How Australia can fast-track energy transmission (2024)

Authors

  • Declan McManus Co-Leader, EY Net Zero Centre and Partner, Infrastructure Advisory, EY Australia
  • Steve Hatfield-Dodds Associate Partner, EY Port Jackson Partners

Contributors

  • Ben Vanderwaal

7 minute read 10 Jul 2024

Related topics

Infrastructure

  • Facebook
  • Twitter
  • LinkedIn
  • Link Copied

Australia’s three-fold transmission challenge requires refreshed energy market rules.

In brief :

  • Australia needs an estimated 10,000 kilometres of new transmission lines by 2050 to achieve our renewable energy ambitions.
  • But three big obstacles stand in our way: supply chain challenges, labour constraints, and the regulatory and planning process to obtain approvals.
  • The EY Net Zero Centre’s latest thought leadership paper,Powering progress, asks: What can we do now to move faster?

Australia has set a national target for 82% of its electricity to be supplied from renewable sources by 2030, as part of an orderly transition to net zero emissions by 2050. Achieving this 2030 target will help meet Australia’s commitment under the Paris Accord of a 43% reduction on 2005 emissions levels by 2030. But we need to move faster to stay on track.

In the EY Net Zero Centre’s latest thought leadership paper,Powering progress: How Australia can fast-track energy transmission projects for a renewable future, we examine why so many transmission projects have stalled, and look at the levers we can pull to speed up delivery.

Powering progressis the second instalment of the three-partEnergy Infrastructure Executive Briefing Series,Stepping Up to Drive the Step Change. And it is a step change. The Australian Energy Market Operator’s (AEMO) Draft 2024 Integrated System Plan (ISP) outlines the investment required for Australia to meet its targets. This includes a tripling of grid-scale renewable energy by 2030 and a seven-fold increase by 2050.[i]

Rooftop solar capacity is expected to double by 2030, and Australia needs to change the way it treats distributed energy resources (DER). The first paper in our Energy Infrastructure Briefing Series,From chaos to choreography, explores the challenges of orchestrating DER.

Australia must integrate new energy infrastructure, piece by piece, while maintaining system stability. We must deliver reliable and affordable electricity while helping ensure the benefits are shared. And we must race towards net zero as the rest of the world decarbonises too.
Declan McManus Co-Leader, EY Net Zero Centre and Partner, Infrastructure Advisory, EY Australia

Explore our Offerings

EY Net Zero Centre

The EY Net Zero Centre brings together EY’s intellectual property, strategic insight, expertise and deep knowledge in energy and climate change leadership to solve the big problems ahead as we move towards net zero emissions by 2050.

Read more

Service Leader

All the evidence suggests firmed renewable energy has a decisive cost advantage over alternative options, including nuclear, and is better positioned to underpin future energy intensive export industries. But even if the relative costs and merits of different generation options change in coming decades, keeping the lights on in the next few years requires immediate action to build and connect new generation.

Most of this renewable energy generation will be built at a distance from our capital cities, requiring an estimated 10,000 kilometres of new transmission infrastructure by 2050.[ii]

However, in its most recent update to the Electricity Statement of Opportunities (ESOO), published in May 2024, AEMO noted significant delays to key transmission projects and called for urgent investments in transmission capacity.[iii]Recent analysis shows that all but one transmission line project has suffered delays; some projects are more than five years behind schedule.

How Australia can fast-track energy transmission (1)

A comparison of expected versus original planned delivery dates shows transmission timelines have blown out by up to five years.

Source: Adapted from Nexa Advisory, 2024.

How do we move beyond the bottlenecks?

Why have transmission projects slowed? And how do we move beyond the bottlenecks? Several obstacles stand in our way. But if we can overcome them, the opportunity is as enormous as the size of the challenge today.

1. Supply chain crunch

The International Energy Agency has observed that pressure on supply chains is affecting the pace of energy transitions around the world.[v]But Australia’s Transmission Network Service Providers (TNSPs) lack buying power, which makes it harder for them to compete for network equipment.

