Australia's coal-fired power capacity is expected to remain until 2050, while power grid must triple its capacity by 2050, with a significant increase in wind, solar, and storage, to meet future demand, according to the Australian Energy Market Operator (AEMO).

AEMO forecasts that renewable energy will continue to replace coal as the primary source of power, with total electricity consumption nearly doubling by 2050. This increase will be driven by a shift towards electric industry, households, and vehicles, along with growing demand from data centers.

The cost of upgrading the energy grid infrastructure is projected at $128 billion. AEMO warns that delaying the transition could raise costs and jeopardize the Albanese government's 2030 renewable energy target of 82% generation from renewables.

Currently, renewables account for nearly 43% of generation, with recent months seeing a rise to 50%. However, experts, including the Climate Change Authority, say that renewable growth must more than double to reach the 2030 goal.

AEMO revised its transmission needs down to 6,000 km, from a previous estimate of 8,000 km, following the Queensland government's cancellation of a major pumped hydro project. The transmission expansion is expected to cost around $9 billion but could save consumers $22 billion and reduce emissions by $2 billion compared to a path without new transmission.

Rooftop solar, already installed in more than 4 million Australian homes and businesses, is expected to continue expanding, with AEMO predicting a fourfold increase in small solar systems by 2050.

The report also forecasts the closure of two-thirds of remaining coal-fired power plants over the next decade, with many shutting earlier than previously planned. Coal plants will likely have to adjust their operations to accommodate cheaper solar power, particularly during sunny periods of the day.

New gas-fired plants will be required to replace aging generators and to increase gas capacity by 25%. However, AEMO anticipates that these plants will operate infrequently, at around 7% of their annual potential, mainly as backup during winter when solar output is reduced.

AEMO CEO Daniel Westerman emphasized that a renewable energy system, supported by storage, gas, and enhanced networks, remains the least-cost path to meeting Australia's future energy needs. However, he warned that delays in infrastructure development could erode benefits for consumers and pose risks to grid reliability.