisation to a 10 MVA synchronous condenser). This is based
on analysis undertaken in Transgrid’s recent System Strength RIT-T183. This 1.7 factor is used to scale the cost of
both technologies relative to each other when producing the weighted sum.

Grid-forming BESS technology is assumed to be available to provide efficient level services immediately.

The system strength costs tab of the Draft 2025 Inputs and Assumptions Workbook presents the assumed cost of
network and non-network solutions, their relative effectiveness and mixture over time, and the resulting efficient
level system strength costs (in $/kW) to apply for new IBR connections. The input technology costs and
parameters will be updated to reflect the latest Transmission Cost Database and Network Expansion Options
Report.

See the ‘Power System Security’ worksheet in the Draft 2025 Inputs and Assumptions Workbook.

Synchronous unit commitment assumptions

Input vintage December 2024

Status Current

Source AEMO internal

Updates since 2024 ISP Updated timing

181
Based on work done for the Transgrid System Strength RIT-T, grid-forming BESS are assumed to be capable and sufficiently demonstrated
to provide protection quality fault current from 2032-33.
182
The weighting reflects what percentage of the solution built per year can IBR based. This starts at 20% of IBR in 2024-25, and increases
10% per year until it reaches 90%.
183
See Section 4.1.3 at https://www.transgrid.com.au/media/wphjea0f/2406-baringa_meeting-system-strength-requirements-in-nsw-padr-
modelling-report.pdf.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 163
Inputs and assumptions

As described in the previous section, an ongoing synchronous unit commitment constraint trajectory is used as a
proxy for the required contribution of these units towards meeting system security requirements in the initial years
of the 2026 ISP modelling.

The trajectory initially reflects the current operational minimum unit requirements that apply in the NEM and then
progressively relaxes this requirement over a five-year period from 2027-28. This reflects decreasing reliance on
these sources of system strength as TNSPs progressively procure alternative solutions via their active RIT-T
processes. This trajectory does not force units to withdraw as the value decreases, rather it prevents units from
retiring until the value decreases, at which point it allows retirements where economic (including the need to pay
for replacement system strength services). For the Green Energy scenario, AEMO assumes a faster decline in this
trajectory to align with the rapid transformation of the economy and rapid decarbonisation assumed by the
scenario.

A short-term two-unit constraint is applied in South Australia until Project EnergyConnect (PEC) stage 2 is fully
commissioned, with all necessary protection and control schemes in place to manage credible loss of either PEC
or the Heywood interconnector, at which point this constraint is relaxed. This approximately mirrors expected
operational requirements, although there may be some operational periods prior to PEC stage 2 where 1 unit is
allowed (this granularity would be difficult to capture in an ISP model). AEMO does not use a fixed assumption for
unit commitment requirements in Tasmania, because the region has a large number of small, distributed
hydroelectric generators and a large number of machine combinations that can be used for power system security
purposes.

Figure 46 and Figure 47 provide the minimum synchronous unit commitment trajectories derived through the
above approach. These assumptions are developed for the purpose of ISP planning studies, and should not be
used as operational advice.

Figure 46 Minimum synchronous unit commitment requirements, all scenarios except Green Energy

12
Synchronous unit commitment

10
requirement (# units)

Queensland (coal) New South Wales (coal) Victoria (coal) South Australia (gas)

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 164
Inputs and assumptions

Figure 47 Minimum synchronous unit commitment requirements, Green Energy scenario

12
Synchronous unit commitment

10
requirement (# units)

Queensland (coal) New South Wales (coal) Victoria (coal) South Australia (gas)

3.11.2 Inertia requirements

Input vintage December 2024

Status Current

Source Annual AEMO Inertia Report, applying the Inertia Requirements Methodology

Updates since 2024 ISP Updated annually according to the latest inertia requirements calculation for each region of the NEM at
https://aemo.com.au/energy-systems/electricity/national-electricity-market-nem/nem-forecasting-and-
planning/system-security-planning

Inertia allows the power system to resist large changes in frequency arising from an imbalance in power supply
and demand due to a contingency event. Forecast inertia is continuing to decline across the NEM as synchronous
generator behaviour changes, penetration of IBR increases, and minimum demand projections decline.

AEMO is required to assess and publish minimum inertia requirements for each region, under both islanded and
interconnected operating conditions. AEMO’s process for assessing these requirements is outlined in AEMO’s
Inertia Requirements Methodology 184 and AEMO’s assessments for each region are published at least annually on
AEMOs website185.

Requirements are currently calculated based on the size of the largest credible contingency event in each region
(or combination of regions). The full process AEMO follows to produce inertia requirements is outlined in the
Inertia Requirements Methodology.

