What will Australia’s grid look like in 2040?

A changing climate, retiring coal plants and rising renewables are forcing a major redesign of the electricity grid. At every level, engineers are leading the transition to a more resilient system.

Australia’s power grid is being pulled in every direction. Coal is retiring, renewables are flooding in and climate extremes are straining infrastructure. What was once a predictable, one-way supply chain is now a fast-evolving system with risks coming from both nature and cyberspace.

Engineers are scrambling to keep pace – integrating rooftop solar and batteries, reinforcing old lines, designing a grid that can bend without breaking. The goal isn’t just to keep the lights on; it’s to build a system that can adapt, recover and evolve. A resilient grid by design.

For Neil Greet FIEAust CPEng EngExec – civil engineer, retired army colonel and energy resilience expert – resilience isn’t just about physical infrastructure. It’s about mindset.

“Energy security requires national security-style planning, which is always in motion, addressing change,” he told create.

Greet, a Board Member of the Engineers Australia College of Leadership and Management, sees the system being squeezed from all sides, including by short-term political thinking, a constrained workforce, fragmented markets and a lack of a coordinated national risk assessment. And as the grid grows more digitised, its exposure to cyber threats increases.

Greet isn’t convinced we’re moving fast enough to address these factors.

“The electricity grid will be exposed to them and will not have reached full potential by 2040,” he said. “It may in fact suffer from cyber-attacks from adversaries.”

Greet’s concern is not just technical but systemic. He warns that, without careful planning, the energy transition could deepen inequities and erode resilience.

“As with all failures of resilience, it’s the vulnerable that suffer first, then, eventually, it destabilises the overall system.”

While warnings of an “energy death spiral” – where wealthier households invest in solar and batteries, leaving others to shoulder rising grid costs – helped spark reform, today’s picture is more nuanced. More than four million households have rooftop solar, and many earn income by exporting to the grid.

Yet even this model is shifting: new pricing structures will allow networks to charge for exports during periods of network congestion. These reforms reflect a broader trend toward two-way energy flow – and the growing value of a reliable grid connection.

Still, as electricity use is forecast to double by 2050 with the electrification of transport, industry and homes, the challenge remains: how to ensure all Australians can participate in and benefit from the transition.

Grid of the future

Merryn York Hon FIEAust CPEng NER is an electrical engineer and until recently the Executive General Manager of System Design at the Australian Energy Market Operator (AEMO), the independent body responsible for operating Australia’s electricity and gas markets, and ensuring the reliable delivery of energy.

Her job was to make sure the future grid can deliver secure, reliable and least-cost electricity – even as coal retires, renewables rise and the climate becomes less stable.

“There’s increasing tension between the energy market’s economic drivers and the technical requirements of a resilient, secure grid.”

Separate entities

“One of the biggest challenges is shifting from the system we have today – built around baseload and peaking generation – to one built on renewables and firming,” she said. Firming refers to technologies and strategies such as batteries, pumped hydro and flexible gas, which can rapidly supply power when renewable output drops.

AEMO’s latest Integrated System Plan, published in June 2024, includes a coordinated roadmap for transforming generation, storage, transmission and system operations in the national electricity market. It sets out the best available view of what Australia’s electricity system could realistically look like by 2050 – a grid that is low-emissions, affordable and able to maintain reliability as energy use patterns shift and coal retires.

“A resilient system needs a mix of renewables, storage, flexible gas and robust transmission, so energy gets where it’s needed, when it’s needed,” York said.

A critical part of this mix is infrastructure that can deliver multiple services – which York refers to as a “no regret” plant. Gas generators fitted with clutches, for instance, can operate in synchronous mode without burning fuel, helping to maintain frequency and voltage stability as coal units are retired. By retaining the stabilising benefits of traditional generation while reducing emissions, they offer a practical bridge to a more renewable, decentralised system.

For Nathan Ting FIEAust CPEng NER, Principal Engineer at Cell Engineering and Chair of the Engineers Australia Electrical College Board, the resilience challenge goes beyond system design. It’s about enabling engineers to act.

“There’s increasing tension between the energy market’s economic drivers and the technical requirements of a resilient, secure grid,” he said.

Neil Greet put it another way: “The power system and the marketplace remain two separate entities. One part is a ‘mechanical’ system maintained and improved by a workforce. The other is a virtual auction room where electricity retailers buy power. This lack of integration means it is difficult to make change.”

