Cost to overhaul Australia’s power grid tipped to rise to $128bn, says AMEO draft plan
The cost to revamp Australia’s electricity system to run mainly on wind and solar by 2050 has skyrocketed to $128 billion, a new plan reveals. See tips to save on your power bill.
The biggest bill the nation faces in the pursuit of net zero just got $3 billion bigger.
The Australian Energy Market Operator’s official cost estimate for revamping the electricity system to run mainly on wind and solar by 2050 has been revised up to $128bn versus $125bn about 18 months ago.
AEMO’s draft “Integrated System Plan”, released today, says more large-scale renewable developments will be required after it wound back forecasts for the average size of new rooftop PV systems since the final version of the previous blueprint was published in June 2024.
The draft plan also warns of “higher capital costs for transmission”, noting individual project building budgets have risen by “up to 100 per cent”.
Ordinarily that could be expected to ring alarm bells for consumers because network outlays are recouped by increasing retail power prices.
But AEMO’s plan shows the forecast total expense for new network transmission falling by about half to $9bn.
One of two main reasons for the substantial decline is it’s now thought that only 6000km of extra power lines will be necessary instead of about 7500km under the earlier plan.
The biggest single removal: a proposed 750km high-voltage link between renewable power sources in north Queensland and a pumped hydro project near Mackay.
The $4.2bn power line is no longer needed because the Crisafulli Liberal-National state government canned the hydro scheme after coming to office, citing a budget blowout.
Also gone is SA’s $620m 126km “Northern transmission project”.
The other way transmission costs have been curtailed is by slashing the assumed interest rate paid by developers, from seven per cent to three per cent.
AEMO highlights the risk of delays in building new network, saying it would reduce the net benefits of its “optimal development path” from $24bn to $17bn.
“Slower progress will erode benefits to consumers and present risks to reliability,” AEMO Daniel Westerman said.
This concern is called out because transmission projects across the nation are already way behind original schedules.
For example, Victoria’s Western Renewables Link is expected to start operating in June 2029. That’s two years later than estimated in 2023.
Part of the Sydney Ring project has suffered a similar delay, and is forecast to begin carrying power in November 2029.
The same is true of Queensland’s Copper String project, now tipped come to online in June 2031.
A large transmission project cannot move through a regulatory approval process until it is “actionable” under AEMO’s plan.
In setting the plan for essential electricity infrastructure, AEMO has to consider price, safety, reliability – and reducing greenhouse gas emissions.
The plan, which Minister for Energy Chris Bowen cites as the best estimate for the cost of the transition, says it is framed to support “Australia’s contribution to limit global temperature rise to less than 2C.”
Of the estimated $24bn net benefit from following the optimal path, $1.9bn is for carbon reduction – down from $3.3bn in 2024.
The new draft heralds a greater reliance on solar than was previously anticipated, because it is becoming more affordable, and less contribution from wind.
Coal stays in the mix for a decade longer – due to policy changes by the Crisafulli government. Queensland has the youngest coal fleet in the national energy market.
Nonetheless, about two-thirds of coal is expected to retire within a decade. As that happens, the grid will lose critical “synchronous generation” which provides grid stability.
So AEMO is budgeting for $3bn of added costs for new machines that will provide replacement “system security services”.
While AEMO has revised down the estimate for the average size of rooftop PV, it still expects households will spend $50bn on solar, batteries and electric vehicles by 2050. This cost is excluded from its overall transition bill.
WHAT AUSSIES CAN DO NOW TO LOWER THEIR POWER BILL
Shop around: the difference between the median and lowest market offer is between $240 and $440, depending on where you live. The best sites for comparing prices are energymadeeasy.gov.au, compare.energy.vic.gov.au and wattever.com.au.
Consider a battery: the federal government is offering a 30 per cent rebate on home batteries. You may not need to get solar panels. You can just get on a plan offering free power in the middle of the day and store it. You can either use it or sell it back, which will greatly reduce your bill.
Study your bill: are you getting smashed because you use a lot of power in the peak? Can you shift any of your consumption to off-peak? Can you reduce your hot water use?
Keep the nasty weather out: proper ceiling insulation can cut heating and cooling costs by 20 per cent. Keeping your curtains closed helps too.
Check for rebates: While the federal government is withdrawing its $75-a-quarter rebate, there are many other discounts available. Hundreds of thousands of people are eligible but haven’t applied. Check on your state government’s energy website.
Check if appliances on standby power can be turned off and take advantage of your energy saving settings on appliances you have.
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