AEMO's new roadmap on the future of the national grid will for the first time include a value for avoided emissions, with a starting figure of $70 per tonne to be used. 

Meanwhile, almost all the newly-released submissions made to AEMO on its draft 2024 Integrated System Plan for the national grid have praised the agency's work, but want improvements in the final version. 

AEMO today confirmed in a webinar that the final version of the 2024 Integrated System Plan – due out by the end of June - will place a value on emissions reductions. The draft ISP did not attribute any value to these reductions.

AEMO will rely on landmark new guidance released last week by the Australian Energy Regulator.

The guidance prescribes an interim value of $70 per tonne of greenhouse gas, rising to $105 by 2030, and then continuing to increase afterwards.

Submitters on the draft ISP that urged the use of a value on emissions in the final version included Energy Australia, which said the final ISP should estimate the carbon cost of not moving at sufficient speed to decarbonise the grid.

Incorporating a carbon cost would bring to the fore the huge costs associated with delays in decarbonising, Energy Australia pointed out.

For example, if supply chain problems constrain the draft ISP's Step Change scenario, then AEMO's analysis implies the 2030 carbon budget will be 155 million tonnes of CO2 greater than under the unconstrained Step Change scenario, it noted.

At an assumed carbon price of $100 a tonne, "this suggests a potential additional cost in the order of $15 billion", it said.

This shows "the real detriment of carbon emissions to the community, in addition to unacceptable outcomes politically, particularly given Australia’s various international commitments", it concluded.

In similar vein, the Clean Energy Investor Group said the draft ISP had created "a blind spot in market benefits" from grid decarbonisation, because it didn't ascribe any quantified value to emissions reduction.

Meanwhile, other draft ISP submissions – all of which have been released recently by AEMO – raise a range of issues. 

The submission from BlueScope warned that AEMO's draft ISP hasn't dealt with industrial electricity needs in a satisfactory way.

BlueScope noted that it currently consumers more than 1,000GWh of electricity at its Port Kembla operations – but says this demand could ultimately increase sixteen-fold. 

That's because it's favoured decarbonisation option is moving to a Direct Reduced Iron (DRI) process, which would cut its scope 1 emissions up to 60% in the initial fossil gas-reliant phase, and ultimately up to 85% when it uses hydrogen. 

However, using fossil gas in a DRI plant would increase BlueScope's electricity consumption to as much as 2,400GWh annually from about 2032, while using hydrogen would lift its electricity consumption to between 11,000 and 16,000GWh annually. 

BlueScope pointed out that even the first stage represents up to half of all NSW business electrification of 5,323 GWh in the draft ISP Step Change scenario.

DRI using green hydrogen would require more than the 5,342GWh of business electrification and 6,663 GWh of domestic hydrogen production combined, it added. 

Only the draft ISP's Green Energy Export scenario (which is focused on export requirements, not domestic needs) would service BlueScope’s hydrogen DRI needs, the company said. 

However, BlueScope pointed out that still wouldn't provide any significant spare capacity for the electrification of any other energy-intensive business in NSW.

BlueScope said the ISP's estimates of major industrial demand need to be provided at a more local level, and it recommends doing this by creating "the demand equivalent" of renewable energy zones, which it terms "industrial electrification precincts". 

This would enable the ISP process to "systematically plan and provide for the needs of

large industrial users of energy in a well-defined geographic area". 

Although BlueScope's suggestions appear reasonable, it's worth pointing out that the company hasn't committed to Port Kembla as the location for any future DRI plant it might build. 

That means either the 2024 ISP or a future version could specify a Wollongong industrial electrification precinct anchored by a Port Kembla DRI plant, only to have the company ultimately opt to position it somewhere else.

Industrial electrification precincts aren't the only new type of zones suggested to AEMO.

NSW network business Ausgrid said the final ISP should provide for the creation of Distributed Renewable Energy Zones (DREZs), arguing this would ensure distribution networks maximise their contribution to the energy transition.

These DREZs would be "hubs for medium-scale generation matched by storage", and utilising these would provide an opportunity to "de-risk and complement larger-scale transmission projects currently facing delays", Ausgrid said.

"DREZs can be delivered quickly by leveraging existing distribution network infrastructure," it said. "In Ausgrid's case, we also have a large, existing field force that can swiftly pivot to delivering DREZ infrastructure 'in-house' rather than going through the additional steps of procuring labour through an outsourced model like most large-scale transmission projects." 