From 1 December 2027, regional TNSPs are required to take all necessary steps to ensure both the islanded and
interconnected inertia requirements are satisfied in each region under the relevant system conditions.

184
See https://aemo.com.au/-/media/files/electricity/nem/security_and_reliability/system-strength-requirements/system-strength-requirements-
methodology.pdf.
185
At https://aemo.com.au/energy-systems/electricity/national-electricity-market-nem/nem-forecasting-and-planning/system-security-planning.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 165
Inputs and assumptions

AEMO’s security assessments as part of the 2022 and 2023 NSCAS reports concluded that system strength
would be the most onerous security requirement over the coming decades, and that delivering adequate services
to meet those needs was likely to substantially resolve the need for additional inertia or voltage control investment.
For example, technology solutions may include assets such as high-inertia synchronous condensers, or
grid-forming technologies capable of providing both voltage stabilisation and synthetic inertia services.

In the ISP, AEMO will validate that all modelled outcomes satisfy the latest inertia requirements as published on
AEMO’s website. The costs associated with meeting these requirements are assumed to be second order, and
therefore captured as part of delivering adequate system strength solutions (e.g. by ensuring some synchronous
condensers have flywheels).

3.11.3 Other system security limits

Input vintage July 2023

Status Current

Source AEMO internal and TNSP limits advice

Updates since 2024 ISP None – consistent network constraint-based approach.

In NEMDE, a series of network constraint equations control dispatch solutions to ensure that satisfactory and
secure network limitations are considered. The time-sequential model used in long-term planning studies contains
a subset of the NEMDE network constraint equations to achieve the same purpose. This subset of network
constraint equations is included in the ISP model to reflect power system operation within other security limits. In
addition to system strength and inertia limits which are considered above, these include:

• Voltage stability – for managing transmission voltages so that they remain at acceptable levels after a credible
contingency.

• Transient stability – for managing continued synchronism of all generators on the power system following a
credible contingency.

• Oscillatory stability – for managing damping of power system oscillations following a credible contingency.

• Rate of change of frequency (RoCoF) – for managing the rate of change of frequency following a credible
contingency.

The effect of committed transmission and generation projects on the network is implemented in NEMDE as
modifications to the network constraint equations that control power flow. The methodology for formulating these
constraints is in AEMO’s Constraint Formulation Guidelines186.

Other system security limits may need to be applied on a case-by-case basis as more information becomes
available, for example to ensure frequency control services or to account for non-credible contingencies in some
cases such as the trip of double-circuit interconnectors.

186
At https://aemo.com.au/en/energy-systems/electricity/national-electricity-market-nem/system-operations/congestion-information-resource.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 166
Inputs and assumptions

3.12 Gas infrastructure

Input vintage Incomplete in this stage of the Draft 2025 IASR

Status In progress

Source CSIRO: GenCost 2024-25 Consultation Draft

Updates since 2023 PEM Cost has been updated to reflect GenCost 2024-25 Consultation Draft
IASR

Get involved Formal consultation on this input in Stage 2 of the Draft 2025 IASR

This section outlines key inputs and assumptions related to hydrogen and biomethane production technologies, as
well as infrastructure needs where potential for development of domestic and export production locations for
hydrogen, biomethane and natural gas infrastructure are explored within ISP modelling.

Hydrogen demand assumed across scenarios is discussed in Section 3.3.6.

3.12.1 Production costs and capabilities

Hydrogen production

To produce hydrogen, AEMO’s forecasts include production potential from electrolysis only. Electrolysis uses
electricity to split water molecules into hydrogen and oxygen. If this electricity is sourced from renewable
generation it creates “green hydrogen”. Proton exchange membrane (PEM) technology is most commonly
proposed for development in the NEM, and AEMO’s forecasts apply this technology choice.

Figure 48 below presents the capital cost projections for new PEM installations as forecast in GenCost 2024-25
Consultation Draft for its Global NZE post 2050 scenario, compared to GenCost 2023-24 projections. Relatively,
there has been an increase in hydrogen electrolysers cost, driven by updated analysis of balance of plant costs.
See Section 3.5.3 for more detail on these cost adjustments, as well as detail on scenario mappings between the
GenCost 2024-25 Consultation Draft and Draft 2025 IASR scenarios.

Cost projections for PEM electrolysers for each scenario are available in the accompanying Draft 2025 Inputs and
Assumptions Workbook.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 167
Inputs and assumptions

Figure 48 Forecast build cost trajectories for electrolysers (PEM), 2023 vs 2025 Global NZE post 2050 scenario
($/kW)

3,000

2,500
Build costs ($/kW)

2,000

1,500

1,000

500

2024 - Electrolysers - PEM 2025 - Electrolysers - PEM

Electrolysers can be operated flexibly, providing capacity to ramp up and down rapidly, potentially even providing
fast frequency response in a similar way to electrochemical batteries. AEMO models PEM electrolysers with a
flexible technical operating envelope with a minimum baseload component, and with a hydrogen production target
to achieve. In this sense, the ISP modelling that forecasts the appropriate electrolyser capacity can select the
degree of capacity (and therefore flexibility) to meet the production volume targets, meaning that the economic
consequences of either highly flexible (with high installed capacity) or minimal flexibility (with low surplus
production capacity) is considered, considering the capital investment costs and operating costs of each.