Australia faces an import impasse that we are unlikely to resolve any time soon. EY analysis finds Australia’s demand for key transmission equipment – while unprecedented by historical standards – is just 0.6% of transmission equipment demand in advanced economies. From a global perspective, Australia’s demand is just a ‘rounding error’ in global demand.

2. Skills squeeze

Labour constraints are likely to be an ongoing challenge for Australia. Jobs and Skills Australia, an independent agency established by the Australian Government to provide data and analysis on labour market needs, estimates that we will need up to 42,000 more electricians to meet our 2030 renewable energy target. The workforce must expand from 53,000 workers today to 84,000 by 2050.[vi]Compounding the difficulty is the global competition for the same skilled labour, as countries worldwide ramp up their own renewable energy projects.

3. Slow approvals exacerbated by social license concerns

Transmission projects have been subject to community opposition, highlighting the need to do more to gain community support. The Australian Energy Regulator is currently refining its approach to social license and, after consultation, is updating its guidelines and instruments.[vii]But the terminology of ‘social license’ itself suggests a privilege to be earned. The challenge for project proponents is to think instead about how benefits should be shared.

We have three levers to pull. But with limited options on labour and equipment constraints, the only lever we can pull quickly is policy and planning – and so government needs to act urgently and decisively to overcome delays.

A supersized energy superpower opportunity

Our coal-fired power stations must be replaced. Doing nothing is not an option, because they are near the end of their economic life and become increasingly likely to break down as they age.

But this imperative also presents opportunities. Renewable energy provides the lowest cost option for replacing these retiring assets, and positions Australia to respond to growing worldwide demand for products made with zero emissions energy.

The EY Net Zero Centre’s 2023 report,Seizing Australia’s energy superpower opportunities, outlines the size of the opportunity. Investing in renewable energy at scale to provide Australia with clean energy and grow new industries could deliver around $65 billion to national GDP by 2050, EY team has found.

If we roll out cost-competitive firmed renewable energy at scale to grow our share of global materials and energy-intensive production, we could expand national GDP by 2.3% by 2050, relative to a lost opportunity where Australia falls behind the global march towards net zero.
Steve Hatfield-Dodds Associate Partner, EY Port Jackson Partners

Directionally, we know where we must go. But practically, we are trapped in a loop, challenged by supply chain and labour constraints, and by complex regulation and planning processes.

Australia’s energy ministers have agreed that long-term reforms to the National Energy Market (NEM) “must be carried out expeditiously”.[viii]But it will take the next two-to-three years, at least, for NEM reforms to kick in. In the meantime, transmission lines must be rolled out at pace.

[i]Australian Energy Market Operator (AEMO) (2023),Draft 2024 Integrated System Plan for the National Electricity Market, available at www.aemo.com.au/-/media/files/stakeholder_consultation/consultations/nem-consultations/2023/draft-2024-isp-consultation/draft-2024-isp.pdf.

[ii]AEMO, 2023.

[iii]AEMO (May 2024),Update to the 2023 Electricity Statement of Opportunities, available at: https://aemo.com.au/-/media/files/electricity/nem/planning_and_forecasting/nem_esoo/2023/may-2024-update-to-the-2023-electricity-statement-of-opportunities.pdf?la=en&hash=4425365102C8992B13B4671EC9659E0A

[iv]Nexa Advisory (May 2024),We plan and then don't build, available at: https://nexaadvisory.com.au/web/wp-content/uploads/2024/06/Nexa-Advisory_We-Plan-and-Dont-Build_Report.pdf

[v]International Energy Agency, (July 2022),Securing Clean Energy Technology Supply Chains, available at: https://iea.blob.core.windows.net/assets/0fe16228-521a-43d9-8da6-bbf08cc9f2b4/SecuringCleanEnergyTechnologySupplyChains.pdf.

