Australia’s energy system is failing, but our politicians still have no viable 'Plan B'

We know that the Australian energy system is in trouble and is about to enter an even greater crisis.  The switch to so-called “renewables” has predictably resulted in much more expensive and less reliable electricity.  Gas shortages are also emerging.  With our coal-fired generators ageing and not being replaced, and alternatives inadequate, there is growing consensus that things are going to get a whole lot worse. 

The Australian Energy Market Operator has been warning of increased blackout risks in several states.  "With up to 62 per cent of its coal fleet now expected to close before 2033, Australia's energy market is perched on the edge of one of the largest transformations since the market was formed," the report states. 

South Australia and Victoria are generally considered most at risk, while NSW and Qld consumers were also recently asked to reduce electricity usage to lessen the risk of blackouts. 

Most of our coal fired power stations were commissioned in the 1970s and 1980s and are rising 50 years of age.  The only more recently built one is Bluewater’s Power Station in Western Australia, built by Griffin Energy in 2009.  With further closures and breakdowns impending, it won’t be long before the electricity crisis greatly deepens.   Australia has run out of time to fix it.

So, what brought Australia to this point?  We used to have some of the worlds cheapest and most reliable power.  Now, we have amongst the dearest and it’s becoming much less reliable.

The answer is obvious. 

We used to have a coal-dominated electricity system that worked well and was continuously renewed and upgraded.  It ran 24/7 as cheap base load power, and did not require any backup.  Australia also used to engage actively in gas exploration and extraction, as dictated by the market.  We had both plentiful gas supplies and a huge amount for export.

Then along came climate alarmism and net-zero, and our politicians (at the behest of virtue-signalling nervous-nellies and carpetbaggers) decided to stop using coal and limit drilling for gas.  Some even want to smash our economy by banning fossil fuel exports.  All this to supposedly “save the planet” from man-made climate change.  

Owners of coal-fired power stations owe government no favours.  Many coal-fired power stations, built by state governments, were privatised (in the 1990s in Victoria, and somewhat later in NSW).  The private buyers, having paid top dollar, subsequently were betrayed through unfavourable changes in energy market rules designed to favour “renewables”.

Even if we accept the debatable proposition that global warming is mainly man-made, alarmists should recognise the reality that the world community is not on a path to reducing carbon emissions.  It is also clear that there is not a hope of Australia (or the world in general) ever reaching “net-zero”, so there is absolutely nothing Australia can do to unilaterally “save the planet”.  Equally, climate catastrophes have not come to pass to the degree predicted.  Instead, populations adapted to most climate issues at low cost and with minimal inconvenience.

Carbon capture is showing some promise as a means of reducing emissions from fossil fuels, though the technology is still to be fully proven at scale.  Santos says it has stored 340,000 tonnes of CO2-equivalent at its Moomba Carbon Capture and Storage project.  The project in South Australia's far north-east is now looking to ramp up its volumes, which are still minor in the overall scheme of things.

According to our CSIRO , “Carbon dioxide (CO₂) emissions from fossil fuels continue to increase year on year.  The  latest annual stocktake shows the world is on track to reach a new record: 37.4 billion tonnes of CO₂ emitted from fossil fuels in 2024, an increase of 0.8% from the previous year”. 

The top three emitters, China, the United States and India, contribute 42.6 per cent of total emissions.  With the US now withdrawing from the Paris Climate Agreement, none of them is pledged to lower emissions, and a lot of other countries are only paying lip service to commitments.  So why is Australia, which has huge resources of coal and gas and has more to lose than most, continuing on its insane path?  To date this has maybe tripled our energy costs with no reduction in our total emissions.  Australia endures expensive energy, while the biggest emitters profit.

Official figures show that Australia’s emissions were 465.9 million tonnes of CO₂ equivalent in the year to March 2023.  This was an increaseof 0.1 per cent despite huge spending on “renewables”.  According to the CSIRO, Australia contributes just over 1 per cent of global emissions so that Australian activity can make little difference to the world’s total. 

