Will the lights go out if we don’t have baseload? “No, absolutely not,” say those whose job it is to keep them on
Mt Piper coal fired power station. (AAP Image/Dan Himbrechts)
Giles Parkinson
Dec 12, 2025
Coal
Policy & Planning
Australia’s green energy transition is continuing apace – not as quickly as many would hope, and possibly not as fast as we could. But it is certainly happening more quickly than nearly everyone imagined a decade ago, and at a speed some still find hard to digest.
The release of the Australian Energy Market Operator’s latest multi-decade blueprint, the draft 2026 Integrated System Plan, underlines what nearly everyone now accepts to be true – that the lowest cost option to replace Australia’s ageing fleet of coal generators is with wind, solar, battery storage, a bit more gas capacity and some transmission.
It’s been the case since the first ISP was produced in 2018, at the instigation of the then Coalition government, and the main thrust of the ISP has varied little since then (three were produced under the Coalition and this is the second under Labor).
Nicola Falcon, now the executive general manager of system design at AEMO, has been working on the ISP since the first was finalised in 2018, and points to its remarkable consistency, despite – or even perhaps because of – the technology changes that have occurred in that time.
“Even with those changes that are going on around us, it continues to be that that least cost mix is renewable generation, connected with networks firmed by storage and backed by gas,” Falcon tells Renew Economy in the latest episode of its weekly Energy Insiders podcast.
See: Energy Insiders Podcast: A blueprint to quit coal, and go green
Yet the biggest hurdle to the ISP’s success remains political – whether it be the political rhetoric and misinformation from the Coalition at the federal level that proves a lightning road for local opposition, or the destructive acts of new conservative state governments such as the LNP in Queensland.
The basis of this is almost entirely dependent on a red herring – that the future of Australia’s economy and the reliability of its electricity supplies can only be guaranteed by what they call “baseload”, by which they mean existing coal and future nuclear.
That’s not what the energy industry says, unless they have a particular vested interest in perpetuating that myth. The future is now focused on bulk renewables – wind and solar – supported by storage, mostly batteries but also some pumped hydro and other technologies – and some peaking gas as the last fall-back.
The big energy players, and the market operator itself, have been consistent with this line, but on Energy Insiders we wanted to hear it again, and asked Falcon if the absence of “baseload” means the lights will go out.
“No, absolutely not,” Falcon replied.
Indeed, it’s the determination of the Queensland LNP government to try and keep its fleet of coal fired generators operating until 2049 that worries AEMO the most, and is likely the biggest threat to grid reliability.
“When we talk about coal being in the system longer, it doesn’t mean that we can rely on coal being online at those times,” Falcon says.
“There really is that need for them to start thinking about how they might be shutting down for days, weeks or even seasons as they compete with that flood of renewable generation coming in.
“They don’t want to be operating when there’s negative prices or zero prices, and that is what we see in some times of the day when we’ve got that abundance of renewable generation.
“That’s the lowest cost mix for consumers (and) it’s going to mean that the coal plants need to work around that. Gone are the days of that sort of baseload generation, for sure.”
The biggest emerging challenge – apart from actually installing the 58 gigawatts (GW) of wind and solar needed to supply the bulk energy to meet the 2030 targets, and the 120 GW needed by 2050 – is managing system security.
This is about inertia and system strength, and what AEMO often describes as the “heartbeat” of the grid, and its ability to withstand the inevitable disruptions – storms, network, generator and load trips – that are part of the daily menu for managing the grid.
AEMO is working through the engineering challenges of operating the grid without synchronous generation, and for the moment is relying on a large number of synchronous condensers – spinning machines that do not burn fuel – to deliver that service.
But syncons are both big, costly and hard to get. And many argue that grid forming inverters with battery storage systems can do the same job. AEMO and the transmission companies responsible for maintaining system strength appear to accept that idea, but want more evidence that the technology can and will deliver what it says on the lid.
Hence an accelerated program of trials over the next 12-18 months, including a world-first test of operating an isolated grid of more than 100 megawatts of load, with “engines off” i.e. no fossil fuels, no synchronous generation. It’s happened at smaller mine sites, but never at this scale.
“The world is watching,” says Falcon.
And she underlines the fact that in Australia there is no choice but to move on from coal, which is the reality that Alan Finkel accepted when he suggested having a roadmap – the ISP – in his eponymous review commissioned by the then Coalition government.
“If you think about coal in general, and you put Queensland to the side for a minute, the remaining coal units in the NEM (National Electricity Market) are on average 40 years old,” Falcon says.
“And when you look back at the age the coal is retired up till now is about 44 years old. So they really are getting to the end of their life.
“We’re still certainly seeing for the rest of that NEM, most of the coal is going to be closed by 2035 and all of it will be gone well before 2040, but Queensland’s average age of their coal is about 30 years.
“So, you know, there is, there is a scenario where you could see them extended to the sort of the 2049 timeframe we’ve seen, but we see that they’d need to be operating a lot more flexibly than they are today.” And by that she means shutting down for shifts, days, weeks, or even months and seasons.
In the meantime, the plunging cost of battery storage has had profound implications – both for its ability to store excess power and send it into the grid in the evening peaks, create demand in the middle of the day, and provide lower cost “virtual transmission” instead of new power lines.
The latest ISP models more battery storage, more solar and battery hybrids, more household PV (backed by more batteries), and less wind, less gas, and fewer new transmission lines.
But the fundamental story remains the same.
“There’s still going to be in a five fold increase in solar and wind that we need from now, where we’ve got about 23 gigawatts on the system to 120 gigawatts by 2050,” Falcon says.
“Yes, a little bit more battery and solar coming up now. That’s driven by the fact that we see costs for utility scale storage come down just so significantly.
“And we’re seeing that industry is responding. We’ve got close to 26 gigawatts in the connections pipeline now for storage coming through to 2030, and solar is a really nice complement to that.
“it can, charge the batteries during the middle of the day, and then the batteries can discharge at night when the sun sets. So it’s not surprising that you sort of see a little bit more of a mix of solar and storage, particularly given that those trends that we’re seeing.
“But wind is still going to have such a big role to play. And, you know, by 2050 as I said, we’re still needing significant investment in both sources.”
The, of course, are the customers themselves, with households expected to host some 87 gigawatts of capacity.
“By 2050 the consumer energy resources that we call them, which is your rooftop PV, your batteries and your electric vehicles, combined, will be providing half of the capacity supplied for the entire NEM, so, you know, a huge role,” Falcon says.
“They’re really at the heart of the transition. And to be fair, they’re setting the pace at the moment. As Australians, we’ve got 4 million households with rooftop PV on them.
We’ve seen with their household home batteries, huge uptake in the amount of CzeR storage and so forth. We’ve got, from a power system perspective, there’s opportunity through those investments, opting in to really provide value, not just for themselves, but also for all Australians.
“And so one of the things that we talk about in the report is this idea of coordination of CER.
“Now that’s not AEMO needing to take control. This is absolutely 100% something that consumers would choose to opt in to do.
“But if there was the right products and value for them to maximize their resources that they’ve invested in, and be able to through third party aggregators or retailers, respond to market signals that meet the needs of the power system.
“We’ve we’ve seen through our analysis that that would actually reduce costs of this transition by about $7.2 billion.
“Which is a win win, really, because we know that not everyone can access investment in CER, but it would be an opportunity for us to be able to more equitably see that energy transition through, because it would benefit all consumers.”
See also: Rooftop solar and batteries on centre stage: Six key graphs from AEMO’s transition roadmap
And: Energy Insiders Podcast: A blueprint to quit coal, and go green
reneweconomy.com.au |