Microgrids: Resilience and equity at the edge

Many remote Indigenous communities rely on ageing single-circuit feeders that stretch up to 100 km through bushfire-prone terrain. These long lines are expensive to maintain, frequently disrupted by extreme weather events such as storms, and slow to repair, often leaving communities without power for days.

Microgrids offer a resilient alternative. By generating and storing energy locally – typically through solar photovoltaics, batteries and small-scale diesel backup – they reduce dependence on vulnerable infrastructure while improving reliability, safety and affordability.

“Microgrids can operate independently from the main grid during outages caused by storms, bushfires or equipment failures,” said Dr Umme Mumtahina MIEAust NER an engineer and renewable energy researcher at CQUniversity. “This enhances energy security and supports community resilience in the face of frequent disruptions.”

Mumtahina is leading a Queensland-based project to improve energy outcomes in a remote Indigenous community. It combines distributed energy resources, demand-side management, and advanced control systems – co-designed with the community to ensure the solutions are both technically sound and culturally appropriate.

But building microgrids isn’t straightforward. Engineers must coordinate diverse components in real time, manage system stability without traditional inertia and plan for future growth. Interoperability, cybersecurity and respectful access to local energy data also require careful attention.

“Microgrids support decarbonisation while building resilience, ensuring that the transition to clean energy includes those most impacted by climate change and energy poverty,” Mumtahina said.

In remote Australia, microgrids are more than backup. They’re a pathway to energy equity, community empowerment and climate justice.

Strengthening the system

“Engineers will play a huge role in the transition of the power system,” York added. “Much of our focus at AEMO related to power system analysis and operation, and these skills are in high demand. [This includes] assessing the technical capability of new generation to connect to the power system, developing power transfer capability equations that can be used in the dispatch engine that runs every five minutes to keep the power system in balance, and many other activities.”

Beyond operational roles, she said, engineers are also essential in construction, environmental assessment and infrastructure delivery – all critical to building a system that is secure, reliable and ready for the future.

Ting also highlighted regulatory barriers and a lack of technical input in policymaking as key risks, noting that engineering insight is too often absent from rule-setting, which slows the implementation of practical, technically sound solutions.

“We need to enable engineering-led decision-making that allows for innovation without compromising safety or reliability,” he said.

As the grid shifts from synchronous to inverter-based generation, engineers face the challenge of rethinking protection schemes, maintaining system strength and ensuring frequency stability in a system with far less inherent inertia – the stabilising effect of spinning generators. These developments demand not just more sophisticated modelling, but a reimagining of how power systems are designed and controlled.

The engineering workforce must also grow to meet the demands of a grid in transition. “Local uptake of engineering as a career remains a concern,” Ting said, noting the need to train not just engineers, but also the trades and technicians who will build and maintain the infrastructure.

Regulatory shift

The call for improved alignment between technical need and regulatory support is already gaining traction. In early 2025, the Australian Energy Market Commission introduced a draft rule to formally recognise distribution network resilience in the National Electricity Rules.

“This framework would support DNSPs [Distribution Network Service Providers] in efficiently planning and investing in network resilience, while providing clearer guidelines to support consumers impacted by power outages caused by extreme weather,” AEMC Chair Anna Collyer said in a statement.

The draft rule complements the Australian Energy Regulator’s recent development of a Value of Network Resilience, providing a method for assessing the consumer benefit of investing in resilience measures. Together, these changes represent a structural shift in how resilience is considered – not just in emergencies, but in everyday decision-making.

Virtual power plants (VPP)

As the grid grows more complex, engineers are designing for uncertainty. Grid-forming inverters – which help stabilise voltage and frequency such as traditional generators – are being deployed to support system strength. Microgrids are being trialled to keep essential services running during outages.

One example is Project Symphony, a collaborative pilot in Western Australia that involved AEMO, Western Power and Synergy. It tested how thousands of customer-owned devices – rooftop solar, batteries and smart appliances – could be orchestrated as a virtual power plant (VPP). It showed that VPPs substantially reduce power system costs and help alleviate local network constraints improving reliability, security and real-time visibility of distributed energy resources.

New standards are also emerging to ensure these assets respond dynamically to changing grid conditions.

