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Electricity transmission is Australia's next problem

The main issue in Australia’s election has been around cost-of-living, which is closely linked to the cost of energy. Previously, energy discussion centred on oil and the security of supply and the cost of downstream refined products of petrol and diesel. Any movements fed into transport and manufacturing costs which were passed through to the consumer, whether positive or negative. Headline inflation was affected.

Things have changed. Now the security and price of electricity has become the focal point with energy transition away from fossil fuels and the setting of future zero emission targets. This, while the significant growth of artificial intelligence and associated data centres and other digital services has added a meaningful new driver of demand for reliable 24/7 energy. The Future Made in Australia economic plan along with federal and state government plans to build over 1.5 million new homes, likely 100% electricity powered, by 2030 will add to electricity demand.

This change will require a significant increase in investment across generation and transmission, to a lesser extent distribution. Once generated from the combination fossil, renewable, and hydro sources, the efficient and uninterrupted transmission and distribution of electricity is critical for economic growth. Generated electricity must reach households and commercial and industrial consumers via efficient transmission and distribution networks. Transmission networks, the grid, have a defined capacity. Increased electricity demand will require a significant increase in transmission capacity. Transmission is the vital link between generation and distribution.

The issue has become a political football

Both the US and Australia are well behind the eight ball as are most other countries. In Australia, electricity generation has become deeply politicised, and its transmission is dividing communities as towers and power lines march across private land, while land-grabbing renewable generation gobbles up thousands of productive acres. Shamefully, the environmental issues are being bypassed, as the cheapest route is often selected.

In Australia, the energy transition from fossil fuels, mainly coal, to renewables has seen a seismic change in the location of generating capacity. Our coal-fired power stations are located close to coal mines, mostly down the east coast. Over 90% of our population live within 100 kilometres of the coastline. The five mainland state capital cities account for almost 65% of our population, dominated by Sydney, Melbourne and Brisbane. In the past, households and industry has been well serviced by the electricity transmission and distribution networks. Transmission was relatively short haul.

The gradual closure of coal-fired power stations and the growth of renewables, mostly solar and wind has altered the generation map as renewable zones are established in regional areas well away from the coast and most consumers.

The Climate Change and Energy Minister Chris Bowen has a target to add 10,000 kilometres to the national transmission network by 2030. Put in context, it is 2.5 times the east/west distance of the Australian mainland or 11 hours flying in an A380 which has a cruising speed of 910 km/h. It is highly unlikely the target will be achieved, and the cost will be in the tens of billion.

A NSW case study

A prime example is the 365km HumeLink in southwest New South Wales, which is well behind schedule and the cost estimate has blown out to almost $5 billion to ultimately connect with Snowy Hydro 2.0, where the cost has soared more than sixfold from an original estimate of $2 billion to well over $12 billion.

The issues in the South West Renewable Energy Zone (SWREZ) of New South Wales are symptomatic of the problems facing energy transmission. Recently, Origin Energy won the transmission access for the zone and is in the process of tying up most of the capacity for its Yanco Delta project. It is one of Australia’s largest proposed wind projects with 1.5 GW wind farm (208 turbines) and an 800 MWh battery strategically located next to key transmission infrastructure. It is located some 530 kilometres from Sydney versus coal-fired power stations Eraring (120) and Mt Piper (160). Both Bayswater and Liddell stations in the Hunter Valley have been closed. Eraring generates approximately 25% of NSW’s power requirements.

Should Yanco proceed, several other proposed wind and solar projects in the SWREZ would become stranded if completed. Origin could divest up to 80% of Yanco, but capital partners may be thin on the ground. Management is widening its strategy to expand renewable energy and storage in its portfolio, while limiting ownership.

To address the transmission shortfall, potentially stranded developers are now engaging with data centre developers to relocate within the SWREZ, with the words from Francis Bacon’s essays of 1625 ringing, “If the mountain will not come to Mohammed, Mohammed will go to the mountain”.

Chris Bowen has repeatedly pointed to the jobs created by the investment in renewable generation and transmission. The ongoing issue is where is the skilled labour coming from and where will they be housed during the construction phase. Regional tourism is already being impacted with transient workers taking accommodation normally satisfying tourist demand.

