Inside AEMO’s Push for a Smarter, More Flexible Grid

AEMO’s latest modelling updates show how AI-driven forecasting is becoming essential to balancing renewables, volatility, and reliability

29 Dec 2025

Australia’s power system is relying increasingly on software rather than new physical assets, as the national market operator updates its forecasting tools to manage rising renewable generation and more volatile demand.

In late 2024, the Australian Energy Market Operator said it had upgraded its forecasting and operational modelling frameworks to improve accuracy as solar output grows and conventional generation retires. The changes reflect a system under pressure from sharper swings in supply and demand, particularly during daylight hours when solar generation surges and in the evening when consumption peaks.

Rooftop and utility-scale solar now dominate daytime generation across much of the national electricity market. At the same time, the steady closure of coal-fired power stations has reduced spare capacity, increasing the need for precise forecasts to maintain system reliability.

AEMO has pointed to advanced analytics and machine-learning-based models as central to meeting this challenge. Drawing on data from smart meters, weather services and network sensors, these tools are designed to improve predictions of electricity demand and renewable output. More accurate forecasts allow the operator to plan earlier, manage congestion on the grid and limit the need for last-minute interventions as the generation mix changes.

Retailers are also adjusting their business models. Companies such as AGL and Origin have expanded time-of-use pricing, smart charging services and customer energy-management tools enabled by smart meters. These programmes aim to shift electricity consumption towards periods of high renewable generation, reducing costs for consumers while supporting grid flexibility.

Network operators face their own challenges as rooftop solar, household batteries and electric vehicles connect faster than expected under traditional planning assumptions. Improved digital monitoring is helping them identify faults earlier and assess where additional capacity can be released without major upgrades, extending the life of existing assets.

The growing role of automated, data-driven decision-making has drawn attention from regulators and industry analysts. Issues around data security, transparency and oversight are becoming more prominent as forecasting models and digital tools play a larger role in market outcomes and system security.

Even so, the direction of travel is clear. AEMO’s latest updates suggest that advanced forecasting is no longer a future ambition but a core requirement of Australia’s power system, as it adapts to a more complex and renewable-heavy grid.