Driving the grid: How EVs could power homes

At Essential Energy’s Innovation Lab in Port Macquarie, a CSIRO-led trial is exploring how electric vehicles (EVs) can become part of Australia’s future energy system, not just as transport, but as mobile energy assets.

The project is testing vehicle-to-grid (V2G) technology using EVs connected to a simulated household fitted with rooftop solar, battery storage and common appliances. Bidirectional chargers allow the vehicles to store excess solar energy during the day and discharge it into the home or grid during peak demand, helping manage load and reduce reliance on centralised infrastructure.

“An EV can have more than five times the battery storage of a stationary storage system, and V2G technology will allow us to leverage that and use it in the home,” Dr Sam Behrens, CSIRO’s technical lead for the collaboration, said. “It can also be used to support the grid, enhancing reliability and resilience by flattening peak loads.”

The trial also highlights existing challenges. EV owners in Australia may face regulatory hurdles when connecting V2G systems, with evolving standards not yet designed for two-way energy flows. Still, the potential is clear: EVs could soon power not just our journeys, but our homes and communities too.

Building resilience

Operational practices are changing too. Engineers at AEMO are updating forecasting models and scenario planning tools to better anticipate conditions that could destabilise the grid. That includes more granular weather modelling, probabilistic load forecasts and assessments of how the system behaves during rare but high-impact events.

One of the most significant examples of resilience-focused infrastructure in recent years is Project EnergyConnect. The 900 km interconnector – Australia’s largest transmission project – was initiated in response to the 2016 “black system event” in South Australia, when a severe storm caused a statewide blackout.

The loss of multiple transmission lines and the resulting drop in system strength exposed the fragility of SA’s connection to the rest of the grid. In the wake of this event, EnergyConnect was fast-tracked as a solution to provide a stronger, more flexible link between SA and the eastern states, enabling renewable energy to flow between NSW, SA and Victoria for the first time.

Central to AEMO’s 2024 Integrated System Plan, EnergyConnect has been engineered with resilience features including dynamic reactive support (which helps manage voltage on the grid), automated systems for detecting faults, and a phased approach to increasing its power transfer capacity – beginning with 150 MW and planned to scale up to 800 MW as more stages of the project are completed.

Driving change

In a 2014 Engineers Australia report, Energy Security for Australia: Crafting a comprehensive energy security policy, co-authors Greet and security policy expert Athol Yates argued that “all Australian jurisdictions should incorporate the building of improved resilient energy systems as part of disaster risk reduction programs and post–disaster ‘build back better’ programs”.

However, this hasn’t happened and projects like EnergyConnect only highlight Australia’s too-often reactionary approach to resilience investment. “We wait for disasters to react instead of investing in infrastructure prior to a disaster,” Greet said.

York, Ting and Greet each bring a different lens, but they converge on a central truth: engineers are not just managing the transition – they are driving it. From system architecture to community consultation, engineering expertise is central to making the future grid work under real-world pressures.

But technical skill alone isn’t enough. It must be matched by planning foresight, policy support and the capacity to adapt as conditions change. As the climate shifts and technology evolves, so too must the frameworks, assumptions and tools that underpin the system.

As Greet put it: “There is an urgent need to recognise that energy resilience is a way of thinking, and responding to complex change is not a fortunate by-product of past regulation and rules.”

This isn’t just an Australian challenge – it’s a global one. On 28 April 2025, Spain experienced an unprecedented nationwide blackout that left much of the Iberian Peninsula without power for up to 10 hours. The outage was triggered by the sudden loss of 15 GW of generation – around 60 per cent of Spain’s electricity supply – within just five seconds, causing cascading failures across the grid.

While investigations are ongoing, early commentary has highlighted factors such as low system inertia, high reliance on inverter-based renewables, and limited interconnection with neighbouring systems as possible contributors to the event.

Other countries offer valuable insights, but Greet cautioned against assuming any one nation has it figured out.

“There is no nation or region that demonstrates strong grid resilience in practice,” he said. “There are localised nodes that are resilient – that is where people, politics, production and consumption align – but all nations have vulnerabilities, perhaps leading in one area, but then lagging in others.”

Resilience isn’t a fixed destination but a moving target, shaped by evolving risks, shifting technologies and the decisions we make along the way.

“It would be a mistake to wait for ‘perfect’. We must continue to be part of the global transformation.”