Community opposition could blow out costs by 30 per cent
“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.
Loading
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.”
Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up for our weekly Inside Politics newsletter.
