Australians living and operating businesses in eastern states can expect a higher risk of blackouts this summer, especially in Victoria.
The Australian Energy Market Operator's latest Electricity Statement of Opportunities says more electricity supply or other actions are urgently needed to meet high demand during the season.
"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.
A key reason for the risks is the failing reliability of ageing coal-fired power stations.
In Victoria this summer, unplanned outages at Loy Yang A2 and Mortlake 2 "pose a significant risk" of insufficient supply that could lead to involuntary load shedding, the report said, potentially leaving up to 1.3 million households without power.
However, other states within the national electricity market aren't expected to experience such problems this summer.
The gradual closure of the Liddell coal-fired power station and a combination of high summer demand and unplanned generator outages will leave NSW "exposed to significant supply gaps and involuntary load shedding" at peak times unless mitigation is taken in advance.
In the longer term, an extra five gigawatts of committed new power generation projects over the next three years - most of which involve renewable energy - will only make a "limited contribution" to meeting demand during peak hours, the report said.
AEMO chief Audrey Zibelman said the outlook report showed the need for "urgent action and prudent planning and investment" in the sector 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," she 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.
Also needed was the acceleration of upgrades and construction of interconnectors and transmission to enable better use of existing and new supply resources, and a three-year "strategic reserve".
Ageing coal-fired power stations will be to blame for any summer blackouts in Victoria, the Climate Council argues.
Australia's modern energy system needs more large-scale renewables such as solar and wind paired with storage, the group says.