Australia’s energy transition will take decades to complete. Gas generation backed up by and efficient transmission pipeline network throughout the eastern states and South Australia is the ideal transition fuel. Gas generated electricity from well-located plants feed into the existing transmission grid. New renewable generating capacity in the far-flung renewable energy zones will require transmission capacity to be added. This will take years and be very costly.

Transmission issues aside, when discussing renewable generating capacity, the focus should be on its availability. In normal circumstances and with scheduled maintenance, coal and gas plants can generate electricity over 90% of the time. For solar the availability (sunlight) is near 45% and optimal wind speeds occur about 50% of the time. There are over 95 million solar panels in place in Australia and recycling is not an easy process. Less than 20% of material can be recycled. These along with the disposal of used wind turbine blades could be the next environmental issue to be faced.

Electricity costs are likely to remain elevated. Government subsidies are a band aid on a meaningfully larger problem.

 

Peter Warnes is a market strategist and commentator, and former head of equity research for Morningstar in Australia. He was also the founder and long-term editor of Your Money Weekly before retiring in 2024 after a career spanning six decades.

 

32 Comments
Steve
May 05, 2025

Of course wind and solar are "free" - because they are 'there' just waiting to be used. But hang on, by the same logic coal, gas, nuclear etc are also "free" because they also already exist. But in all cases (bar possibly capturing lightning!) they still need to actually be converted into electricity, and distributed to end users, in the necessary quantity, at the time of the customers need. So cut any crap about wind and solar being "cheap" because the resource is thought to be free. Based on that logic the hydrogen option would be a winner, because water (which we use to make into hydrogen & oxygen) is also free and abundant. Something about the devil and details........

GeorgeB
May 06, 2025

“based on that logic the hydrogen option would be a winner, because water (which we use to make into hydrogen & oxygen) is also free and abundant”
Actually it’s not a fair analogy because unlike wind and solar which are actual sources of energy, you have to supply energy to split water into its constituent hydrogen and oxygen by a process called electrolysis. So you only get back that same energy when hydrogen is recombined with oxygen to reform water. Hence there is no free energy from water only the energy that is supplied to generate the hydrogen. This is no different to charging a battery which also relies on a supply of power or energy.

Michael
May 04, 2025

Great article Peter.

There are is a lot of "politics" in the energy debate and many comments reflect selectively chosen facts - many of which are true - but ignore other inconvenient facts not supporting that position.

One common error is that net zero means no carbon emissions. It does not. CSIRO estimates 25% of emissions will remain even if this goal is achieved. So offsets (technologies such as carbon capture and storage which are now operational in Australia - e.g. Moomba, as well as planting trees and other means) must be part of the mix. If there was a carbon price (which the Greens torpedoed for there political convenience may years ago) this process would be more economically efficient, but then there are the politics.....

On nuclear, many countries are considering this alternative. Many countries have operating plants and there are a significant number under construction. See https://en.wikipedia.org/wiki/List_of_commercial_nuclear_reactors#:~:text=Additionally%2C%20there%20are%2066%20reactors,List%20of%20nuclear%20reprocessing%20plants [Peter Wilmhurst, please read]

Given the widespread use in many less technically advanced countries the argument, which has been advanced by some opponents, that Australia would not have the capability to implement this alternative doesn't stack up.

Is nuclear the right solution for Australia? Possibly, but the economics are not clear. Similarly the cost of renewables is also uncertain. Examples include Snowy 2, and the costs of transmission (and transmission losses) which seem to be escalating e.g. Transgrid recently issued an update on the new electricity transmission connection between South Australia and NSW which included a revised net project cost at $3.6 billion up from $2.28m

CSIRO nominate a period of 15 years to build a reactor in Australia compared with 8-10 years elsewhere. This may or may not be correct, but if correct, is indicative of the problems besetting the approval and time to deliver major capital projects in Australia, including the rollout of renewables. Clearly, our project approval processes to enable private investment must be markedly improved. [And this is just not a problem with energy and mining projects as similar approval and regulatory problems are evident with housing and residential developments]

