Australian power grid is full, industry warns, as transmission build drags

The country’s electricity infrastructure is already congested and building the necessary transmission lines is a slow process, top energy leaders say.

Australia is struggling to build high-voltage transmission lines quickly enough to cover for closing coal stations.

Australia is struggling to build high-voltage transmission lines quickly enough to compensate for the retirement of coal power stations, heightening the risk of higher power bills and blackouts, industry executives have warned.

The Australian Energy Market Operator has called for faster work on five projects worth nearly $13bn, but pockets of local community opposition threaten to prolong development work.

A lack of competition in the construction of new transmission also threatens to cost the country an estimated $13bn, consultancy Nexa Advisory forecast on Tuesday, adding a further roadblock for the switch to renewables.

Michael Katz – former ING Bank chairman and Commonwealth Bank executive – is one local landowner who has vowed to reject sweetened offers from the NSW government and Transgrid, which is building the 360km HumeLink that will connect Snowy 2.0 to the power grid.

“I received the offer. It was a combination of insulting and ridiculous,” said Mr Katz, who insists the 500kV transmission line l connecting Wagga Wagga, Bannaby and Maragle should be underground to avoid bushfire risks and disruptions to his farm. “You have got to have environmentally friendly transmission if you want environmentally friendly generation,” Mr Katz said.

Transgrid and the state government have rejected the call to go underground, insisting it would add costs to the project that will ultimately be recouped via customer bills.

Mr Katz – who is a member of the HumeLink Alliance, which opposes the overground construction of the link – said he and his neighbours would all refuse compensation payments.

Transgrid chief executive Brett Redman said the company was conscious of the emotional toll of building infrastructure across properties, and the company was taking time to properly consult.

Mr Redman said about 40 per cent of the landowners who would be impacted by HumeLink had agreed to compensation. “I want people to feel like they’ve got the time to talk to us. We’re working through with individual landowners what reasonable timelines are playing to give them the chance to absorb and respond,” Mr Redman said.

“We’re at about 40 per cent. We’re making good progress. I feel that we are on track there to get the vast majority of landowners by agreement.”

The cost of HumeLink has grown to $3.3bn, up from an initial $1.1bn. With consumers eventually bearing the cost, Nexa Advisory chief executive Stephanie Bashir said competition was needed among transmission network service providers.

“Unfortunately, we have a system that protects a small group of transmission network service providers from competition. ­Energy users pay for that, to the tune of $13bn,” Ms Bashir said.

“With rising energy bills and cost of living, we need the savings greater competition will provide. Protecting foreign-owned providers simply doesn’t make sense for homes and businesses.”

Coal power stations, once the foundation of Australia’s electricity supply, are on course to nearly all be retired in little more than a decade, a transition that is reshaping the economy.

To offset the loss of coal, which can generate electricity on demand, Australia is aggressively targeting a massive expansion of new zero-emission energy sources but energy leaders say the country’s infrastructure is already congested and building the necessary transmission lines is a slow process.

The warning reflects a growing concern within Australia’s energy industry that transmission is the biggest bottleneck to the country’s ambitious transition plans.

About 10,000km of new lines must be built before 2030, but their development has been hampered by funding constraints and community opposition.

The federal government has promised $20bn to accelerate transmission infrastructure under its Rewiring the Nation plan.

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.

AEMO estimates that 14GW of coal power generating capacity in the National Electricity Market will close by 2030, much more than the 8GW announced so far.

Aware of a looming threat, 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.

NSW Energy Minister Penny Sharpe said the payments would see the benefits of the transition equally shared.

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.