Victoria’s power costs to surge from the ‘lowest to the highest’ in Australia, according to report
A bombshell report has warned there will be blackouts across the state during colder months while Victorians will be stung with Australia’s most expensive power bills.
Victoria
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The Victorian government’s “aggressive” electrification of the power network is likely to result in mass blackouts with demand forecast to outweigh renewable energy supply by more than 30 per cent in some months, a bombshell report by an energy expert warns.
The state’s push to rely on renewable energy will also lift power bills from the nation’s lowest to the highest, author Paul Simshauser predicts.
The report by Professor Simshauser, a leading academic who runs a Queensland government-owned energy business, concludes the average wholesale electricity price across the nation would be about 30 per cent more in a system mainly reliant on intermittent renewables than in the existing coal-dominated system.
And the report finds that the cost of solar, wind, batteries, hydro and gas assets needed to get close to net zero would be about $300bn in today’s dollars, compared with the current system’s worth of $136bn.
Before the last election, Prime Minister Anthony Albanese vowed that a federal Labor government he led would lower household power bills by an average of $275 by 2025.
Instead, in most areas, they have risen by vastly more.
The Victorian government has also been under pressure over power bills and gas bans.
The report by Professor Simshauser, chief executive of the Queensland government’s transmission network business Powerlink, a professor of economics at Griffith University and member of the Cambridge University Energy Policy Research Group, and co-authored with Associate Professor Joel Gilmore, highlighted “profound effects” anticipated in Victoria as the state ploughs ahead with its transition to renewable energy sources.
The report cautioned that the state faced a severe risk of blackouts during colder months in autumn and winter by the 2030s, with renewable energy such as solar and wind underperforming when energy demand was at its highest.
Data in a “sobering” chart revealed demand in Victoria would surge due to the electrification push – where, for example, some gas appliances were banned – resulting in it outweighing renewable supply by more than 30 per cent in some months.
“While Victoria has made considerable progress with respect to renewables (40.5 per cent market share) brown coal persists with 65 per cent market share,” the researchers said.
“If renewable developments fail to keep pace, adding electrification loads to the power system will either raise power prices above tolerable thresholds or entrench coal plants longer than necessary.”
In the future it was likely Victoria would have to import energy from other regions supported by gas turbines and hydropower, the report said.
This would contribute to Victoria’s surging power costs from the “lowest to the highest” in Australia, it said. In July, last year the Australian Energy Market Operator quarterly report showed the average cost of wholesale electricity in Victoria from April to June reached $127/MWh, up $39 compared to the same quarter in 2023.
Victoria had the third-highest spot price on the mainland at $127/MWh behind South Australia at $135/MWh and NSW at $173/MWh.
Meanwhile, replacing Victoria’s coal fleet was also not the answer as this would cause a price surge with forecasts of up to $180/MWh, the report said.
Victoria’s Energy minister Lily D’Ambrosio clapped back at the report on Wednesday, saying she respected the author but took issue with the conclusions.
“What we know in this state is that more renewable energy that we build in this state the cheaper our wholesale energy wil be,” she said.
“It is no accident that Victiria continues to have the lowest wholesale prices in the country. It’s because of our ambitious investment into renewable energy projects in Victoria.
“We have met all our renewable energy targets.”
When asked if there could be blackouts in the next three years Ms D’Ambrosio said:
“There are no anticipated shortfalls at all that are anticipated and if there are any areas where there may need to be additional supply provided the Australian Energy Market Operator’s role is to assist that on a year-to-year basis as they do in every states and take steps.”
The report acknowledged the Victorian and NSW governments had struck deals to keep coal-fired power stations open for longer than owners intended amid growing concerns about power shortages. Victoria’s Loy Yang A power station will remain open until mid-2035 under a $50m agreement signed between its owner AGL Energy and the Victorian government in 2022.
Researchers noted that in the past eight years, $83bn had been invested in 35 gigawatts of wind, solar, batteries, pumped hydro and power plants fuelled by gas across the nation, but that many projects would not come online in time.
It highlighted that gas was a critical part of the energy network, foreshadowing that stalling offshore wind projects and underperforming wind farms in Victoria would mean this energy resource was less reliable.
A state government spokesman said: “Our record investments in renewable energy have meant that Victoria has had the lowest wholesale power prices in the country over the past two years … and AEMC projects the state’s prices will fall by 9 per cent over the 10-year outlook, remaining below the national average.”
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