This project "inertia" is also impacting and the recycling of battery and solar waste of which 83% of PV (solar) materials and batteries cannot be recycled currently. Source - https://www.sustainability.vic.gov.au/circular-economy-and-recycling/product-stewardship/national-approach-to-manage-solar-panel-inverter-and-battery-lifecycles#:~:text=Solar%20panels,-The%20average%20lifespan&text=A%20solar%20panel's%20aluminium%20frame,not%20currently%20recyclable%20in%20Australia. [Peter Wilmhurst, please read]

Given, there is no plan for recycling, and considering how unsuccessful Australia has been in recycling plastic and nuclear waste properly, will recycling this highly toxic waste be different? Where will be plants be located? How large will the cost really be? As, inevitably, governments will require the private sector to remediate (as in oil &gas, mining as well as other projects) and manage their waste, how then can the companies which are implementing solar and battery renewable projects be sure they have sufficient provisions on their books, and have the costs built into their current pricing?

Overall, and taking an optimistic view , perhaps we will muddle through on energy policy. But a pessimist would be thinking that the outcomes could be much better if only...






Dudley
May 05, 2025

"if only...":
there will be enough natural gas until fusion ignites.

James
May 07, 2025

Taking a step back I’m not sure energy transition is the correct term from a global perspective

If 80% of the world is still using fossil fuel as the main source of energy ( China , India & Africa & South America ) & only 20% seeking to transition - is this really a transition?

Added to this energy consumption is increasing. With fossil fuel & renewables feeding into the mix of global sources.

Looking at this context surely Australia’s efforts are not material & rate as futile.

Also why isn’t a regional hub & spoke model a better idea for renewables than trying to link to the grid. Doesn’t this type of energy lend itself to shared battery storage on a local or regional basis ? In this context replacing coal fired energy with gas ( rather than nuclear ) & using the existing grid might make more sense. This being a plan while storage tech improves to wean users off the grid.


Ken Burgin
May 04, 2025

‘while land-grabbing renewable generation gobbles up thousands of productive acres.’ Oh please. Some interesting analysis but why the exaggeration?

PeterJ
May 07, 2025

The needed new transmission lines will certainly need thousands of acres.

Janet
May 08, 2025

If you think this is exaggeration you need to do more research

James
May 03, 2025

Great piece by Chris Uhlmann in The Australian today titled: "Anti-nuclear zealotry is just net-zero intelligence". Love him or hate him he's high calibre and does his homework. A few standout points:
- nuclear power is the densest form of energy on Earth and produces zero carbon emissions. And it works 24/7!
- yes, it's expensive but so is the real cost of chasing net-zero (largely with renewables), tipped to hit US$10 trillion per year.
- by the governments own plan, by 2050 the weather dependent grid will need 15 GW of gas generation to function. (So how are those 'cheap' renewables looking, oh and they need replacing in 20-25 years tops, much less for offshore wind!)
- at the last COP in Dubai, 25 nations pledged to triple global nuclear capacity by 2050.
- 32 countries currently use nuclear, and the number is growing. China has 58 reactors, 28 more under construction and plans to build 118 more by 2035.

But heh, we Australian's are apparently smarter than everyone else in the world. And nothing of course it has nothing to do with mindless political ideology and a willingness to destroy what's left of our economy, when most of the rest of the world isn't really that serious about achieving net zero anymore, now that economic reality and physics trumping politics has kicked in.

I'll leave the last word to Bill Gates, who with his considerable wealth and resources, and as one who genuinely wants to save the planet said:

"Nuclear power is the only carbon-free energy source that can reliably deliver power day and night, through every season, almost anywhere on earth, that has proven to work on a large scale."

Peter
May 03, 2025

Irs amazing we are handing over all our energy security to china how dumb is that?

Trevor
May 03, 2025

This piece from Chris Uhlmann gives some background on the big blackout in Spain. Worth a listen.

https://open.substack.com/pub/chrisuhlmann/p/the-pain-in-spain?r=3hw1im&utm_medium=ios

Stanley Jevons
May 03, 2025

Australia has a huge area and most of it is exposed to higher than the global average of sunshine. South Australia proven what could be done with successful large scale battery back up for PV solar and this can be copied in numerous areas around Australia without the need for a national grid. To achieve this, the successful available technology simply has to be more widely adopted.

Dudley
May 03, 2025

'In South Australia, the average electricity price is 45.3c/kWh, making it the most expensive state in Australia for electricity. This is primarily due to the state's reliance on renewable energy sources, which can be more expensive to produce. The average annual electricity bill in SA is around $2,230.'

