Community opposition could blow out costs by 30 per cent
Community opposition and planning bottlenecks could cause the cost of replacing aging coal-fired power plants with clean energy projects to rise by 30 percent, adding billions of dollars to the energy transition and threatening to increase bills for homes and businesses.
As more coal-fired power plants are expected to close in the coming years, the lack of high-voltage power lines to connect far-flung wind and solar power plants to major cities has emerged as one of the most formidable obstacles in the race to keep electricity supplies and prices stable.
Draft amendments to the Australian Energy Market Operator’s 25-year roadmap for power grid transition, to be published on Wednesday, reveal the 44,000 kilometer powerline network on the east coast must be expanded by at least 6,000 kilometers over the next four years.
But AEMO supports the predictions of other experts, warning that key projects to modernize the grid, including new transmission links that will strengthen energy flows between states, face years of delays and cost increases of up to 100 percent. Developers face years-long approval wait times and strong local opposition.
The market operator’s report predicts that failure to accelerate the delivery of critical infrastructure could add 30 percent to the costs of projects. These increases will ultimately be reflected in consumer electricity bills, limiting the benefits of a larger grid dominated by low-cost renewable energy sources.
The report predicts that continued delays will also jeopardize Australia’s chances of meeting its 2030 emissions reduction target, which will make up 82 per cent of the electricity mix from renewable energy by then, increasing the need to keep polluting coal-fired power stations on the grid for longer.
Keeping more coal-fired generators beyond their shutdown dates will increase the risk that consumers will face electricity bill shocks as aging equipment breaks down unannounced, causing large supply gaps and price fluctuations.
Australian Energy Market Operator (AEMO) chief executive Daniel Westerman said investment in the energy transition continues to grow but “challenges remain in delivering essential infrastructure at the pace required”.
“Slower progress would undermine benefits to consumers and pose risks to reliability,” he said.
AEMO’s report reaffirms its recommendation that the best way to keep people’s electricity bills as low as possible in the future is to develop a mostly renewable grid, supported by more storage, power lines and gas-powered generators.
Unless there are further delays in plans to replace aging coal plants with a grid dominated by renewable energy by 2050, the cost of major projects is estimated to be around $128 billion.
But if current delays in deploying clean energy continue, the cost of large generation, storage and transmission projects will increase by up to 30 percent.
AEMO said it was still possible for Australia to reach net zero by mid-century and that renewable energy was the cheapest alternative to Australia’s aging coal power plants, even if there would be huge cost hits in introducing clean energy.
Around 6000 kilometers of new transmission lines are needed by 2050 to connect renewable projects in rural Australia to population centres, but these are being slowed by years of planning reviews and transmission lines are currently delayed by an average of three years across the country.
The most important is the completion date of the project $3.3 billion VNI West The transmission line will explode from 2028 to 2030. While it was originally expected to cost $3.9 billion, the cost estimate is now between $7.6 billion and $11.4 billion.
EnergyConnect between South Australia, Victoria and NSW delayed from 2026 to 2027; The cost also jumped from $2.3 billion to $4.1 billion, and the expected completion date of the Marinus Link from Tasmania to the mainland was moved from 2030 to 2032.
The law firm of Herbert Smith Freehills Kramer found that only one of 89 renewable energy projects on the east coast requiring final approval under federal environmental law has been given the green light since 2023.
AEMO’s cost explosion forecast was based on a scenario where the electricity grid fails the government’s target of reaching 82 per cent renewable energy by 2030 and achieves only 75 per cent clean energy.
Global energy consultants Rystad predict the grid will only reach 60 per cent renewable energy by 2030, and independent think tank the Grattan Institute has said the 82 per cent target is likely unachievable.
AEMO was also forced to update its forecast for coal plants on the electricity grid following the Queensland government’s U-turn policy; The state will continue to operate coal power plants until 2049.
This means coal plants will operate for an extra 14 years, compared to the previous official forecast in 2024 that 90 percent of coal plants would be closed by 2035 and all would be depleted by 2037.
Energy Minister Chris Bowen said Australia was moving with the international trend towards renewable energy.
“Renewable energy received three times more investment than coal globally in 2024. In the first half of 2025, and for the first time, most of the world’s energy was provided by renewable energy sources rather than coal.”
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Mike Foley is the climate and energy correspondent for The Age and The Sydney Morning Herald.Connect via email.
