Response to AEMO consultation on updates to the ISP Methodology

1 May 2023

To: Australian Energy Market Operator

RE: Consultation paper – Update to the lSP Methodology March 2023

Sent by email to: [email protected]

The Institute for Energy Economics and Financial Analysis (IEEFA) welcomes the opportunity to comment on the Update to the ISP Methodology, March 2023 and recognises the large amount of work AEMO has put into the ISP process so far. The Integrated System Plan (ISP) creates one plan for the National Electricity Market (NEM), enabling coordination of energy industry stakeholders and infrastructure build, and is an important process.

Overall, IEEFA’s comments in this submission include recommendations to:

• Improve the ISP’s 1.5-degree scenarios – in particular to create at least one additional 1.5-degree aligned scenario
• Improve the balance of demand-side vs supply-side solutions in the ISP cost optimisation
• Provide greater clarity on the allocation of energy efficiency and electrification loads to half-hourly demand profiles
• Reconsider storage derating
• Provide further information on demand-side participation response duration
• Avoid or explain inconsistencies in gas power generation outlooks between the GSOO and ISP
• Incorporate a value of carbon emissions into the ISP methodology
• Clarify the government action required to be in line with different scenarios in ISP reporting
• Provide higher data granularity in generation results

Please see the detailed comments in the pages that follow.

Kind regards,

IEEFA Australia Electricity Team