Chookman
May 03, 2025

SA does currently does have the most expensive power: however, it is not necessarily due to the percentage of renewables. Pricing policy is a big factor. Every power generator selling electricity to the SA grid - solar, wind, pumped hydro, gas, batteries and imports - at any particular time is paid at the rate of the most expensive generator. So when gas and/or battery power is used (the two most expensive electrics generators for SA) every power generator company will get paid the higher gas price. Unfortunately for SA which no longer has cheap stable baseload power supplied by coal, gas is the baseload power fuel. So until a stable baseload power source or grid is developed that is cheaper than gas, prices in SA, under current pricing policies, will remain tied to gas prices irrespective of the amount of renewables.

Dudley
May 03, 2025

"So until a stable baseload power source or grid is developed that is cheaper than gas":

Renewable generators could provide all baseload power as reliably as coal or gas - if there were enough of them.

100 times the 'nameplate' (maximum) generating capacity? To provide adequate power from wind drought zephyrs, moonshine and earthglow?

The capital cost would necessitate electricity prices which would result in no demand.

PeterJ
May 07, 2025

RE "....South Australia proven what could be done with successful large scale battery back up for PV solar and this can be copied in numerous areas around Australia without the need for a national grid......" South Australia need to prove it then - they need to disconnect from the national grid. This would be powerful proof . Also batterys only capable of short term storage. Need an explanation of what happens when no renewables for some days or weeks - as does happen randomly from time to time ....

Dudley
May 08, 2025

"South Australia need to prove it then - they need to disconnect from the national grid.":

Cheap at twice the price.

'Transgrid has confirmed the cost of the New South Wales section of Project EnergyConnect has climbed to $3.6 billion, well above the $1.82 billion price tag that was originally approved.'
https://www.pv-magazine-australia.com/2025/01/15/costs-climb-for-nsw-sa-grid-interconnector/

'World leading renewable hydrogen production, storage & power station in Whyalla SA'
https://www.youtube.com/watch?v=tBzLRidcTUI

Phil Kneale
May 02, 2025

Embarrassingly, of the top 20 countries by GDP, I think we are the only one not operating, or planning for, nuclear energy. There must be some secret knowledge accessible only to us. When USA, Russia, China, India & others (accounting for > 60% of global CO2 emissions) have no intention of aiming for "net zero", all we are doing is self-harming, while having no effect on the climate. The dominoes are falling. John Kerry in the USA (a climate alarmist and former Climate Tsar in the US government) has now admitted that net zero is unachievable. Former British PM, Tony Blair has also announced a similar view.

Peter Wilmshurst
May 03, 2025

Germany has shut down their nuclear plants. Spain is planning on doing the same.

Nuclear works really poorly with renewables. We need power with a low capital cost and can be turned on and off. The opposite of nuclear.

James
May 03, 2025

"Nuclear works really poorly with renewables. We need power with a low capital cost and can be turned on and off. The opposite of nuclear."

So, build NUCLEAR and stop wasting money on intermittent (unreliable) renewables and the need to build tens of thousands of kilometres of new transmission lines, the true cost of which is hidden! No need to turn anything on or off then!

Take a regional drive and see first hand the despoiling and "awful-ization" of our landscape and the disregard of once important environmental considerations to achieve net zero, at whatever the cost. But I guess for many, as long as it's not in your back yard, who cares?

If you want a low carbon emission power source, then the answer is nuclear, not renewables, batteries and a whole lot of base load backup; that is duplicate systems. This path is going to cost a lot more and the price of electricity will only go in one direction: UP!

Also, don't confuse the ability to power your modest home needs with solar and batteries with the ability to scale that up to run industry and whole cities!

As for countries shutting down their nuclear, their number is dwarfed by those actively looking at building more! Germany's own goal is stupendous. A once great industrial nation is on it's knees because they don't have cheap reliable power anymore!

Peter
May 04, 2025

Must agree with James on this. Why does Australia have renewables at all?
We don't emit any CO2 what so ever! In fact we absorb huge amounts of CO2.
With 5 people per square kilometer and 1.1% of world emissions over 5% of world land area this should be self evident to all real Australians? Just look at the open data network or the NASA video of atmospheric CO2 showing the source, not Australia!

