Transgrid CEO Brett Redman warns electricity transmission project delays could mean higher bills

Delays in delivering giant electricity transmission projects could slug households with higher bills and stall a move to renewables, Transgrid has warned.

NSW electricity giant Transgrid has warned delays in delivering huge transmission projects could lead to higher costs for power users and stall an urgent switch to renewable energy.

Transmission lags along with coal plant closures, rising demand and a gap in replacement generation sparked the market operator on Monday to call for an ­urgent response from industry to plug the supply shortage amid an escalating risk of blackouts.

Transgrid is developing three major transmission projects – EnergyConnect which will move energy through NSW, South Australia and Victoria; the Humelink connecting Snowy 2.0 to the network and the southern transmission link to Melbourne called VNI West later this decade.

“Urgent action is needed to accelerate Australia’s energy transition,” Transgrid chief executive Brett Redman writes in The Australian on Friday. “We must act now to accelerate the timeline for when renewables can deliver cheaper, cleaner and more reliable energy to homes and businesses.”

Gaps in the reliability of the power grid will emerge in South Australia next year due to the closure of a gas-fired power station, higher industrial demand and a year-long delay in TransGrid’s EnergyConnect renewable power cable between the state and NSW.

However, Transgrid said it remained on schedule with EnergyConnect.

“EnergyConnect is expected to be energised, and the release of transfer capacity will have commenced by the end of 2024. Transgrid and Electranet do not anticipate any change in the timing of the project’s delivery,” a spokeswoman said on Thursday.

The Transgrid chief cited a June 2022 report by Endgame Economics that found that while prompt investment in transmission upgrades reduces the average wholesale power price, those prices become higher and more volatile with extended delays to transmission upgrades.

“It also found that the increase in average wholesale cost added to consumer bills with a delay greatly outweighs the small reduction in transmission cost due to deferred transmission capital expenditure,” Mr Redman said.

“It means consumers will likely have larger electricity bills with greater transmission delay.”

One of the specific crunch points hovers around Snowy Hydro’s 2.0 expansion as concerns rise that the Humelink cable won’t be in place should the government-owned company hit a 2025-26 schedule.

Mr Redman acknowledged the Humelink project was integral to the transition.

The Australian Energy Market Operator held a briefing on Thursday to discuss the findings of its stark electricity report, with experts quizzing it on the criteria used to determine which projects fitted its committed status given a big pipeline of developments.

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 farms backed up by battery storage accounting for 88 per cent of the project pipeline.

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.

While AEMO has called for authorities to urgently sanction more than $10bn of transmission projects to escape the ongoing threat of blackouts and high power prices, the fight to get some communities onside shows the challenge of delivery.

“The recent energy market crisis demonstrated the current system’s lack of resilience and the high consumer cost of disruption. These risks will continue until we have a strong, flexible electricity network capable of safely delivering high volumes of renewable energy,” Mr Redman said. “Transgrid is responding to this reality. It is imperative Transgrid builds new transmission now, to avoid paying much more for this critical infrastructure later.”

Officials say five major projects covering 10,000km to connect up new renewables supplies need to be built “as urgently as possible” as fears grow that big storage schemes like Snowy 2.0 may see new supplies stranded if new developments are not delivered on time.

The five schemes are Humelink, VNI West, a boost to the existing network outside Sydney’s Ring and the giant New England renewable energy zone connection also in NSW. Marinus Link, a second power cable connecting Tasmania to Victoria, is already delayed by two years and will not start until 2029.