Transmission is Australia’s biggest energy threat: Debelle
The Fortescue Future Industries director joined the chorus of energy executives concerned about the pace of developing new high-voltage transmission cables.
Building enough transmission to transport new renewable energy generation to households and businesses is Australia’s biggest energy challenge, the former deputy governor of the Reserve Bank of Australia has warned.
Coal power stations - which have historically underpinned Australia’s electricity network - are expected to be retired in little more than a decade.
Guy Debelle - Fortescue Future Industries director and former RBA deputy governor - on Friday joined the chorus of energy executives concerned about the pace of developing new transmission cables to deliver solar and wind to homes.
“Transmission, I think, is one of the biggest, if not the biggest challenge in the energy transition. And does that potentially risk us meeting all of those, you know, emissions reductions by 2030,” Mr Debelle told The Australian-Sky News Economic Outlook forum.
About 10,000km of new lines must be built before 2030, but their development has been hampered by funding constraints and community opposition.
Prime Minister Anthony Albanese defended his government, insisting blame lay with the former coalition government.
“How is it that Snowy 2.0 is not connected to the grid? What is the point of doing a massive project like that isn’t plugged in,” Mr Albanese told the conference.
“It’s absurd. And we are having to deal with that. We are having to deal with a decade of inaction.”
The federal government-owned Snowy Hydro is building a giant expansion of the Snowy pumped hydro scheme in NSW but the development is running behind schedule. The pumped hydro project is not expected to be operational until 2028.
Pumped hydro is particularly significant to Australia’s energy transition. It would store excess renewable energy generated, which could be dispatched during the peak evening demand periods.
Australia has seen a spate of zero emission generation capacity installed, which Mr Albanese said is having a significant impact on wholesale electricity prices. The Prime Minister said he was hopeful of still achieving a target of $275 in power bill savings by 2025.
“I’m going to tell you what – we have an ambition to take advantage of the transition to renewable energy. If you look at the contracts in NSW recently on solar, they are having a real impact,” he said.
The Australian Energy Market Operator has called for faster work on five projects worth nearly $13bn, but Australia also has a long history of transmission project delays.
The $2.3bn Project EnergyConnect, an interconnector being built between South Australia and NSW, has seen repeated delays and cost overruns.
The Federal Labor government has allocated $20bn to accelerate transmission infrastructure under its Rewiring the Nation plan, but new developments remain slow.
Australia’s installed storage capacity, either pumped hydro or batteries - is widely seen as behind the pace necessary to meet the country’s ambition of having renewable energy account for more than 80 per cent of the country’s electricity generation by the end the decade.
Wholesale prices - the cost of producing the electricity - remain high due to recent adverse weather and the retirement of major generators such as AGL Energy’s Liddell coal power station.
Labor insists it is making progress on major transmission projects. The HumeLink transmission scheme is under construction and will deliver cheap power from Snowy Hydro once it begins operations, but pockets of landowners have said they will refuse compensation offers.
In a bid to break the deadlock, Victoria and NSW have offered landowners affected by new transmission lines $200,000 for every kilometre of their land crossed by a major infrastructure project.
Funds are paid out in annual instalments over 20 years, indexed to inflation.
Queensland has gone even further. The state government in May said it would offer landowners who agree to allow high-voltage transmission cables across their properties an average $300,000 per kilometre.
The process of delivering major transmission projects through rural areas and amid landowner issues is widely expected to take longer than official timelines, constraining the volumes of clean energy that may be delivered to users in the market.
Some 150 gigawatts of energy supplies, nearly triple the current generation and storage capacity of the Australian market, has been proposed by companies and investors by 2032 with large-scale solar and wind backed up by battery storage accounting for 88 per cent of the project pipeline.
Nearly two-thirds of all coal capacity will be shut down by 2030 under forecasts by AEMO.
Renewable developers and network operators are also worried a pipeline of power generation and clean energy supplies faces delays or gridlock unless major electricity transmission projects are delivered across the national electricity system.
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