[vi]Jobs and Skills Australia (October 2023), The Clean Energy Generation: Workforce needs for a net zero economy, available at: www.jobsandskills.gov.au/sites/default/files/2023-10/The%20Clean%20Energy%20Generation_0.pdf

[vii]Australian Energy Regulator (October 2023),Directions Paper: Social licence for electricity transmission projects, available at: www.aer.gov.au/system/files/2023-10/Directions%20paper_%20Social%20licence%20for%20electricity%20transmission%20infrastructure%2815924469.2%29.pdf

[viii]Australian Government Department of Climate Change, Energy, the Environment and Water (DCCEEW),Energy and Climate Change Ministerial Council Meeting communique(1 March 2024), available at: www.energy.gov.au/energy-and-climate-change-ministerial-council/meetings-and-communiques.


Summary

The stakes are high, and the timeline is tight. We must accelerate approval processes, streamline regulatory frameworks, and actively engage with communities to secure their support. We need to act now to de-risk urgent actions and investments, allowing time to reform broader rules and regulations. By working hard on multiple fronts, we can overcome the current obstacles and deliver on our ambition for a reliable, affordable and sustainable energy future for Australia.

Energy Infrastructure Executive Briefing Series

In this three-part Energy Infrastructure Executive Briefing Series, developed by the EY Net Zero Centre, we explore three critical levers for Australia to pull to drive the net-zero transition, and create new services for consumers, businesses and our nation.

Find out more

How Australia can fast-track energy transmission (2)

Talk to the EY Net Zero Centre team to help your company cut through the complexity, manage the uncertainty and create clear pathways to net zero emissions.

Declan McManus Co-Leader, EY Net Zero Centre and Partner, Infrastructure Advisory, EY Australia Father of three. Works at the intersection between infrastructure and decarbonisation. Passionate about helping government on its energy transition. Global citizen. Connector of people and insights. Brisbane, AUS
Steve Hatfield-Dodds Associate Partner, EY Port Jackson Partners I love robust discussion, espresso, and delivering solutions to wicked problems. My favourite quote is from Ruskin: “There is no wealth but life”. Sydney, AUS

About this article

Authors

  • Declan McManus Co-Leader, EY Net Zero Centre and Partner, Infrastructure Advisory, EY Australia
  • Steve Hatfield-Dodds Associate Partner, EY Port Jackson Partners

Contributors

  • Ben Vanderwaal

Related topics

Infrastructure

  • Facebook
  • Twitter
  • LinkedIn
  • Link Copied
How Australia can fast-track energy transmission (2024)

FAQs

What is the transmission of electricity in Australia? ›

The National Electricity Market (NEM) incorporates around 40,000 km of transmission lines and cables. It supplies about 200 terawatt hours of electricity to businesses and households each year. It supplies around 9 million customers.

How does Australia get most of its energy? ›

Most of our electricity is produced from burning black and brown coal at large power stations. Natural gas is the third highest energy source in Australia (after oil and coal). It is used by power stations for electricity generation, factories for manufacturing, and homes for heating and cooking.

What is the energy transition in Australia? ›

Australia has set a target to reach net-zero carbon emissions by 2050. Meeting this target involves investing in renewable energy infrastructure and transitioning away from coal-fired power plants. Meeting decarbonisation targets is a complex task, and collaboration is key to success.

What are the energy needs of Australia? ›

Australia's energy consumption fell 0.1% in 2021-22 to 5,762 PJ, the third successive year of decline and down 7% from the all-time peak of 6,188 PJ in 2018-19. The drop in consumption in 2021-22 was 7 PJ. Fossil fuels (coal, oil and gas) accounted for 91% of Australia's primary energy mix in 2021-22.

How much electricity is lost in transmission in Australia? ›

The losses are equivalent to approximately 10% of the total electricity transported between power stations and market customers.

Who is the electricity transmission company in Australia? ›

Transgrid builds and maintains the largest electricity network in Australia, providing the backbone of the National Electricity Market while supporting the transition to a cleaner energy future.

