How Australia can fast-track energy transmission

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.

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.

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.