Australia's energy regulator says the nation's power grid needs a multi-billion dollar upgrade to ensure future energy supplies.

The Australian Energy Market Operator (AEMO) said that spending the money now would save money in the long-term.  AEMO's newly released National Transmission Network Development Plan (NTNDP) foresees trouble as the grid is "projected to materially decline".  Areas of South Australia, Western Victoria, and Tasmania are of particular concern. 

In addition, "Emerging local areas of poor network strength (are) in New South Wales and Queensland, where a high concentration of renewables is anticipated by 2035-36," according to the report.  "To counteract the decline in system strength, improvements to either inverter-connected devices or supporting plant will become essential for these generators to operate reliably," it said.

The NTNDP recommends several key upgrades, especially links between the power grids of states and territories.  For example, a second interconnector linking the power grids of South Australia and New South Wales would be operational from 2021; another interconnector called a Basslink from Tasmania to the Mainland should be up by 2025.

"While noting that there may be many different combinations of strategies to meet future balancing requirements, AEMO's NTNDP modelling reveals positive net benefits for potential transmission developments to help facilitate the diversity of the future generation mix and to improve system resilience," read the statement from AEMO Chief Operating Officer Mike Cleary.  "Given the range of potential developments in consideration, and the interdependencies between them, a coordinated, national approach to plan for the energy transformation is imperative to enable optimal solutions to be implemented in the long-term interest of National Electricity Market (NEM) consumers."