Australia has a record number of solar, wind and battery projects waiting to be plugged into our national grid. But as attention has shifted to “the dangerous sideshow of offsets”, dwindling investment means the country doesn’t have the infrastructure to connect them all.
Merryn York, executive general manager of system design at the Australian Energy Market Operator (AEMO), said the regulator was “working with network service providers to connect electricity generation and storage projects that are growing in volume, capacity and complexity”.
“In the past 12 to 18 months, we’ve connected Australia’s largest battery, solar farm, wind farm and hybrid facility.”
But the pipeline is growing longer each year. The backlog of proposed renewable projects has multiplied 35-fold in just two years, the regulator’s latest data reveals, from 5.6 gigawatts in 2021 to a mammoth 193 gigawatts in 2023.
Just 9.5 gigawatts worth has been approved to connect to the grid, the AEMO notes.
Australia’s sluggish efforts to plug in renewable projects risk more than just climate inaction. It puts our aspirations to be a global renewable superpower in a dangerous stranglehold, something that could pose a threat to national security as countries like China and India jostle for the title too.
Why is there a renewable backlog?
Research director at the Australia Institute Rod Campbell says the problem comes down to investment. Research from the Institute, using Australian Bureau of Statistics data, showed “investment in transmission has been basically steady in recent years”.
Indeed in June 2022 — the most recent data — new renewable energy generation construction hit a six-year low of about $250 million, Campbell said, while other electricity connections received around $2.75 billion.
“There’s no doubt that Australia’s electricity system needs more transmission infrastructure to connect new renewable projects to the grid,” Campbell tells Crikey.
“This has been a problem for many years and is likely to remain a hot topic, because growing transmission needs are likely to have significant impacts on communities if not well planned.”
An AEMO spokesperson acknowledged there is “a strong pipeline of proposed generation and storage projects, totalling three times today’s generation capacity, with large-scale solar, wind and batteries accounting for 86%”.
“Investment in firming generation, such as pumped hydro, gas and long-duration batteries, and transmission are critical to complement our growing fleet of weather-dependent renewable generation,” the spokesperson continued.
The Renewable Energy Target turning point
Enter Australia’s Renewable Energy Target (RET) — a government scheme launched more than two decades ago (then named the Mandatory Renewable Energy Target) to ensure a fifth of the country’s energy, some 41,000 gigawatt hours (GWh), was renewable.
We reached that target in 2020 and reduced our target to 33,000 GWh by 2030. Since then, Campbell said, “Australian climate and energy policy shifted in focus away from genuine decarbonisation and towards carbon offsets”.
And the money followed — to the detriment of the country’s renewable infrastructure.
“Renewable energy investment was much higher when we had a policy specifically designed to incentivise it — the RET,” he said.
“This is a major problem because generating and transmitting renewable energy permanently decarbonises the energy system, whereas offsets are used to delay investments in decarbonisation.”
Clean Energy Council chief executive Kane Thornton says the extension of the RET scheme would be “a relatively simple and efficient approach for encouraging investors to accelerate clean energy deployment in Australia”.
“Australia has a small window of time to stake our claim in the emerging green industries of the future, which can ultimately overtake our declining fossil fuel industries and revitalise and expand our local manufacturing base.”
What is being done?
To tackle the growing problem, the AEMO, together with the Clean Energy Council, has launched the Connections Reform Initiative in 2020, working with Australian Energy Market Commission, Australian Energy Regulator and the Energy Security Board.
“It is vital that improvements are made to the connections process to ensure that the system can safely and securely take on the high number of large-scale renewable energy projects that are and will continue to register to connect to Australia’s power systems,” a statement from the Clean Energy Council read.
The AEMO has also launched a “Connections Simulator Tool” for renewable project developers and other interested parties, so they can run simulated tests within the National Electricity Market. It will reduce risks, costs and time, said Darren Miller, CEO of the Australian Renewable Energy Agency’s (ARENA), co-funder of the project.