What is Australia's number 1 energy source? ›

Australia's energy needs are still mostly met by fossil fuels. Australia's coal resources are used to generate three-quarters of domestic electricity; natural gas is found in many homes and is increasingly used in industry; and Australia's transport system is heavily dependent on oil, some of which is imported.

Can Australia be powered by renewable energy? ›

Renewables account for 39.4 per cent of Australia's total electricity supply. 5.9 GW of new renewable generation capacity added in 2023. 2.8 GW of new large-scale renewable generation capacity completed construction and was added to the grid.

What uses the most power in Australia? ›

Heating and cooling combined use the largest amount of energy in the average Australian home. They account for around 40% of household energy use according to YourHome.gov.au.

Why is there an energy shortage in Australia? ›

This crisis stems from the convergence of multiple factors, including the closure of coal-fired power plants, delays in renewable energy projects and escalating electricity demands. The ramifications of this crisis are dire, with significant disruptions predicted across various sectors unless immediate action is taken.

Where does Australia import its energy from? ›

Liquefied natural gas exports increased 7% in in 2021-22 and have grown by an average of 16% per year in the last decade. Most of Australia's energy imports are of refined petroleum products and crude oil, with the majority of consumption of these commodities met by imports.

Is Australia an energy superpower? ›

On paper, the Australian Government's Future Made in Australia plan is a great idea, making Australia a renewable energy superpower, with more capacity to make clean energy at home and for export. But simultaneously, the Government is planning for “gas to 2050 and beyond“.

Is Australia self sufficient in energy? ›

Put simply, Australia consumes more oil than it did a decade ago, produces less, and for various reasons, both commercial and political, the country's emergency reserves – which should be equivalent to at least 90 days of net oil imports – are the lowest of any International Energy Agency member country.

Why does Australia use so much energy? ›

The demand for energy is increasing as Australia's economy and population grow. To date Australia's energy needs have been largely met by fossil fuels. Australia's abundant and low-cost coal resources are used to generate three-quarters of domestic electricity and underpin some of the cheapest electricity in the world.

Who is the largest energy consumer in Australia? ›

Power Consumption

This increase is mainly driven by the residential sector. Industry is the largest user of electricity with 32% of the consumption, followed by households (28%), services (27%), and the energy sector hydrocarbon and coal mining and processing ("others").

Is electricity in Australia the same as USA? ›

Mastering the nuances of Australian electricity is just one of the skills you will learn during your semester in Sydney. Electricity in Australia is 240 volts, which is more than twice the voltage used in the US.

What is the electrical connection in Australia? ›

The International Electrotechnical Commission (IEC) “world plugs” website calls the Australian electrical plug a Type I plug. It consists of three flat pins measuring 10 millimetres wide and 31 millimetres long.

What is the electricity system in Australia? ›

Due to its large size and the location of its population, Australia lacks a single grid that covers all states, but has a transmission grid that extends along the east coast from Queensland via New South Wales and Victoria to South Australia and also connects via submarine DC cable with Tasmania.

What is the source of electricity in Australia? ›

Australia's energy needs are still mostly met by fossil fuels. Australia's coal resources are used to generate three-quarters of domestic electricity; natural gas is found in many homes and is increasingly used in industry; and Australia's transport system is heavily dependent on oil, some of which is imported.

References

Top Articles
Latest Posts
Recommended Articles
Article information

Author: Twana Towne Ret

Last Updated:

Views: 6215

Rating: 4.3 / 5 (44 voted)

Reviews: 91% of readers found this page helpful

Author information

Name: Twana Towne Ret

Birthday: 1994-03-19

Address: Apt. 990 97439 Corwin Motorway, Port Eliseoburgh, NM 99144-2618

Phone: +5958753152963

Job: National Specialist

Hobby: Kayaking, Photography, Skydiving, Embroidery, Leather crafting, Orienteering, Cooking

Introduction: My name is Twana Towne Ret, I am a famous, talented, joyous, perfect, powerful, inquisitive, lovely person who loves writing and wants to share my knowledge and understanding with you.