Reported performance derived from Bloomberg New Energy Finance (BNEF) indicates a baseload of 5.4%187.
AEMO assumes a baseload of 5.4% for both domestic-focused and export-focused electrolysers, in line with the
BNEF data.

Matters for consultation

• Do you have any alternative views on the electrolyser cost curve?

Natural gas and biomethane production

AEMO will use relevant information developed for the GSOO to support biomethane and natural gas production
cost and technical capabilities.

For information that is outside of the GSOO data, this section will be updated in Stage 2 of the Draft 2025
IASR release.

187
Bloomberg New Energy Finance (BNEF) report: Electrolyzer Price Survey 2024: Rising Costs, Glitchy Tech (March 2024).

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 168
Inputs and assumptions

3.12.2 Gas infrastructure

Hydrogen

This section will be updated in Stage 2 of the Draft 2025 IASR release.

Natural gas and biomethane infrastructure needs

AEMO’s gas supply model evaluates the reserves, production, and transportation capacity of Australia’s East
Coast Gas System to calculate the delivery of gas supply to gas consumers. The gas supply model can be
incorporated with gas expansion options for pipeline, gas storage, and/or production augmentations, informed by
industry engagement, to identify natural gas infrastructure needs.

The gas production capacities, mid-stream gas delivery limits, production cost and potential costs of augmentation
projects are key input assumptions into the gas supply model. They are provided from gas industry participant
surveys, publicly available data or gas specialist consultants. The summary of key inputs and related data sources
for the gas supply model are as in Table 37 below.

Table 37 Key inputs and the related data sources for the gas supply model

Input Source

Demand projections AEMO Forecasting Portal, at http://forecasting.aemo.com.au

Capacity of reserves and resources Gas industry participants, and publicly available data (in case of lack of data, Rystad Energy
estimates), at https://aemo.com.au/en/energy-systems/gas/gas-forecasting-and-planning/gas-
statement-of-opportunities-gsoo)

Production costs Rystad Energy and publicly available data; Rystad Energy data at
https://aemo.com.au/en/energy-systems/gas/gas-forecasting-and-planning/gas-statement-of-
opportunities-gsoo

Transmission costs Gas industry participants and publicly available data

Pipeline, processing, storage facility Gas industry participants Gas Bulletin Board (GBB), and publicly available data GBB available
capabilities and daily rates at: http://gbb.aemo.com.au/

Annual and daily field production limits Gas industry participants, and internal AEMO analysis

Further information on inputs to be used in developing gas development projects will be consulted on in
Stage 2 of the Draft 2025 IASR, or in the Network Expansion Options Report consultation.

3.13 Employment factors

Input vintage September 2024

Source Rutovitz, J., Gerrard, E., Lara, H., and Briggs, C. (2024). The Australian Electricity Workforce for the 2024
Integrated System Plan: Projections to 2050. Prepared by the Institute for Sustainable Futures for RACE for
2030188.

Update process Updates will be dependent on feedback received on this Draft 2025 IASR.

Updates since 2023 IASR Updated job-years for generation, storage and transmission development per outcomes of 2024 ISP.

188
Rutovitz, J., Gerrard, E., Lara, H., and Briggs, C. The Australian Electricity Workforce for the 2024 Integrated System Plan: Projections to
2050. September 2024. At https://aemo.com.au/-/media/files/major-publications/isp/2024/electricity-sector-workforce-projections/nem-2024-
workforce_final.pdf.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 169
Inputs and assumptions

Electricity sector employment is forecast to increase by 74% by 2050 (from 33,300 full time workers189 in 2024 to
57,900 in 2050), in the Step Change scenario from the 2024 ISP190. This growth will challenge engineering,
procurement and construction (EPC) firms and regional communities, particularly if there are boom-and-bust
cycles or if workers and contractors are engaged project-to-project. Governments are aware of these challenges
in shaping new and existing labour force and skills policies191 and with proactive planning, this challenge could
represent an opportunity.

This section outlines the proposed employment factors that will be used to estimate the workforce requirements
needed to implement the ISP. The focus on workforce requirements in this estimation is focused on infrastructure
development requirements; it does not include the workforce requirements to deliver electrification developments
or other factors affecting the evolution of the consumer load in the energy transition.