Our politicians seem to have two main alternative plans to keep the lights on.  The climate alarmists (including many within the Coalition) want to double down on “renewable” energy, with many also eschewing gas in addition to coal. The mainstream Coalition is instead now advocating the construction of seven nuclear power stations to replace coal. 

Only a few National Party parliamentarians (Matt Canavan and Keith Pitt come to mind) openly support building new coal-fired power stations.

All the evidence suggests that the “renewables”-based system under construction is ruinously expensive, unsightly, and will be very unreliable.  Major causes are its intermittent nature, eye-watering cost blowouts, and a failure to install adequate capacity, backup, and transmission lines.  Wholesale power prices soared more than 80 per cent in the final quarter of 2024, compared to the same period in 2023, amid record demand levels and limited coal generation availability.

Enormous economic damage is occurring.  Current energy policy is a major contributor to lower per capita living standards, pressure on public budgets, energy price inflation, and industries like manufacturing becoming even more uneconomic.  The same problems have beset countries like Germany, which have ventured down the same path as Australia.

Essentially, the decision to ditch coal-fired electricity, which had served Australia well, was a monumental mistake, as was the shunning of gas, which is the obvious backup for intermittent “renewable” electricity.  

Coal-fired power and the use of gas for domestic and industrial use makes complete sense given Australia’s resource endowments.  What makes no sense is the policy of making energy intensive industry, like aluminium smelting, uneconomic due to expensive energy policies in Australia, leading to forced relocation.  Places like China can generate cheaper power, in part using Australian coal.  Australia should have cheaper coal-fired power because we can build power stations right on our coalfields.

By far the cheapest way of replacing an aged coal-fired power station is with a more modern high-efficiency low-emissions (HELE) coal power station.  These more modern facilities also produce much less CO₂.  They can also continue to use the same location, and transmission and other infrastructure (e.g. water).

“Renewables” should only have been initially introduced on a limited trial basis.  They should be persevered with only if proven to function economically and reliably (which they don’t). 

Similarly, the decision to build seven nuclear power stations, given Australia’s lack of prior experience with nuclear energy, is asking for trouble, delays, and cost blowouts.  Australia should only build one or two, if any at all.  The reason Australia never went for nuclear energy during the Howard era was that coal power was always far cheaper.

Transition to a net-zero economy represents at least a USD$1.9 trillion investment by 2050, according to the New Energy Outlook: Australia report, published by research company Bloomberg NEF.  This is a mind-boggling cost.  It is clearly unaffordable considering that in 2023 Australia’s annual GDP amounted to only about USD$1.74 trillion.  While the full bill for “renewables” has been hidden from the public, waste on such a scale should never have been countenanced.

The politics of “renewables” has been promoted by several high wealth individuals through political financing.  The largest donor to David Pocock's political party at the last election was James Taylor, understood to be a venture capital investor and Climate 200 backer, who tipped in $91,539.  In the lead up to the 2022 federal election, Pocock's party received $1.68 million including a $856,000 donation from Simon Holmes a Court's Climate 200.  Climate 200 was again a big donor for teal MPs, contributing hundreds of thousands collectively to their campaigns.

When the greenhouse/global warming scare first achieved prominence over 20 years ago, many analysts believed that that governments would never commit to the like of net zero because of the huge cost.  “Progressive” administrations proved these analysts naive!  Even the Liberal Party in Australia went woke on carbon emissions, and it was the Morrison Government that signed the Paris Agreement (presumably to solicit moral approval on the world stage).     

Australia ratified the agreement in November 2016, setting a local target of reducing emissions by 26 to 28 per cent on 2005 levels by 2030.  Under Labor, Australia's commitment now is to reduce emissions by a ridiculous and unachievable 43 per cent by 2030, and to net zero by 2050.

Australia’s transition to “renewables” is not going at all well.

The Australian Energy Market Operator has warned that "any delay" to completing new energy projects could lead to major blackouts.  Australia's south-eastern states are also facing a major shortfall of gas supplies within four years as production from historic fields in Bass Strait falls away.   Woodside chief executive Meg O’Neill said she believed it was too late now to avert that shortfall.  State governments, especially in Victoria, are blocking exploration, despite large known reserves. 

