AEMO’s Transition Plan for System Security - Beyond The Headlines
For those that don’t know, AEMO’s Transition Plan for System Security is a technical roadmap that sets out how Australia can operate a stable power system as it moves from synchronous coal generators to inverter based renewables. (1) The 160 page report spans new grid services, technology readiness, system strength requirements, and the timing challenges as coal plants retire. As per the report, the key challenge is not the shift to renewables itself. It is that the shift is occurring while demand is rising and essential grid services once provided by coal are being removed. The plan makes clear that the transition is well underway but requires faster investment in the technologies that will keep the system secure. It is important to note that the report is produced annually. Other than the specifics changing, the report and its outcomes remain relatively similar. Despite this, for some reason, the latest report received a lot of coverage, with sides arguing over whether it was black or white.
What Was Picked Up in the AEMO Report
AEMO identifies a tightening window in New South Wales as Eraring prepares for a 2027 closure. As per the report, analysis shows that delays in bringing new system strength assets online could create periods where the grid does not have the necessary voltage control or inertia. This is drawn directly from the technical modelling which highlights that system strength gaps appear under certain fault scenarios as synchronous generators retire. AEMO highlights that synchronous condensers and grid forming inverters will both be essential. The plan also details the operational protocols required for a future where the grid will regularly run at times with very low synchronous generation. South Australia is used as a case study that demonstrates the technology is already operating at scale. As per the report, South Australia has successfully managed periods with extremely low synchronous generation by combining syncons, big batteries, and new control schemes such as rooftop solar curtailment.
The AFR Interpretation: The Black
The AFR article by Angela McDonald-Smith (2) focuses on the consequence of getting the timing wrong. The article stresses AEMO’s warning that delaying new system strength infrastructure could raise blackout risks in New South Wales when Eraring retires. The AFR report notes that these essential grid services have historically been provided by coal units but are not naturally provided by solar or batteries. The article also details the role of synchronous condensers. As per the AFR article, Transgrid is rushing to install large syncons that act as shock absorbers to maintain voltage and frequency. The piece draws attention to similar shortfalls overseas, referencing the blackout across Spain and Portugal that affected more than 50 million people. This is used to reinforce the argument that Australia cannot delay. The AFR piece emphasises the speed at which new machines need to be installed, noting that the NSW government has already moved to accelerate delivery timelines by up to 18 months. The overall tone is clear. Without intervention, there is risk. With intervention, the transition can proceed.
The Renew Economy View: The White
Renew Economy’s reporting from Giles Parkinson adopts a different lens. (3) Rather than focusing on risk, it highlights the technical opportunity and the readiness of new technologies. As per the Renew Economy article, big batteries equipped with grid forming inverters are capable of delivering system strength and synthetic inertia at a fraction of the cost of syncons. The article points out that AEMO is cautious rather than dismissive. The caution comes from limited real world deployment at a gigawatt scale, not from a lack of capability. Parkinson also emphasises that South Australia provides the real world evidence that these technologies work today. The article cites Tesla’s White Paper which argues that grid forming batteries can deliver system strength faster and more reliably because they have no mechanical failure points. Experts quoted by Renew Economy highlight that syncons may be useful in some applications but may also introduce unnecessary complexity. This explains the difference in tone. The AFR stresses risk while Renew Economy stresses technological readiness.
Balancing the Two Interpretations
Both interpretations can be correct. AEMO’s report is careful to highlight what works and what still needs validation. It notes the speed at which the transition is progressing and the need for both syncons and grid forming inverters to ensure the system remains secure. It also notes that technical modelling must be expanded through longer trials and digital twin simulations. Renew Economy captures this constructive tone while the AFR captures the consequences of delay. What matters for investors is how both interpretations affect project timing, policy certainty, and investment flows.
What This Means for Investors in the Energy Transition
The transition is not slowing. AEMO’s plan confirms that system security will increasingly rely on non mechanical technologies. That is a structural investment trend. Investors should expect continued funding into big batteries, grid forming inverter research, synchronous condensers, and fast response technologies. The AFR focus on risk highlights a near term investment window in New South Wales. System strength assets will need to be built fast, which creates opportunities in regulated transmission investment, construction, power engineering, and enabling services. Renew Economy highlights the long term cost advantage of grid forming batteries. That signals opportunities in storage developers, inverter manufacturers, and battery integrators. As per the report, South Australia’s experience shows that once the operating frameworks are proven, renewable heavy grids can be the most secure. For investors this reinforces that diversified portfolios in storage, transmission, engineering services, and renewable generation remain well placed. The transition plan shows that change is unavoidable. The only real question is who is prepared for it.
The Bottom Line
AEMO’s Transition Plan for System Security confirms that Australia can run a stable grid with very high renewable penetration. The risk is timing, not technology. The AFR highlights the cost of delay. Renew Economy highlights the opportunity for new technologies. Together they point to rising investment in storage, grid forming inverters, syncons, transmission and system strength services. For investors this is a clear signal that system security is becoming one of the most investable parts of the energy transition.
References
Australian Energy Market Operator, Transition Plan for System Security. November 2025.
McDonald-Smith A, Australian Financial Review, "AEMO warns of NSW blackouts if Eraring closes in 2027." 28 November 2025.
https://www.afr.com/companies/energy/aemo-warns-of-nsw-blackouts-if-eraring-closes-in-2027-20251128-p5nrajParkinson G, Renew Economy, "We won’t need spinning machines: Will big batteries be allowed to provide heartbeat of a grid with engines off?" 2 December 2025.
https://reneweconomy.com.au/we-wont-need-spinning-machines-will-big-batteries-be-allowed-to-provide-heartbeat-of-a-grid-with-engines-off/
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