AEMO sourced employment factors for generation, transmission and storage from "The Australian Electricity
Workforce for the 2024 Integrated System Plan: Projections to 2050", a renewable energy industry report
prepared by the Institute for Sustainable Futures (ISF) for Reliable Affordable Clean Energy (RACE) for 2030.

Employment factors are derived from industry surveys of developers, installers and original equipment
manufacturers conducted by the ISF. These surveys collect a breakdown of occupational data across sectors for
construction, installation, operations and maintenance of recent actual projects and activities.

3.13.1 Generation and storage

Employment factors are applied to the capacity of generation and storage build to estimate workforce
requirements. Employment factors reduce over time in proportion with technology costs (see Section 3.5.3) to
reflect productivity improvements.

Table 38 Generation and storage employment factors

Construction Construction/in ManufacturingB Australian Operations FuelB

timeA stallationB ManufacturingB and
Maintenance
(O&M)B

Years Job-years/MWC Job-years/MW Job-years/MW Jobs/MW Job-years/GWh

Black coal 5 11.08 5.41 1.62 0.22 0.04

Brown coal 5 11.08 5.41 1.62 0.22 0.01

Gas 2 1.27 0.92 0.28 0.14 0.07

Wind (onshore) 2 2.65 1.54 0.35 0.21 -

Wind (offshore) 3 1.50 13.68 0.90 0.20 -

Utility-scale PV 1 1.61 3.08 0.07 0.09 -

Rooftop PV 1 4.19 2.86 0.12 0.13 -

Utility-scale 1 0.53 0.50 0.08 0.03 -

batteries

189
These numbers represent number of full time equivalent jobs.
190
At https://aemo.com.au/-/media/files/major-publications/isp/2024/2024-integrated-system-plan-isp.pdf.
191
SGS Economics and Planning Pty Ltd & UTS Institute for Sustainable Futures. Towards A Renewable Energy Superpower. April 2024. At
https://www.uts.edu.au/sites/default/files/2024-04/Renewable%20Energy%20Superpower%20Report%202024%2060pp%20WEB%20
SPREAD%201.pdf.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 170
Inputs and assumptions

Construction Construction/in ManufacturingB Australian Operations FuelB

timeA stallationB ManufacturingB and
Maintenance
(O&M)B

Years Job-years/MWC Job-years/MW Job-years/MW Jobs/MW Job-years/GWh

Distributed 1 4.44 0.50 0.08 0.23 -

batteries

Pumped hydro 4 7.18 3.48 0.70 0.08 -

Hydro 5 7.36 3.48 1.04 0.14 -

A. Rutovitz, J., Langdon, R., Mey, F., Briggs, C. The Australian Electricity Workforce for the 2022 Integrated System Plan: Projections to 2050. Revision 1.
January 2023. At https://aemo.com.au/-/media/files/major-publications/isp/2022/supporting-materials/the-australian-electricity-workforce-for-the-2022-
isp.pdf.
B. Rutovitz, J., Gerrard, E., Lara, H., and Briggs, C. The Australian Electricity Workforce for the 2024 Integrated System Plan: Projections to 2050.
September 2024. At https://aemo.com.au/-/media/files/major-publications/isp/2024/electricity-sector-workforce-projections/nem-2024-
workforce_final.pdf.
C. One job-year represents one job over the course of the year at full-time capacity.

3.13.2 Transmission

Employment factors are applied to transmission build to estimate workforce requirements. Because transmission
construction is relatively mature, employment factors for transmission development do not reduce over time.

Table 39 Transmission employment factors

Transmission build Construction/installation

Transmission line: single circuit 0.70 (job-years/km)A

Transmission line double circuit 3.7 (job-years/km)

Transmission (other) 1.90 (job-years/$million)

A. One job-year represents one job over the course of the year at full-time capacity.

Matters for consultation

Do you have any feedback on the proportion of manufacturing that is assumed to be onshore, and how it may
vary over time in response to state policies?

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 171
Appendix A1. ISP Review implementation measures

A1. ISP Review implementation measures

Over 2023 and early 2024, the Federal Government undertook a review of the ISP (Review of the ISP), and on
5 April 2024 the Energy and Climate Change Ministerial Council (ECMC) published its Response to the Review of
the Integrated System Plan192 (Energy Ministers’ response to the Review of the ISP).

The response outlined a series of actions to enable the ISP to set a direction for the energy system as a whole,
while maintaining the critical function of the ISP in transmission planning. The Review of the ISP focused on
supporting emissions reduction, integrating gas and electricity planning, enhancing demand considerations,
transforming Australia’s energy mix, jurisdictional policy interactions, and supporting the timely delivery of ISP
projects.