Solar and wind are not the boon for the environment they are cracked out to be.  Considerable emissions are created in the manufacture of solar and wind energy collection hardware, as well as in concrete and other materials used in installation.  The same also applies to construction of additional transmission lines.  Advocates of green energy always play down these costs.  The associated emissions get outsourced, mostly to China, and are not formally attributed to Australia.  Solar and wind have very low variable costs of production but very high capital and backup costs.  A lot of the public is fooled by claims of “free energy from the sun and wind”.

The demise of coal-powered electricity involves great transfer of economic activity from Australian industry to foreign producers and investors.  In the longer term the disposal of wind hardware and solar panels will also generate a significant waste disposal problem.  

Efforts to store electricity, for when production from wind and solar is in excess, have been a particular disaster.

Pumped-hydro is a much-hyped component of the “renewables” plan.  Such schemes have the inherent disadvantage of consuming more power than they generate.  What they aim to do is conserve most of the surplus electricity generated, when conditions are favourable for wind and solar.  The problem is that, particularly in the Australian context, pumped hydro is ruinously expensive, because our dry and relatively flat continent lacks suitable sites.  Similarly, battery options are uneconomic, especially at scale, and don’t store a lot of power anyway.

The total cost of the Snowy 2.0 pumped-hydro project (which will use existing dams) has blown out to an incredible $12 billion and won’t deliver any power until at least late 2028.  Snowy Hydro blames this on the rising cost of labour and construction material, and unexpected problems drilling a key tunnel.  The rising costs of “renewable” energy are also the result of governments initiating too many capital projects for the existing skilled workforce to handle simultaneously.

When first announced in 2017, Snowy 2.0 had an estimated cost of $2 billion and was promised to deliver its first power in 2021.  Effectively the Turnbull Government committed to the scheme for political reasons before it completed a proper feasibility study.  Snowy 2.0 should have been canned long ago and, despite the billions already spent, probably should still be abandoned.  The only reason the government has persisted is that Snowy 2.0 is a showpiece for “renewable” energy policy, and admitting failure would involve enormous loss of face.

Meanwhile the Pioneer-Burdekin pumped hydro energy storage project isn't going ahead.  The new Queensland Government formally stopped this project" because it’s not financially viable, not environmentally appropriate and the community was never consulted.  On Queensland Treasury projections, the cost to each Queensland household for the project would have been $15,653.  The storage project was key to the previous Labor government's $62 billion 10-year jobs and energy plan to achieve net zero emissions by 2050”.

The proposed Borumba Pumped Hydro project, south of Gympie, is still on the table but may also be in jeopardy due to its high cost.  Pumped hydro schemes are uneconomic in the Australian context but governments have difficulty abandoning them because they are the main part of their back-up plans for intermittent power.

The Borumba project plans to supply up to 2,000 MW of electricity for “up to 24 hours”, resulting in a storage capacity of 48,000 MWh.  It is estimated that the project will now cost a huge $18.4 billion and will not be ready until 2033 at the earliest.  The facility was a signature part of the former Labor state government's plan to “power two million homes”.

Things are not going well on the transmission-line front either.

Snowy 2.0, as well as many of the new solar and wind farms located in distant places, requires costly new transmission lines.  The Australian Energy Market Operator has said that work on HumeLink and five other transmission lines must be completed urgently, or the National Electricity Market will face a decade of unreliable supplies as Australia transitions away from coal.

HumeLink is being built by TransGrid, and involves a 500kV overhead transmission line, with nearly one-thousand 75m towers, 26 suspended wires and a 70m-110m wide easement scar across 365km of rural NSW.  HumeLink’s primary purpose is to “unlock Snowy 2.0” through connections to Bannaby (near Goulburn) and Wagga Wagga.  The initial 2020 estimate of $1billion escalated to nearly $5bn by 2023, and costs will likely blow-out further. The transmission capacity also dropped from 2570 megawatts to 2200.   

To complete Snowy 2.0’s connection to Greater Sydney, the proposed $1.6bn Sydney Ring South transmission line must be built. Likewise, further transmission is needed beyond Wagga Wagga to connect Snowy 2.0 to Melbourne.  The taxpayer and consumers will have to pay for all this.

