Community opposition and planning logjams could drive a 30 per cent blow out to the cost of replacing ageing coal-fired power stations with clean energy projects, adding billions of dollars to the energy transition and threatening to push up bills for homes and businesses.
The lack of high-voltage power lines to connect far-flung wind and solar farms to major cities has emerged as one of the most difficult obstacles in the race to keep electricity supply and prices stable as more coal-fired power stations are expected to close in coming years.
The market operator has warned of cost blow outs due to energy project delays. Credit: Getty Images
Draft changes to the Australian Energy Market Operator’s 25-year road map for transitioning the electricity grid, to be released on Wednesday, reveal the eastern seaboard’s 44,000-kilometre network of power lines must be expanded by at least 6000 kilometres within the next four years.
However, key projects to modernise the grid, including new transmission links to enhance the flow of energy between states, are running into years-long delays and facing cost blowouts of up to 100 per cent, AEMO warns, backing predictions from other experts. Developers face years-long approval wait times and strong local opposition.
The market operator’s report predicts that failing to speed up the delivery of critical infrastructure could add 30 per cent to projects’ costs. These increases would ultimately flow through to consumer power bills and limit the benefits that would be unlocked by a larger grid dominated by low-cost renewables.
The report forecasts that ongoing delays would also jeopardise the chance of hitting Australia’s 2030 emissions-reduction target, which depends on renewables accounting for 82 per cent of the electricity mix by then, and increase the need to keep polluting coal-fired power stations in the grid for longer.
Keeping more coal-fired generators beyond their closure dates would heighten the risk of consumers facing power bills shocks due to ageing equipment breaking down with no notice and causing huge supply gaps and price swings.
Australian Energy Market Operator (AEMO) chief executive Daniel Westerman said investment in the energy transition was continuing to grow, but “challenges remain in delivering essential infrastructure at the pace required”.
“Slower progress will erode benefits to consumers and present risks to reliability,” he said.
AEMO’s report reaffirms its advice that the best way to keep people’s electricity bills as low as possible in the future to develop a mostly renewable grid, backed up by more storage, power lines and gas-fired generators.
If there are no further delays to plans to replace ageing coal plants with a renewables-dominated grid by 2050, major projects are forecast to cost around $128 billion.
But if the current delays to the clean energy rollout continue, the cost major generation, storage and transmission projects would increase by up to 30 per cent.
AEMO said it was still possible for Australia to reach net zero by the middle of the century, and that renewable energy was the cheapest replacement for Australia’s ageing coal plants, even if there are major cost blow outs to the clean energy rollout.
Around 6000 kilometres of new transmission lines are needed by 2050, to link renewable projects in rural Australia to population centres, but they are being slowed by years-long planning assessments, and transmission lines that are now delayed by an average of three years across the country.
Most notably, the completion date for the $3.3 billion VNI West transmission line has blown out from 2028 to 2030. Initially expected to cost $3.9 billion, its cost estimate is now between $7.6 billion and $11.4 billion.
The EnergyConnect link between South Australia, Victoria, and NSW has been delayed from 2026 to 2027 – the cost has also blown out from $2.3 billion to $4.1 billion, and the expected completion of Marinus Link from Tasmania to the mainland has shifted from 2030 to 2032.
Law firm Herbert Smith Freehills Kramer has found that just one of the 89 renewable energy projects that need final approval under federal environmental law on the eastern seaboard have been green-lighted since 2023.
The cost blow out forecast by AEMO was based on a scenario where the electricity grid missed government’s target to reach 82 per cent renewables by 2030 and only achieved 75 per cent clean energy.
Global energy consultants Rystad has forecast the grid will only reach 60 per cent renewables by 2030, and independent think tank the Grattan Institute has also said the 82 per cent target is likely unachievable.
AEMO has also been forced to update its forecast for coal power in the electricity grid, following a policy U-turn by the Queensland government, the state will continue to run its coal plants until 2049.
That means coal plants would run for an extra 14 years, compared to the previous official forecast in 2024 that 90 per cent of coal plants would be shut by 2035, and all of them gone by 2037.
Energy Minister Chris Bowen said Australia was moving with the international trend to renewables.
“Globally in 2024, renewable generation received three times as much investment as did coal. In the first half of 2025 and for the first time, more of the world’s energy was delivered by renewables than by coal.”
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Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: www.smh.com.au