The Federal Minister for Climate Change and Energy made three rule change requests to the AEMC to implement
some of the review recommendations. The AEMC is currently considering its final determinations and rules for the
rule change requests, which have been consolidated into two rule changes 193.

AEMO’s approach to implementing new methods to address the actions identified in the Energy Ministers’
response to the Review of the ISP will be documented in the ISP Methodology, while new inputs needed to apply
AEMO’s updated methods will have been outlined in this Draft 2025 IASR (in either this stage of its release, or in
the second release stage in 2025). Stakeholders can provide feedback on potential implementation measures
through the relevant consultation processes for each of these.

Table 40 below summarises the AEMO publications which AEMO proposes to amend to implement the actions
identified in the Energy Ministers’ response to the Review of the ISP.

192
See https://www.energy.gov.au/sites/default/files/2024-04/ecmc-response-to-isp-review.pdf.
193
See https://www.aemc.gov.au/rule-changes/better-integrating-gas-and-community-sentiment-isp and https://www.aemc.gov.au/rule-
changes/improving-consideration-demand-side-factors-isp.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 172
Appendix A1. ISP Review implementation measures

Table 40 Proposed implementation for actions in the Energy Ministers’ response to the Review of the ISP

Action in the response Process for implementation

to the Review of the
ISP 2025 IASR ISP Methodology 2025 Network Enhanced Locational
Expansion Options Information reportB
ReportA

Integrating gas into   [] 

the ISP

Enhanced demand    

forecasting and
optimising for the
demand-side

Better data on    
industrial and
consumer
electrification

Coal-fired generation    

shutdown scenarios

Improving locational    
information

Enhanced analysis of    
system security

Jurisdictional policy  D   
transparency

Clarifying policy D   
inclusions

Improving the    
accessibility of the 
ISPC

Incorporating    
community sentiment
Additional planning    
inputs
A. The Network Expansion Options Report is consulted on as part of the IASR. This was previously known as the Transmission Expansion Options
Report, but has been renamed to reflect the inclusion of both transmission and distribution in future ISPs.
B. The Enhanced Locational Information report provides a consolidated set of locational information about where to locate projects in the NEM.
C. AEMO will consider opportunities throughout the ISP development process to enhance consumer understanding of key elements.
D. These actions are to be implemented, in parallel with the IASR process, through the publication of a guideline on AEMO’s policy inclusion consultation
process with jurisdictions.

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 173
Appendix A2. Supporting material

A2. Supporting material

In addition to the Draft 2025 Inputs and Assumptions Workbook, Table 41 documents additional information
related to AEMO’s inputs and assumptions.

Table 41 Additional information and data sources

Organisation Document/source Link

https://aemo.com.au/energy-systems/electricity/national-electricity-market-nem/nem-
AEMO Generation Information
forecasting-and-planning/forecasting-and-planning-data/generation-information

https://aemo.com.au/energy-systems/major-publications/integrated-system-plan-
AEMO’s Transmission
AEMO isp/2024-integrated-system-plan-isp/current-inputs-assumptions-and-
Cost Database
scenarios/transmission-cost-database

2024 GSOO Stakeholder

https://aemo.com.au/en/energy-systems/gas/gas-forecasting-and-planning/gas-
AEMO Surveys and gas supply
statement-of-opportunities-gsoo
input data

2025 IASR Scenarios

https://aemo.com.au/-/media/files/major-publications/isp/2025/2025-IASR-Scenarios-
AEMO Consultation Summary
Consultation-Summary-Report
Report

2020 Assessment of https://aemo.com.au/-/media/files/electricity/nem/planning_and_forecasting/inputs-

AEP Elical Ageing Coal-Fired assumptions-methodologies/2020/aep-elical-assessment-of-ageing-coal-fired-
Generation Reliability generation-reliability.pdf
Values of Customer https://www.aer.gov.au/industry/registers/resources/reviews/values-customer-reliability-
AER
Reliability (VCR) 2024

2024 Energy Technology

https://aemo.com.au/-/media/files/major-publications/isp/2025/Aurecon-2024-Energy-
Aurecon Costs and Technical
Technology-Costs-and-Technical-Parameter-Review
Parameter Review

Deloitte Access Economic forecast 2024- https://aemo.com.au/-/media/files/major-publications/isp/2025/Deloitte-Access-

Economics 25 Economics-2024-Economic-Forecast

2024 Multi-sector
CSIRO To be uploaded with Stage 2
modelling

GenCost 2024-25
CSIRO https://www.csiro.au/en/research/technology-space/energy/GenCost
Consultation Draft

2024 Projections for solar https://aemo.com.au/-/media/files/major-publications/isp/2025/CSIRO-2024-Solar-PV-

CSIRO
PV and battery systems and-Battery-Projections-Report

2024 Electric Vehicle

CSIRO To be uploaded with Stage 2
Projections

Pumped Hydro cost https://www.aemo.com.au/-/media/Files/Electricity/NEM/Planning_and_Forecasting/

