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Quantifying the risk of renewable energy droughts in Australia's National Electricity Market (NEM) using MERRA-2 weather data

Author

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  • Gilmore, Joel
  • Nelson, Tim
  • Nolan, Tahlia

Abstract

It is anticipated that Australia's National Electricity Market (NEM) will be almost entirely dependent upon variable renewable energy (VRE) production in the coming decades. The Australian Energy Market Operator (AEMO) and other researchers have provided detailed forecasts of the storage and firming required to ensure a secure electricity system that is supplied exclusively by VRE. However, these forecasts utilise existing VRE datasets which are often limited by historical observation given the relatively recent deployment of renewables in the Australian electricity system. This article seeks to significantly expand this analysis by building a VRE output forecast model that utilises 42 years of real-world weather data. This ‘backcasting’ approach provides data that will allow planners to far more accurately determine firming and storage requirements to overcome real-world instantaneous and medium-term production risk in a system supplied entirely by VRE resources. Our results can be used by policy makers to better plan the just transition to a renewable energy-based electricity system.

Suggested Citation

  • Gilmore, Joel & Nelson, Tim & Nolan, Tahlia, 2025. "Quantifying the risk of renewable energy droughts in Australia's National Electricity Market (NEM) using MERRA-2 weather data," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 912-928.
    • Handle: RePEc:eee:ecanpo:v:86:y:2025:i:c:p:912-928
    DOI: 10.1016/j.eap.2025.03.040
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    References listed on IDEAS

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    Cited by:

    1. Paul Simshauser, 2025. "Are gas turbines 'bankable' in transitioning energy-only markets?," Working Papers EPRG2601, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    2. Simshauser, Paul & Gilmore, Joel, 2026. "On the electrification of gas loads in Australia's national electricity market," Energy Policy, Elsevier, vol. 208(C).

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    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design

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