Residents and businesses on Australia’s east coast have been warned to prepare for increased risk of blackouts this summer, with more generator failures likely on hot days.

The dangers are highest in Victoria, where the Australian Energy Market Operator said more than a million households might at times be forced to endure scorching temperatures without electricity.

AEMO said NSW was projected to meet its reliability standard “with a more comfortable margin this summer” than last.

But up to 770,000 homes across the state will face a blackout risk on extreme heat days once the Liddell coal-fired power station plant has closed in 2023-24, unless action is taken, according to AEMO’s latest Electricity Statement of Opportunities.

The report said Australia’s power reliability would continue to decline in the next decade, “due to an uncontrollable, but increasingly likely, high-impact” event in the nation’s “ageing coal fleet”.

AEMO said unplanned shutdowns at Victoria’s Loy Yang A2 and Mortlake 2 power stations posed a significant likelihood of leaving residents with insufficient supply – which might lead to involuntary load shedding.

“Compared to last year’s forecast, AEMO observes greater risks of load shedding due to uncontrollable, but increasingly likely, high-impact (‘tail risk’) events such as simultaneous unplanned outages during hot days,” the report said.

It urgently called for more electricity supply or other solutions to meet high summer demand.

In NSW, the gradual closure of the Liddell coal-fired power station and a combination of high summer demand and unplanned generator outages would leave residents “exposed to significant supply gaps and involuntary load shedding” at peak times.

The Liddell power station in the NSW Hunter Valley is to close in 2022. Photo: AAP

AEMO said Australia needed to invest in dispatchable power, such as coal, gas, battery and pumped hydro, to meet the expected shortfall during peak demand as older coal plants closed in the coming decade.

Former prime minister Malcolm Turnbull’s multibillion-dollar Snowy Hydro 2.0 project will improve reliability for the entire network. It is expected to be operational in 2025.

In the longer term, the report said an extra five gigawatts of committed new power generation projects over the next three years – most of which involve renewable energy – would make only a “limited contribution” to meet peak demand.

AEMO chief Audrey Zibelman said the report highlighted the need for “urgent action and prudent planning and investment” to deliver affordable and reliable electricity.

She said it was not sustainable or cost-effective for consumers and businesses to “reactively” secure extra electricity resources to meet peak summer demand.

“A more measured course is to take a number of deliberate actions that address the challenges of our ageing coal fleet and which meet the need for secure and dispatchable supply, whilst also taking advantage of Australia’s natural resources,” Ms Zibelman said.

“We need to harness all the resources we have in the system, together with the opportunities that come with the technological advances occurring in the industry to meet current and future energy demands at the lowest cost possible.”

Further action could include a new ‘‘reliability standard” which ensured each region has enough power to meet peak demand requirements 90 per cent of the time – a standard used internationally.

Speeding up upgrades and construction of inter-connectors and transmission would also enable better use of existing and new supply resources.

Ageing coal-fired power stations would be to blame for any summer blackouts in Victoria, the Climate Council argued.

Australia’s modern energy system needed more large-scale renewables such as solar and wind paired with storage, the group said.

-with AAP