Entura
modelling Inputs-Assumptions-Methodologies/2019/Report-Pumped-Hydro-Cost-Modelling.pdf

2024 Projections for solar

Green Energy https://aemo.com.au/-/media/files/major-publications/isp/2025/GEM-2024-Solar-PV-and-
PV and stationary energy
Markets Battery-Projections-Report
battery systems
Gas, liquid fuel, coal and https://aemo.com.au/-/media/files/major-publications/isp/2025/ACIL-Allen-2024-Fuel-
ACIL Allen
renewable gas projections price-forecast-report

Oxford
Discount rates for energy https://aemo.com.au/-/media/files/major-publications/isp/2025/Oxford-Economics-
Economics
infrastructure Australia-2024-Discount-Rate-report
Australia

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 174
List of tables and figures

List of tables and figures

Tables
Table 1 Stakeholder engagement on the 2025 IASR 14
Table 2 Key parameters, by scenario 20
Table 3 Summary of policies included in the Draft 2025 IASR 27
Table 4 State-level economy-wide emission reduction ambitions relative to 2005 levels (in
financial year unless otherwise stated) 31
Table 5 The 2024 IEA WEO scenario summaries 43
Table 6 Mapping of scenarios between studies 44
Table 7 Weather stations used in forecasting consumers electricity use (regional) 48
Table 8 Weather stations used in forecasting consumers electricity use (sub-regional) 48
Table 9 Consultant scenario mapping for CER 57
Table 10 Economic forecast details by scenario 64
Table 11 Retail price input settings by scenario 77
Table 12 Price elasticities of demand for various appliances and sectors 77
Table 13 Mapping of DSP settings to scenarios 79
Table 14 Sources for technical and cost parameters for existing generators 81
Table 15 Existing generators – long duration outages 83
Table 16 Unplanned outage assumptions (excluding long duration outages) for 2024-25 financial
year 83
Table 17 Median hydro climate factors, Step Change scenario 91
Table 18 List of generation and storage technology candidate 95
Table 19 Mapping AEMO scenario themes to the GenCost 2024-25 Consultation Draft report
scenarios 97
Table 20 First-of-its-kind generation cost premiums 98
Table 21 Pumped hydro energy storage locational cost factors 104
Table 22 Pumped hydro sub-regional limits (in MW of generation capacity) 105
Table 23 Pre-tax real weighted average cost of capital 118
Table 24 Pre-tax real discount rates 119
Table 25 AER Values of distribution and transmission customer load-weighted VCR by state 119
Table 26 Value of greenhouse gas emissions reduction 120
Table 27 Offshore REZ resource limits 130
Table 28 REZ transmission limit constraints 134
Table 29 REZ secondary transmission limits 134

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 175
List of tables and figures

Table 30 REZ group transmission constraints 135

Table 31 NEM regions, ISP sub-regions, reference nodes and REZs 140
Table 32 Existing network flow path representation between sub-regions 142
Table 33 Load and generation representation within the sub-regional model 144
Table 34 Notional transfer capabilities between the sub-regions of the existing network
(December 2024) 146
Table 35 Preparatory activities 155
Table 36 Inter-regional transmission flow path outage rates 160
Table 37 Key inputs and the related data sources for the gas supply model 169
Table 38 Generation and storage employment factors 170
Table 39 Transmission employment factors 171
Table 40 Proposed implementation for actions in the Energy Ministers’ response to the Review of
the ISP 173
Table 41 Additional information and data sources 174

Figures
Figure 1 Map of weather stations used in forecasting consumers electricity use, per NEM sub-
region 49
Figure 2 Aggregate ONSG capacity, by NEM region (MW) 51
Figure 3 Forecast NEM-wide other non-scheduled generation capacity (MW) 52
Figure 4 Forecast utilisation of the four pillars of decarbonisation, by scenario 53
Figure 5 ACIL Allen biomethane available volume and production cost estimates by feedstock
and scenario 56
Figure 6 Actual and forecast rooftop PV installed capacity (NEM and WEM), 2016-17 to 2054-55
(GW [degraded]) 58
Figure 7 Actual and forecast PVNSG capacity (NEM and WEM), 2016-17 to 2054-55 (GW
[degraded]) 59
Figure 8 Actual and forecast distributed PV installed capacity (NEM and WEM), 2016-17 to
2054-55 (GW [degraded]) 60
Figure 9 Actual and forecast rooftop PV and PVNSG installed capacity (NEM and WEM) for the
Step Change scenario, 2016-17 to 2054-55 (GW [degraded]) 60
Figure 10 Distributed battery capacity forecast for the NEM+WEM (GW), including non-aggregated
and aggregated batteries 61
Figure 11 Aggregated VPP capacity for NEM+WEM (GW) 63
Figure 12 Economic composition of the NEM, Step Change scenario 65
Figure 13 Population growth in the NEM by scenario 65
Figure 14 NEM household disposable income per capita by scenario 66