Other areas of planned transition to “renewables” are also in trouble. 

Much-hyped new technologies like “green hydrogen” have totally flopped, with virtually all investors (save maybe the Australian Government) pulling out of developments due to the technology appearing not economically viable.  Green hydrogen costs two to three times as much to make as conventionally produced hydrogen, and all hydrogen is problematic in terms of safe storage.   

Doubt has been cast over the future of a pledge by GFG (owner of the Whyalla steel mill) to build a $600 million hydrogen power plant, with the South Australian premier refusing to guarantee the project will go ahead.  The South Australian government recently revealed GFG owed it royalties “in the tens of millions” of dollars, and that the government’s $593m hydrogen ambitions for the region were now imperilled by the failure of GFG to realise its plans to modernise and decarbonise the steelworks. 

The contribution of electric cars is now also looking extremely doubtful despite heavy subsidies.  Both across the world and in Australia, electric vehicle sales are now starting to decline.  Issues with electric vehicles include limited range, very poor resale value, and problems with battery fires. 

Electric vehicle sales in Australia have fallen to a more than two-year low.  According to the Federal Chamber of Automotive Industries, EV sales in January 2025 were the lowest since October 2022.  Former Snowy Hydro chief executive Paul Broad says there is “no chance in the world” of the Albanese government reaching its goal for 89 per cent of new car sales being electric by 2030.

Issues with governance and the absence of proper market signals also come into play.

Massive subsidies, extensive regulation favouring “renewables”, and off-balance sheet accounting for many public expenditures, have the effect of both obfuscating the true cost to the taxpayer of “renewable” energy, and the true economics for the consumer.  Solar and wind would not be competitive in the marketplace without these interventions, while rooftop solar would not have its current penetration without high electricity prices, subsidised installations, and inflated (though now falling) feed-in tariffs. 

It is likely that the true value of solar electricity during times of peak generation in the middle of sunny days (especially in summer) is a negative price.  Similarly, the true cost of domestic electricity is well above what consumers are paying, due to the masking effects of price rebates from government and subsidies to providers of “renewable” energy.  Subsidised electricity to date has prevented a major consumer revolt against “renewables”.

Proposed “made in Australia” subsidies for solar panel manufacture and a $2 billion Green Aluminium Production Credit for aluminium smelting make no economic sense.  In a high energy cost economy like today’s Australia, these industries have no prospect of ever being internationally competitive and would be a continuing drain on the public purse.

So where are we at now?

In short, Australia is in trouble.  With lead times of ten years or more required to plan and build electricity infrastructure, it is probably too late to avoid energy shortages over the next decade at least.  To date shortages have been minor but that will increasingly change.  Coming energy shortages won’t be much of an influence in the coming federal election but may be a big influence in the following one.  

Australia needs to withdraw from our Paris commitments and build new HELE coal-fired power stations and gas infrastructure as fast as it can.  The reality, however, is that the Australian electorate and politicians are not ready to do this yet.  Australians should therefore brace for serious blackouts in coming years.

There is a big question mark over whether solar and wind are suitable as the mainstay of our electricity supply.  Solar is incapable to producing at night, and wind droughts persisting for many days are not unusual.  Given the prohibitive cost of both pumped solar and batteries, and that these are unlikely to provide backup of sufficient capacity or duration, the only practical backstop is gas.

The business model of renewables was always flimsy and propped up by taxpayers.  “Renewables” essentially are not commercially viable independent of big subsidies and favourable regulations.  Australia’s continued spending on “renewables” is enormous (enough fund a major war?).  Despite this, Australia is failing to reduce emissions and will end up with a very expensive and unreliable electricity supply. 

Australians reputedly have an acute bulls**t barometer but to date have failed to see through the “renewables” scam, that is making us all poorer.  It may require major failures of the electricity system before the scaredy-cats see sense.  There is also the perennial issue with public spending, namely that people (especially those of the left) don’t realise what a large amount of money a billion dollars is (especially if it is other people’s money).