AEMO delivers a range of planning and forecasting publications for the National Electricity Market (NEM), including the NEM Electricity Statement of Opportunities (ESOO), the Gas Statement of Opportunities (GSOO) and the Integrated System Plan (ISP)

The use of scenario planning is an effective practice to manage investment and business risks when planning in an uncertain environment, particularly through disruptive transitions. Scenarios are a critical aspect of forecasting, providing the information needed to assess future risks, opportunities, and development needs in the energy industry.

Scenario planning enables options to be identified, which are robust across multiple future states. It is vital that the dimensions of scenarios chosen cover the potential breadth of plausible futures impacting the energy sector and capture the key drivers of these possible futures in an internally consistent way.

AEMO has adopted five scenarios, which have been developed through extensive consultation with members, participants and other stakeholders to provide a suitably wide range of possible industry outcomes differing with respect to the growth in grid-scale renewable generation resources, the uptake of distributed energy resources, and the level and breadth of decarbonisation policies.

The five scenarios are:

  • The Central scenario, which reflects the current transition of the energy industry under current policy settings and technology trajectories, where the transition from fossil fuels to renewable generation is generally led by market forces and supported by existing federal and state government policies.
  • The Slow Change scenario, which reflects a general slow-down of the energy transition. It is characterised by slower advancements in technology and slower reductions in technology costs, low population growth, and low political, commercial and consumer motivation to make the upfront investments required for significant emissions reduction.
  • The High DER scenario, which reflects a more rapid consumer-led transformation of the energy sector, relative to the Central scenario. It represents a highly digital world where technology companies increase the pace of innovation in easy-to-use, highly interactive, engaging technologies. This scenario includes reduced costs and increased adoption of distributed energy resources (DER), with automation becoming commonplace, enabling consumers to actively control and manage their energy costs while existing generators experience an accelerated exit. It is also characterised by widespread electrification of the transport sector.
  • The Fast Change scenario, which reflects a rapid technology-led transition, particularly at grid scale, where advancements in large-scale technology improvements and targeted policy support reduce the economic barriers of the energy transition. This includes coordinated national and international action towards achieving emissions reductions, leading to manufacturing advancements, automation, accelerated exit of existing generators, and integration of transport into the energy sector.
  • The Step Change scenario, which reflects strong action on climate change that leads to a step change reduction of greenhouse gas emissions. In this scenario, aggressive global decarbonisation leads to faster technological improvements, accelerated exit of existing generators, greater electrification of the transport sector with increased infrastructure developments, energy digitalisation, and consumer-led innovation.

The scenarios inform and facilitate the realisation of economically efficient solutions to support the energy system in transition. They inform risks, and enable prudent decisions to be made that take risks into account, enabling developments that adapt to differences in the pace or nature of change.

The ISP uses scenarios to develop a whole-of-system plan that manages the ultimate cost and risk of this transition in the long‑term interests of customers.

Further information on inputs and assumptions associated with each scenario can be found in the 2019 Planning and Forecasting Consultation responses on Scenarios, Inputs, Assumptions and Methodology report. You can download the full report here

A summary of stakeholder submissions and AEMO’s responses to these is available here and you can also download the full report