Clean energy slump – why Australia’s renewables revolution is behind schedule, and how to fix it

This chart shows the planned build by five year time period for transmission and utility scale renewables, based on the AEMO Draft 2024 Integrated System Plan, Step Change scenario. Grattan Institute, CC BY-NC-ND^[6][7]

Instead, renewable generators have had to connect to existing lines, which have become congested^[8]. So even when new renewable installations get approvals for construction, their output can be curtailed because they can’t get it to consumers. This has hit developer finances hard^[9].

And many rural communities aren’t happy with the new transmission lines planned for their regions. While many of the required lines have been known about in the energy sector for years, the communities that will host them are only finding out about them now. Understandably, many object^[10].

Thousands of local residents attend a rally at Flagstaff Point in Wollongong to protest against a proposed offshore wind turbine farm. AAP/Dean Lewins^[11]

As well, bottlenecks in the planning approval bureaucracy mean things are slow to get built^[12]. This isn’t just about transmission lines: it also applies to new renewable generators and even upgrading roads so equipment and machinery can be used safely.

Coal hanging on

There’s still uncertainty about when coal generators will leave the market.

We need to build replacement capacity for ageing coal generators before they retire but no one wants to build new generators to replace the coal if they aren’t sure when demand for their electricity will emerge.

Generators are required to declare their earliest exit date if that date is less than three-and-a-half years away, but there’s nothing to stop them pushing that date out. That’s what Delta Electricity did last year^[13], when it changed the closure date for the Vales Point power station in New South Wales from 2029 to 2033.

Vales Point coal-fired power station has had its operating life extended to 2033. Rob Brady/Shutterstock^[14]

On top of this, nervous state governments have started making opaque deals^[15] to pay coal power stations to stay open, as insurance against the slow pace of the renewables build.

Read more: Do we want a wind farm outside our window? What Australians think about the net zero transition^[16]

Governments aren’t coordinating well

Every state government on the east coast has a renewable energy target. So does the federal government. But these targets were set as arbitrary percentages linked to arbitrary dates, not chosen to deliver the cleanest, most reliable, cheapest energy system for consumers.

State and federal governments choose their targets in isolation, which drives up overall costs. To give just one example: both New South Wales and Queensland have established “renewable energy zones^[17]” in New England shire, located right across the border from each other. Developing these areas as a single zone should cost less overall, but no such interstate efficiency has emerged. Each state has gone its own way.

An aerial view of the hybrid Gullen solar farm and Gullen Range wind farm at Bannister in NSW. Locating renewables in one location makes it easier to provide suitable transmission lines. Steve Tritten/Shutterstock^[18]

Is there a way out?

All of the above has led to a policy quagmire that has bogged down Australia’s energy transition.

In our report^[19] released last month, my colleagues and I argue the best way forward is to temporarily put aside a desire for neat, market-driven policies. Instead, we think governments and industry need to accept an approach that could feel ad hoc or disorganised at times in the next decade while coal exits are taking place.

During this time, governments will probably need to intervene regularly to coordinate new transmission, new generation, and coal exits, so the lights stay on.

Once coal is a no longer a substantial part of the market, it will be time for governments to step back. Beyond 2030, electricity demand is expected to keep growing, and the renewables building task will continue.

If current forecasts are right, coal will fall below 10% of our electricity production by 2032. ‘Storage’ includes utility and consumer storage. This is based on AEMO’s 2023 Integrated System Plan, Step Change scenario. Grattan Institute, CC BY-NC-ND^[20][21]

Governments need to start designing the rules that will govern this new electricity system. It requires asking a fundamental question: what will the respective roles, rights, and responsibilities of energy consumers, industry, and governments be in the future?

Keeping the system reliable will be a fundamentally different task when the amount of electricity generated depends on the weather. Market rules must change to ensure there is always sufficient generation available to meet demand in this new electricity system.

And carbon pricing – a political taboo for so long – will need to be discussed again. Even when the coal generators have closed, a vital share of our electricity will come from gas^[22]. The electricity sector needs a clear and enduring carbon price for the energy sector to guide gas-plant entries and exits, and ensure they pay for their emissions.

Governments will need to better integrate and orchestrate all forms of distributed energy resources, from rooftop solar panels to electric vehicles, particularly as electric vehicles become able to use their batteries to help power the grid.

Australia may be able to muddle through the next few years, but voters will not forgive their political leaders if they mess up the post-coal era and fail to deliver the trifecta of clean, affordable, and reliable energy. The hard work starts now.

Read more: No threat to farm land: just 1,200 square kilometres can fulfil Australia's solar and wind energy needs^[23]

Read more https://theconversation.com/clean-energy-slump-why-australias-renewables-revolution-is-behind-schedule-and-how-to-fix-it-229514

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