Dudley
May 04, 2025

"We don't emit any CO2 what so ever! In fact we absorb huge amounts of CO2.":
Both sentences wrong.

Australian:
1. Exhale = emit carbon dioxide 4-5% by volume.
2. Inhale = absorb carbon dioxide 0.04% by volume.
Since exhale volume = inhale volume, net carbon dioxide of (~4% - 0.04%) = ~3.96% by volume is emitted.

Australia:
1. Australian emits (exhales) about 450 million tonnes carbon dioxide per year.
2. Australian absorbs (inhales) about 150 million tonnes of carbon dioxide equivalent each year.
Net ~300Mt (ie not <= 0).

World:
If all countries were like Australia there would be no carbon dioxide climate threat for hundreds of years.
There is a threat because some other countries are grossly over populated relative to Australia.

Andrew Smith
May 02, 2025

Offshore examples and comparisons would have given more insight eg. via US DeSmog and Renew Economy to avoid our politicised onshore echo chamber.

Fact is, despite global fossil fuel anti-renewables and pro-nuclear PR campaigns, renewables are surging, while fossil fuels are stagnating, but economic growth is increasing (see Texas).

Australia should look to similar situation eg. Kenya, on how to leverage regional and/or remote decentralised renewables sources, namely sunlight....which allegedly Australia has a surplus of.

For now we have to work through legacy systems, government policy, corporate outlooks and often climate science denying media, which inevitably slows any innovation or change for the better.

Sean Grey
May 07, 2025

DeSmog and Renew Economy are advocacy sites. I would not recommend either for balance, particularly the latter for honest reporting on subjects like battery storage.

Phil Kneale
May 02, 2025

And whatever diabolically complex and expensive system we end up with, it will make no noticeable difference to global temperatures (which is supposedly the whole reason for doing it, despite the scant evidence of there being a problem that needs fixing in the first place). The whole thing is hilariously, but tragically, absurd.

Alan
May 02, 2025

Surely we can get a more accurate assessment of the costs of various systems and their optimum mix including coal, gas, renewables and nuclear. For example, for solar panels and wind turbines - cost of mining minerals, cost of manufacturing (not at slave labour rates), transport, erection, land clearing and environmental destruction, transmission lines, disposal etc. Then we need to assess reliability cost when wind doesn't blow and sun doesn't shine, size of batteries for at least 2 weeks storage etc. Then do same exercise for nuclear etc. Then look at most optimum mixes!! The data is available!!!

Goronwy
May 02, 2025

I happened to chat to an engineer on Hume Link a few months ago. He was FIFO from Sydney as not the staff closer to construction. He told me they design the towers on CAD Software here and send the file to China where they make them in kit form and ship them in in pieces. It cost $1 million per tower before construction but still much cheaper than getting it made here. You need at least two per kilometre, so $20 billion for 10,000 kilometres before the cost of labour and the wires.

PeterJ
May 07, 2025

so $20 billion for 10,000 kilometres before the cost of labour and the wires

Would also need cost of land - maybe 50m?? wide easement for 10,000 KM would be a big cost too?

Bill Tindale
May 01, 2025

Bayswater power station is still in operation, due to close 2035. Liddell is closed and is being dismantled.

David Richardson
May 01, 2025

Well as a society we have chosen this path - now the true cost and consequences are coming to fruition and we still dont know the full consequences.

Peter Wilmshurst
May 01, 2025

Less than 20% of a solar panel can (!!) be recycled, really?

ChatGPT believes the number is more like 90 to 95%. Glass is about 75% of the weight of a panel, very easily recyclable. Aluminium frame, ditto. Copper wiring, harder to separate, easy to recycle. The silicon solar cell, also tougher, but possible.

We need to invest in the facilities to recycle old panels. This will be an issue for coming decades when we start to get rid of the panels that have been in place for decades, but like the furphy about batteries not being recyclable, when we start to retire old solar panels (and batteries) in volume the value of their raw materials will drive investment in recycling facilities and we will see good rates of recovery.

Dean Tipping
May 01, 2025

You could not make this up! We are the dumbest democratic country in the world by a country mile. Net zero equals zero manufacturing, zero productivity growth and zero aspiration and growth in living standards.

 

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