Transition to wind and solar to be blown off course by opposition, major energy companies warn

Australia’s energy transition roadmap fails to account for growing opposition to new zero emission projects that will prolong the use of coal and gas, a spate of energy companies have warned.

Australia’s biggest energy companies have raised the alarm on the nation’s switch to green power revealing they expect major delays on renewable and transmission projects amid community opposition, sparking an urgent call to boost gas supplies and keep coal plants open longer.

Authorities have asked for industry to deliver their verdict on a 20-year blueprint for the power grid which pulled forward the exit of coal from the market, requiring a 50 per cent hike in the level of renewables to be built by the end of this decade.

AEMO estimated utility-scale wind and solar capacity will need to triple by 2030 and increase sevenfold by 2050, a target that has simultaneously spurred a series of new federal policies and stoked alarm at the rate of change expected across regional parts of the country that will largely house new developments.

The nation’s biggest energy operators have responded with new warnings that the rollout of renewables and transmission faced fresh delays in a major intervention that heaps fresh pressure on the nation’s bid to more than double renewables by 2030.

Developers including transmission operator Ausgrid, the nation’s largest gas pipeline operator APA Group and the Carlyle-backed Amp Energy said they were concerned over delays and development snags.

Timeframes for projects “are likely to need further extensions to reflect significant challenges faced by project proponents,” APA Group said in a submission to the Australian Energy market Operator. “Renewable energy projects face complicated and lengthy approvals processes that projects must go through before construction can even begin.”

The $20bn-plus rollout of transmission around the nation to deliver renewable energy to households and users also faces ongoing community concerns.

Community opposition “to the development of new transmission infrastructure is one of the key reasons why many projects are delayed. Delays to the delivery of transmission infrastructure will impact the speed at which new renewable generation can be connected to the national electricity market,” APA said

Large-scale renewable energy projects are unpopular in some pockets of the country, who insist they will uproot their lives with insufficient benefits.

Opponents have been able to use planning laws, primarily in NSW to slow approvals for projects. In NSW, wind farms on average take four years to secure planning approval. Developers can not begin construction until having secured necessary permits.

Even if projects can secure planning permission, many are predicated on the installation of new high-voltage transmission lines. Australia must build around tens of thousands of new transmission lines, but is struggling to secure land owner support despite ever larger financial sweeteners.

Ausgrid, a major transmission provider in NSW, also raised fears noting forecasts of over $16bn of spending annually in transmission project costs out to 2050 was required.

“As highlighted by AEMO and as the industry has already experienced, this substantial network investment will face cost pressures, social licence issues and workforce and supply chain challenges. These issues are likely to result in longer timelines, higher costs and more complexity and disruption than anticipated,” Ausgrid said.

Amp Energy, a Canadian infrastructure player backed by the $US385bn Carlyle Group, said Australia will not hit net zero goals without “radical reform” to the level of transmission investment and ease of solar and wind connecting to the grid.

“We believe at the current market trajectory that Australia will have ample generation investment, but almost certainly risks having stranded generation assets or lost generation investment without drastic improvement in transmission infrastructure and connection approvals processes,” Amp said in its submission.

Delays are highly consequential. The federal Labor government has set an aggressive target of having renewable energy generate 82 per cent of the country’s power by the end of the decade, a key pillar in Australia’s emission reduction targets.

Should Australia not deliver its renewable energy transition, it will face an elevated risk of price rises or even blackouts as there is insufficient generation to replace the retiring coal fleet.

Australia would likely then have to extend the use of coal and gas, but Alinta Energy said there are no policies to support bringing new supplies online.

With a raft of official warnings this week over gas shortages emerging on the east coast next winter, power giant Alinta said the Albanese government needed to re-think how to get more gas into the system. It pointed out the AEMO blueprint requires 13 gigawatts of additional gas generation is required to firm renewables, a stark figure given near-term warnings over supply shortfalls.

“Alinta Energy also notes a general lack of policy support for the development of gas generation for renewable firming and it is unclear how such investment could be made based on current market settings,” the company - operator of the Loy Yang B coal plant - said.

Delta Electricity, which runs the major Vales Point coal plant in NSW’s Hunter Valley, said an extension of coal may be required warning that AEMO was using its blueprint for investment decisions designed to achieve government targets.

“Delta considers this is potentially dangerous as it sets expectations that will never be met in the timelines set. This is highlighted by AEMO itself that large scale renewables and transmission projects will simply not be delivered on time, particularly over the next decade, because of supply chain constraints and social licence issues,” Delta said in its submission.

“These outcomes would then provide a strong signal that coal-fired generation will need to be maintained for longer than assumed or modelled by AEMO for system security and reliability of the national electricity market – but the draft 2024 integrated system plan does not even consider this option.”