Greater Sydney distribution business, Endeavour Energy, made a similar call, stating that in its network area there is the potential to add at least 3GW to 4GW of additional renewable capacity to its existing grid, at low incremental cost. 

The Australian Hydrogen Council and the Clean Energy Council both express concern that the draft ISP doesn't take into account off-grid hydrogen production projects.

"For example, in the Green Energy Exports scenario, 50% of electrolysers are assumed to be grid-connected," the Australian Hydrogen Council noted. 

If the final ISP just focuses on the 50% that are grid connected, as the draft does, then the ISP forecast for workforce and infrastructure requirements for hydrogen production will understate overall needs "and potentially undermine the urgency for necessary policy support", the Australian Hydrogen Council warns. 

The Institute for Energy Economics and Financial Analysis (IEEFA) pointed out that the draft ISP "is heavily focused on supply-side and transmission planning". 

"In IEEFA's view the ISP should be a full whole-of-system plan, determining how various components of the system work together and optimise costs. It should identify the lowest-cost solution for the NEM, making the right trade-offs between storage, transmission, generation and demand-side actions – large, medium and small in scale," it said.

IEEFA also urged AEMO to provide a "Green Energy Exports" scenario that is explicitly 1.5 degree-aligned, but not necessarily as reliant on hydrogen. 

And, in similar vein to Ausgrid and Endeavour Energy, it said the ISP process should pay more attention to optimising the capacity of distribution businesses to contribute to grid decarbonisation.

Several submitters argued that the draft ISP  underplays the contribution that South Australia can make to a clean energy transition, and the likely increase in industrial load in the state.

Specifically, they want the final 2024 ISP to classify South Australia's proposed Mid North (southern and northern) transmission projects as actionable now.

The strongest case for doing so is made by ElectraNet, the state's main transmission provider, which notes that the draft ISP contains no actionable projects in South Australia.

The draft ISP "underestimates the amount of large industrial load growth in South Australia", ElectraNet warned.

"ElectraNet expects an additional 1,000MW of load to connect by the early 2030s," it says. 

"This is consistent with the South Australian Government's economic strategy to capitalise on the green re-industrialisation of the economy and only represents a portion of the potential loads in active discussions with ElectraNet."

ElectraNet also wants the South-East expansion project to be actionable now, to connect an expected additional 694MW of wind by 2032.

Others making similar calls regarding the Mid North transmission projects include CMX Energy Consulting (a green hydrogen and renewables specialist with offices in Adelaide, Toronto, and Dubai), and Amp Energy, which is developing the Cape Hardy green hydrogen and ammonia facility on the eastern side of South Australia's Eyre Peninsula.

Both CMP and Amp said that potential overseas off-takers in Japan and investors from Canada have warned that, without confidence in transmission infrastructure, they won't enter into long-term offtake agreements or invest.

A similar recommendation to make the Mid North transmission projects actionable is made by the South Australian Chamber of Mines and Energy, which said the draft ISPs demand forecasts for South Australia are unrealistically low. 

Meanwhile, environment group WWF said the draft ISP has ignored the broader economic, social and environmental benefits of the Green Exports scenario. 

WWF said the draft ISP doesn't take into account the capacity of the Green Exports scenario to help other countries decarbonise, or the major economic and employment benefits associated with establishing new, export-focused industries.

In other submissions:

• Fortescue said it expects Australia's economy and energy system will progress to a point somewhere between the draft ISP's "Step Change" and "Green Energy Exports" scenarios.
  
• The Clean Energy Investor Group said the final ISP should be converted into a mandatory framework that is focused on an explicit "investor-credible 1.5 degree-aligned scenario".
  
• Climateworks pointed out that the draft ISP's green energy exports scenario "is most closely aligned with the objectives of the Paris Agreement", and says this scenario should be prioritised.
  
• The Electric Vehicle Council said the draft ISP appears to have significantly overstated electric vehicle uptake, by forecasting about 3.7 million EVs in FY31 when the Council anticipates 1.5 million, of which 1.35 million will be in the National Electricity Market.
  
• Greater Sydney distribution business, Endeavour Energy, warned of "exponential growth" in energy demand from data centres. In 2023, the Greater Sydney distribution business had 19 applications from data centres totalling 2.6GW of connected load. In addition, last December alone, there were 18 additional enquiries totalling a further 2.7GW of connected load.
  
  "If realised, we expect data centres alone to reach a peak demand of 5.9GW, representing over 250% of our total network demand today," it cautioned.