Wedoany.com Report-Dec.14, The Australian Energy Market Operator (AEMO) released the Draft 2026 Integrated System Plan (ISP) on Thursday, confirming that hydropower and pumped-storage projects will remain essential for grid reliability as Australia transitions to a renewable-dominated electricity system.

The optimal development pathway outlined in the draft projects 12 GW of new pumped-storage capacity and continued operation of the existing hydropower fleet through 2050. These long-duration storage assets will complement 32 GW of grid-scale batteries, 120 GW of additional wind and solar generation, and expanded transmission infrastructure needed to replace retiring coal-fired power stations. The ISP forecasts that two-thirds of remaining coal capacity will retire by 2035, with complete phase-out by 2049.

Hydro Tasmania welcomed the findings. CEO Rachel Watson stated that the modelling clearly demonstrates the critical role of extended-duration storage.

"The ISP had also identified that extended renewable lulls (when the wind isn't blowing and the sun isn't shining) are a reality and harder to predict in duration and intensity," Watson said. "We are planning for this climate variability and modelling for various scenarios. Tasmania's deep hydro storages are uniquely suited to help firm Australia's grid through these lulls over days, weeks and seasons."

Watson highlighted AEMO's recognition of the proposed Marinus Link interconnector and North West Transmission Developments in north-west Tasmania as vital projects. "Project Marinus will allow Hydro Tasmania to strategically manage water levels in our dams. We can import surplus low-cost solar and wind from the mainland and export when it benefits Tasmania."

Hydro Tasmania is advancing upgrades to existing stations, the redevelopment of the Tarraleah scheme, and new pumped storage at Lake Cethana, and other initiatives to increase dispatchable capacity for both local and mainland markets.

AEMO CEO Daniel Westerman emphasized the extensive analysis behind the plan. "Extensive stakeholder consultation and modelling of thousands of potential investment combinations has identified the least-cost option," he said. " Renewable energy, firmed with storage, backed up by gas and connected with upgraded networks remains the least-cost road map to meet Australia's energy needs. This aligns with consumer, industry and government investments already under way."

Westerman added that any delays in delivering generation, storage, or transmission projects could raise costs and threaten reliability. "While momentum in investment and delivery continues to build, challenges remain in delivering essential infrastructure at the pace required. Slower progress will erode benefits to consumers and present risks to reliability," he said.

Public consultation on the Draft 2026 ISP will remain open until February 2026, with the final plan scheduled for release in June 2026.