Not only that, Miller said, but it will also bolster investment. It’ll be a key tool for developers “to continue to invest in renewable energy, and will ultimately help to streamline processes, reduce delays and bring down costs for installing more solar and wind”.
But Campbell said tens of millions in renewable projects are still languishing in the pipeline, at a time when a renewable race is seeing our neighbours — and not all of them entirely friendly — investing big bucks in their green infrastructure and manufacturing.
“Overall, Australia has taken our eye off the ball on climate and energy,” Campbell says.
“Lack of transmission is part of that picture along with lack of policy to drive genuine decarbonisation and the dangerous sideshow of offsets.”
Is Australia focussing on the wrong energy goals? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.
Stands to reason. The last thing that the multinational fossil fuel industry which owns Australia’s two main political parties wants is for Australia to emerge as a global renewables power. Diversion into carbon credits is a win-win for them.
Exactly. You can game the system with carbon credits. With actual infrastructure you’d be forced to do something, not just pretend.
There’s a place for genuine carbon credit schemes (with stress on ‘genuine’). We know that there are some industries and sectors, such as aviation, that will be harder to de-carbonise than others. We have three choices with these industries: either we let them go on polluting at current or higher levels until we work out a way to bring their emissions down, or we decrease their level of activity (eg, fly less), or we try and offset the emissions they create until we can eliminate them. I think most people would see the last as the most acceptable.
The trouble is, there is only so much genuine offsetting that can be done on a finite planet. There’s only so much area available for tree planting, for example – and that’s leaving aside all the issues associated with ineffectiveness and shonky operators.
So the smartest, most integrous strategy is to save offsets for when they are the only choice, not just use them as cover for continuing business as usual – which is precisely what many of the biggest polluters are doing today.
It is akin to a drug addict stealing life-saving medication to feed his addiction, while knowing full well that his theft will lead to many deaths amongst those genuinely ill.
Would be of interest to ask electrical distribution networks, recently privatised from ASX public share ownership e.g. in SE Australia, Spark and Ausnet, will or can be adapted for their future capacity, network and distribution to deal with more renewable sources?
So the essence is that at one time we had a genuine plan to decarbonise but sometime in the last 10 years, during the LNP disaster, the game changed to a carbon free for all with carbon credits acting as a smoke screen to fool the punters. And the current Labor govt is ok with that. So apparently both parties are now wholly owned by the fossil fuel people. And to hell with Australia. Not happy.
I have no idea why this article conflates well-known issues around grid connections with offsets.
The issues around grid connections are entirely technical and in no way linked to the policy of the day around offsets.
The investment in (mostly rubbish) offsets would be better spent on renewable energy projects “in the pipeline” and connecting them to the grid. The ‘safeguard’ mechanism is a smokescreen for maintaining the status quo for Labor’s paymasters.
I suggest the policy error here is caused by an obsession with the grid as it is and ways to get connected to it.
When you can make electricity anywhere you need it, redundant mega-generators become irrelevant and so do the radial grids they ‘justified’.
Many local mini social grids for domestic is inevitable. That way we do not pay for the substantial loss in HT long-distance transmission (losses >50%). Locally, the loss is a much lower percentage. Connection to the grid will not be necessary, but may be convenient if you want to pay for it. It is probable that already the grid is so inappropriate that it is contributing to climate change
At a time of cruciality of radical change, necessary radical change is so easily characterised as ‘left’, ‘extreme’, ‘unrealistic’ etc. The struggled must always continue. Never give up. Pause maybe. But never give up.
12 years ago, we put in what was then a big solar system on a property we are renting, with the idea of taking advantage of solar credits that were offered at the time. So many of our neighbours did the same thing, that the electricity lines couldn’t handle it, so our credits went up the spout on the best generating days. Even on 68 cents back into the grid (yeah I know you get a lot less now) it still hasn’t paid for the installation. We do have the benefit of feeling good about contributing to climate action though… The transmission lines are desperate for upgrading and I don’t understand why it isn’t happening?