Supply-side capacity in the NEM over the next 24 years (v2)

This time, we extend our look at supply-side capacity into the Integrated System Plan (ISP) time horizon.

Last time, in Supply-side capacity in the NEM over the next 10 years (v1), we looked out 10 years using the 2026 ESOO. The ISP projects to 2050.

Capacity over the next 24 years, to 2050

We continue to consider supply of electricity through the lens of three main service types:

• Bulk energy (Variable Renewable Energy, VRE),
• Firming and
• Shaping.

Changes since last time include allocating Snowy 2.0 and Borumba to the Firming category instead of Shaping. We have left the other hydro units in Shaping.

ISP scenarios

The 2026 ISP was published in June 2026. Out of 34 development candidates, the work identified an optimal development pathway (ODP) that meets consumer needs (e.g. demand) and government policies (e.g. net zero by 2050) in each of three scenarios of the future.

The ODP reflects the NEM reaching those goals (consumer needs and government policy) and it is selected after considering how it plays out under different futures. Therefore the ISP it isn’t strictly a forecast for what will happen. Rather, its seeks to identify an optimal pathway to achieving the goals stated in the the assumptions.

The scenarios of the future are labelled:

• Slower Growth – “a future that is challenged by lesser economic growth and greater challenges than other scenarios”,
• Step Change – “domestic action that limits global temperature rise to below 2°C compared to pre-industrial levels”,
• Accelerated Transition – ” provides an ‘upside alternative’ that explores the possible drivers for rapid emissions reduction domestically and globally”

ISP results include a generation development opportunities outlook for each pathway-scenario combination. These summarise what is projected to be built given the scenario settings – in the form of capacity, among other measures. In this article we study these generation capacities from the ODP which was candidate #4. This lets us compare supply side capacity under each scenario in similar fashion to last time, as done with the ESOO results.

Scenario sensitivities were also tested for the ISP. A notable sensitivity, which we also include in this analysis, was:

• Constrained delivery (in generation and transmission) –  simulates “factors which slow infrastructure development” impacting “ability to meet government policies such as the decarbonisation and renewable energy targets”.

ESOO Development Scenarios, + one

In the last time, we presented ESOO capacity out to 2036:

• ‘Committed + Anticipated’ – projects represented the base development case,
• ‘Government Schemes and Actionable Developments’ – more ambitious on development rate and magnitude.

Additionally, we charted:

• ‘Committed’ projects only – the conservative perspective.

In this article we include those capacities in the chart and we incorporate the anticipated closure schedule for those projects into the ISP period.

By service group

We chart the capacity outlooks by service group to compare scenarios.

Bulk Energy

“Off the chart!”

The required development of wind and solar to meet demand and policy objectives assumed in the ISP is staggering when viewed relative to the ESOO (+closures) trajectories.

Accelerated Transition has the NEM supported by 211 GW of wind (on and offshore) and utility-scale solar by 2050. Than number is 117 GW in the Step Change scenario.

The Constrained Delivery sensitivity reaches 122 GW by 2050. This one branches off Step Change, hence there’s some similarity with that scenario. The slowdown appears in the near-term of Constrained Delivery only. It catches up to Step Change more or less by mid-2030.

Capacity anticipated to be built in the ESOO scenarios looks conservative in the context of the ISP development paths.

The list of closures is driving declines post 2036 (when the ESOO development outlook stops) in the ESOO+closures series. It is typical that thermal unit closures garner attention for size and system services provided. However, the closure outlook for VRE is a reminder that we’ll need to cover capacity lost as older units reach their end of technical life.

Shaping

Energy storage systems (including existing hydro) make up the capacity in this group.

Note we are excluding Snowy 2.0 and Borumba (an anticipated project) from Shaping. These are allocated to Firming for this analysis.  Therefore, in the outlooks, the Shaping capacity comes mostly from medium and shallow utility-scale storage.

If we follow the ESOO+closures series past the 10-year mark, we observe retirements starting to dent capacity levels in the mid-2040s.

ISP capacity trajectories align closely with the Government (schemes) and Actionable (developments) ESOO outlook in the near term. By 2030 the Government and Actionable capacity level is 10 GW higher than the ISP’s Step Change.

Step Change doesn’t have much Shaping capacity declining (a net retirement of 17.4 GW is swamped by a buildout of more than 41 GW). The other ISP scenarios show a stronger drop off in shaping capacity. The drop off is attributed to retiring assets operating now or built in the early years. With that early phase being similar among scenarios (except Accelerated Transition which grows faster), declines in Shaping capacity are largely differentiated by how much continues to be built between 2040 and 2050.

Firming

In the early years of the ISP trajectories, we observe coal retirements happening sooner than slated. For example, Accelerated Transition has all coal retired by July 2033. In the ISP “coal retirements are optimised to minimise cost and balancing emissions within the ISP’s carbon budget”.

In the ISP scenarios Flexible Gas does the heavy lifting to resist a decline in Firming capacity overall, until the 2040s. In Step Change gas retirements of around 6 GW play out between 2040 and 2050 and almost 4 GW of coal is retired too – a lot to cover with new generation sources.

Fully Scheduled Capacity

Adding capacities of Firming and Shaping services provides us with a series representing Fully Scheduled capacity.

Note this is different from the Dispatchable Capacity series in the ISP results. We have not included coordinated CER storage in the analysis which is projected to rise from around 1.3 GW to 47 GW by 2050 in Accelerated Transition, 23 GW in Step Change. We also leave out capacity from ‘other renewable fuels’ as this makes a relatively minor contribution to capacity. It may be realised through smaller non-scheduled units.

Some interesting aspects about this series stem from the nature of the technology mix.

ISP Shaping capacity is mostly from utility-scale storage that grows strongly in the early years. Those capacity gains are somewhat offset by early coal retirements. So, by the early 2030s, we see ISP scenarios sticking closer to committed and anticipated levels of the ESOO even though storage growth is stronger.

The project pipeline currently has very few projects that are meeting the ‘anticipated’ status post 2030. Growth will need to be sustained via the proposed projects in the pipeline in order to keep pace with the ISP after 2033.

In the Slower Growth ISP scenario capacity declines furthest in the 2040s. In this scenario remaining coal retires later and utility-scale storage capacity levels are not maintained in this scenario. Growth in bulk energy continues to support demand albeit at lower levels – softer demand growth is in the Slower Growth future.

A Gap

There’s a question of what it means for any planned pathway when reality starts to take a different path. Course corrections may still be possible. However, observers with a near-term view to 2030 (because of the 82% of electricity from renewable sources target) have begun to consider proximity to emission reduction targets already.

The ISP framework is under review (AEMC communicates two items, relating to a Review of the Integrated System Plan). Recently the first round of consultation closed. Submissions on the discussion paper were recieved by 3 September 2026.

There is much to unpack in those submissions and discussion questions.

One emerging theme in the submissions I’ve been able to read might be summarised as asking:

• What else should be done to give confidence that the identified development pathway is resilient to deviations from assumptions or outcomes, at the magnitudes that are emerging?

December 2026 is when the draft report on the ISP review is to be released.