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 176
List of tables and figures

Figure 15 NEM aggregated Gross State Product by scenario 67

Figure 16 2024 Actual and forecast NEM residential connections, all scenarios, compared to the
2023 forecast 68
Figure 17 2024 NEM LIL electricity consumption forecast compared to the 2023 forecast (TWh) 70
Figure 18 2024 WEM LIL electricity consumption forecast compared to the 2023 forecast (TWh) 71
Figure 19 LNG electricity consumption forecast 72
Figure 20 Residential appliance uptake trajectories for the NEM, consumption change relative to
base year (2024), 2023-24 to 2054-55 (TWh) 75
Figure 21 NEM Residential retail price forecasts, 2024-25 to 2054-55 76
Figure 22 Equivalent full unplanned outage rate projections for coal-fired generation technologies 84
Figure 23 Equivalent full unplanned outage rate projections for OCGT, CCGT and steam turbine
generation and small peaking plant technologies 85
Figure 24 Equivalent full unplanned outage rate projections for battery and hydro technologies 85
Figure 25 Hydro Tasmania scheme topology 88
Figure 26 Snowy Hydro scheme topology 89
Figure 27 Hydro scheme topologies of other existing hydro power stations 90
Figure 28 Hydro inflow variability across reference weather years – Snowy Hydro 91
Figure 29 Generation and storage projects in October 2024 Generation Information page (MW) 94
Figure 30 2023 vs 2024 Global NZE post 2050: build cost trajectories forecasts for wind and
large-scale solar 99
Figure 31 2023 vs 2024 Global NZE post 2050: build cost trajectories forecasts for gas generation 99
Figure 32 2023 vs 2024 Global NZE post 2050: build cost trajectories forecasts for selected
storage technologies 100
Figure 33 Weighted REZ locational cost factors for wind in the 2023 IASR and the 2025 Draft IASR102
Figure 34 Weighted REZ locational cost factors for wind in the 2025 Draft IASR 103
Figure 35 Forecast industrial gas prices by scenario – Melbourne, 2024-25 to 2054-55 ($AUD/GJ) 109
Figure 36 Forecast industrial gas prices by location – Step Change, 2024 to 2055 ($AUD/GJ) 110
Figure 37 Forecast coal prices for existing generators in New South Wales, Step Change, 2024 to
2055 ($AUD/GJ) 111
Figure 38 Forecast coal prices for existing generators in Queensland – Step Change, 2024 to 2055
($AUD/GJ) 112
Figure 39 Forecast price for diesel by scenario – terminal gate price plus distributors margin,
Victoria, 2024 to 2055 ($AUD/GJ) 113
Figure 40 Wind resource quality map – average wind speed (m/s) at 150 m hub height 115
Figure 41 Solar resource quality map – average annual global horizontal irradiance (GHI)
(kWh/m2/year) 116
Figure 42 Southern Australia summer maximum temperature anomaly 122
Figure 43 Candidate renewable energy zone map 127
Figure 44 REZ resource limits and initial transmission limits 129
Figure 45 ISP sub-regional model 142

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 177
List of tables and figures

Figure 46 Minimum synchronous unit commitment requirements, all scenarios except Green
Energy 164
Figure 47 Minimum synchronous unit commitment requirements, Green Energy scenario 165
Figure 48 Forecast build cost trajectories for electrolysers (PEM), 2023 vs 2025 Global NZE post
2050 scenario ($/kW) 168

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 178
Abbreviations

Abbreviations
Abbreviation Meaning

ACCC Australian Competition and Consumer Commission

ACCU Australian carbon credit unit

ACSL Advisory Council on Social Licence

ADGSM Australian Domestic Gas Supply Mechanism

AEMC Australian Energy Market Commission

AER Australian Energy Regulator

APS Announced Pledges Scenario

BESS battery energy storage system

BMM business mass market

BNEF Bloomberg New Energy Finance

BoM Bureau of Meteorology

CBA cost benefit analysis

CBD Commercial Building Disclosure

CCGT closed cycle gas turbine

CCRG Consumer and Community Reference Group

CCS carbon capture and storage

CEFC Clean Energy Finance Corporation

CER consumer energy resources

CNSW Central New South Wales

CQ Central Queensland

CSA Central South Australia

CWC ClimateWorks Centre

DAC direct air capture

DAE Deloitte Access Economics

DAT dual-axis tracking

DCCEEW Department of Climate Change, Energy, the Environment and Water

DISER Department of Industry, Science, Energy and Resources

DSP demand side participation

DSP IP DSP Information portal

E3 Equipment Energy Efficiency

EAAP Energy Adequacy Assessment Projection

ECMC Energy and Climate Change Ministerial Council

EFOR equivalent full forced outage rate

EMMS electricity market management system

ESCI Electricity Sector Climate Information

ESOO Electricity Statement of Opportunities

ESS Energy Savings Scheme (New South Wales)

