Our Engineering Roadmap Shows Us Where We Are Going
While it may not be the sexiest part of the energy transition, engineering the grid remains one of the most important. Without it, all the wind, solar and battery investments in the world will not deliver a stable and secure electricity supply. That is why the Engineering Roadmap FY2026 Priority Actions Report from the Australian Energy Market Operator (AEMO) continues to deserve serious investor attention. (1)
The report outlines 29 priority actions across the National Electricity Market (NEM) and Western Australia's South West Interconnected System (SWIS), focusing on operational readiness, grid stability, consumer energy resources, and technology integration. For investors, it signals where the market is heading, what barriers remain, and, importantly, how capital can accelerate the transition.
What Is the Engineering Roadmap?
The Engineering Roadmap is AEMO’s blueprint for preparing Australia’s electricity systems for operation at times of 100% renewable penetration. While technically possible in smaller systems, achieving this at national scale requires replacing the invisible glue of system strength, inertia, and frequency control that coal and gas once provided. The roadmap ensures these capabilities are engineered back in using new technologies such as batteries, virtual power plants, and inverter-based resources.
Key Progress and Achievements
In FY2025, AEMO completed 33 of 37 priority actions for the NEM. These included publishing technical guidance on grid-forming batteries, implementing minimum system load frameworks for Victoria and South Australia, and supporting governance for integrating consumer energy resources (CER). The work was supported by a $15m grant from the Australian Renewable Energy Agency (ARENA), helping to accelerate deployment and strengthen technical planning across the market.
In the SWIS, the inaugural Engineering Roadmap laid the groundwork for system strength assessments with Western Power, voltage management at low demand periods, and implementation of non-co-optimised services to maintain stability when demand drops.
A clear sign of progress emerged last summer when the NEM hit a record 75.6% renewable contribution in late 2024, followed closely by the SWIS at 85.1%. These milestones showed that the transition is no longer a concept but an operational reality.
FY2026: The Year Ahead
The 29 priority actions for FY2026 focus on four key themes:
Uplifting operational capabilities: improving real-time visibility of under-frequency load shedding schemes, enhancing outage management, and building operator readiness.
Preparing for transition points: managing the retirement of coal-fired power stations like Eraring, Yallourn and Collie, and developing operational protocols for 100% renewable scenarios.
Integrating consumer energy resources (CER): improving forecasts, onboarding dynamic export limits from networks such as SA Power Networks and Energy Queensland, and assessing DER behaviour during restarts.
Enabling new technologies: conducting trials and technical validation of grid-forming batteries, inverter-based loads, and synthetic inertia contributions.
The grid is no longer about simply turning a switch. Managing two-way energy flows from homes, virtual plants, and industrial DER means every new rooftop solar system and EV charger becomes both a contributor to and a challenge for grid stability.
One of the more important actions this year involves analysing fault current contributions from grid-forming battery energy storage systems. These systems are now capable of delivering services that were once exclusive to coal plants. For investors, this represents a bridge to capitalising on multiple revenue streams from battery arbitrage, frequency control, and system strength services within a single asset class.
What About WA?
Western Australia’s SWIS continues to act as a testing ground for the rest of the nation. With the retirement of state-owned coal generation set for completion by 2030, WA faces both a challenge and an opportunity to fast-track its energy transformation.
Actions in the SWIS include reviewing Rate of Change of Frequency (RoCoF) limits, improving weather forecasting, and expanding AEMO’s modelling capability to account for declining system strength, particularly near Collie and the Shotts Terminal area where more than 650MW of grid-following batteries are expected by 2027.
Project Jupiter, WA’s flagship distributed energy initiative, continues to advance. Backed by $20.8m in ARENA funding, it is paving the way for virtual power plants that connect household solar and batteries into grid-scale services. For investors, this highlights that the next major opportunity may be decentralised and sitting behind the meter.
Streamlining the Road Ahead
This report will likely be the final standalone Engineering Roadmap before AEMO consolidates its reporting within the Transition Plan for System Security from 2026 onwards. This alignment will merge operational priorities, technology trials, and stakeholder feedback into one streamlined publication.
Such consolidation is timely. Investors need simplicity and clarity when allocating capital. Complex markets like system strength and synthetic inertia are evolving quickly, and AEMO’s guidance now shows where private capital can play a role in replacing synchronous machines and maintaining stability.
Why This Report Matters for Investors
The Engineering Roadmap is not just a technical manual. It is an investment map outlining where capital will be needed and where regulatory evolution is likely to follow.
Key opportunities include:
Grid-forming batteries: already proven for frequency and inertia services and now being validated for system strength. Broader approval could drive stronger deployment economics.
Consumer energy resources: integrating rooftop solar, smart appliances and EVs into grid operations will require new layers of digital infrastructure and aggregation.
Virtual power plants: Project Jupiter and similar programs are demonstrating the commercial viability of software-based grid orchestration.
System strength investments: maintaining voltage and fault levels as coal exits is not just an engineering issue, it is an emerging market in its own right.
The Bottom Line
The Engineering Roadmap FY2026 Priority Actions Report demonstrates that Australia’s power system has entered the execution phase of the energy transition. Transition points such as coal closures, high renewable periods, and DER integration are no longer theoretical. They are active deadlines.
The takeaway for investors is clear. System security is evolving into a services market, and AEMO’s engineering certainty is providing private capital with the confidence to participate. Whether investing in batteries, building virtual power plants, or deploying enabling infrastructure, the path ahead is becoming more visible and more investable.
References
AEMO Engineering Roadmap FY2026 Priority Actions Report. 17 July 2025. https://aemo.com.au/initiatives/major-programs/engineering-roadmap
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