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 179
Abbreviations

Abbreviation Meaning

EV electric vehicle

FBT fringe benefits tax

FCUD Full Commercial Use Date

FERC Federal Energy Regulatory Commission

FERM Firm Energy Reliability Mechanism

FFP fixed flat plate

FRG Forecasting Reference Group

GALLM Global and Local Learning Mode

GCM global climate model

GEM Green Energy Markets

GEMS Greenhouse and Energy Minimum Standards

GG Gladstone Grid

GIS Geographic Information Systems

GJ gigajoule/s

GSOO Gas Statement of Opportunities

GVA Gross Value Added

GW gigawatt/s

GWh gigawatt hour/s

HDI Household Disposable Income

HEUF Household Energy Upgrades Fund

IASR Inputs, Assumptions and Scenarios Report

IBR inverter-based resource/s

IEA International Energy Agency

IPCC Intergovernmental Panel on Climate Change

ISP Integrated System Plan

kW kilowatt/s

kWh kilowatt hour/s

LIL large industrial load

LOR lack of reserve

LPG liquefied petroleum gas

LRET Large-scale Renewable Energy Target

LTESA Long-Term Energy Service Agreement

MEL Greater Melbourne and Geelong

MLF marginal loss factor

MT PASA Medium Term Projected Assessment of System Adequacy

MtCO2-e million tonnes of carbon dioxide equivalent

MVA megavolt ampere/s

MW megawatts
MWh megawatt hours

NABERS National Australian Built Environment Rating System

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 180
Abbreviations

Abbreviation Meaning

NatHERS Nationwide House Energy Rating Scheme

NCC National Construction Code

NDC Nationally Determined Contribution

NEL National Electricity Law

NEM National Electricity Market

NEMDE NEM Dispatch Engine

NEO national electricity objective

NEPS National Energy Performance Strategy

NER National Electricity Rules

NEVA National Electricity (Victoria) Act 2005

NMI National Metering Identifier

NNSW Northern New South Wales

NQ Northern Queensland

NSA North South Australia

NSCAS network support and control ancillary services

NSW EII Act New South Wales Electricity Infrastructure Investment Act 2020

NZE Net Zero Emissions by 2050

OCGT open cycle gas turbine

OEA Oxford Economics Australia

ONSG other non-scheduled generation

PDRS Peak Demand Reduction Scheme

PEC Project EnergyConnect

PEM proton exchange membrane

PHES pumped hydro energy storage

PJ petajoule/s

POE probability of exceedance

PV photovoltaic

PVNSG PV non-scheduled generation

QNI Queensland – New South Wales Interconnector

QRET Queensland Renewable Energy Target

QREZ Queensland Renewable Energy Zone

RCP Representative Concentration Pathway

RET Renewable Energy Target

REZ renewable energy zone

RIT-T regulatory investment test for transmission

RoCoF rate of change of frequency

RRN regional reference node

RRO Retailer Reliability Obligation

SA REPS South Australian Retailer Energy Productivity Scheme

SAT single-axis tracking

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 181
Abbreviations

Abbreviation Meaning

SESA South East South Australia

SEV South East Victoria

SNSW South New South Wales

SNW Sydney, Newcastle, Wollongong

SPR Strategy. Policy. Research.

SQ South Queensland

SRES Small-scale Renewable Energy Scheme

SSSP System Strength Service Provider

STC small-scale technology certificate

STEPS Stated Policies Scenario

TAS Tasmania

TNSP transmission network service provider

TRET Tasmanian Renewable Energy Target

UNFCCC United Nations Framework Convention on Climate Change

UOR unplanned outage rate

US EIA US Energy Information Administration

V2G vehicle-to-grid

VCR Value of Customer Reliability

VEU Victorian Energy Upgrades

VNI Victoria – New South Wales Interconnector

VPP virtual power plant

VRE variable renewable energy

VRET Victorian Renewable Energy Target

WACC weighted-average cost of capital

WDR Wholesale Demand Response

WEM Wholesale Electricity Market

WEO World Energy Outlook

WNV West and North Victoria

ZEV zero emission vehicle

© AEMO 2024 | Draft 2025 Inputs, Assumptions and Scenarios Report 182