Australia's energy transition in flux amid struggle to build major transmission arteries

In South Australia's mid-north, the low ridges and rolling hills of the Southern Flinders Ranges eventually give way to the flat expanses of the Riverland.

It is a vast space of reddish-brown dirt, low scrub and colossal horizons.

Even still, just outside the tiny hamlet of Robertstown, about two hours north of Adelaide, there is a man-made structure that somehow looms large.

For Robertstown is the starting point — or, depending on your point of view, end point — of Project EnergyConnect, a huge new high-voltage transmission line linking SA with New South Wales.

From here, steel lattice towers, each standing 65 metres tall, march into the distance.

Aluminium and steel powerlines strung high above the ground are capable of carrying 330 kilovolts of electricity — hundreds of times greater than the voltage levels of a typical household.

Once fully complete, the line will be about 900km long and allow much more trading of energy — particularly the renewable kind — between the two states.

Ralf Ricciardi, the head of major projects at South Australian transmission company ElectraNet, is upbeat about EnergyConnect.

"From ElectraNet's point of view, we have completed all of the design and construct activities," Mr Ricciardi says.

"We've commissioned our site, we've built from … here and through to the border with NSW.

"We're still completing some commissioning on a special protection scheme, but essentially the assets are commissioned and ready to go."

Disconnect at the state border

Indeed, ElectraNet's 200km share of the project has been built more or less on time and on a budget.

Construction in SA was largely finished in December 2023, while the costs have been kept to a little more than $450 million.

Mr Ricciardi notes that ElectraNet's contribution came hot on the heels of a couple of other transmission projects the firm built in the past 20 years.

"I guess we've been able to capitalise on all the previous lessons from the other projects," he says.

Across the border, however, it's a very different story.

In NSW, EnergyConnect has been plagued with troubles of almost every kind.

The state's transmission company, Transgrid, is running late, with completion now not expected until sometime next year, two years behind schedule.

Costs, meanwhile, have ballooned.

Whereas Transgrid's costs were originally expected to be $1.8 billion, they are now on track to be double that figure at $3.6 billion.

It's a situation that has consumer advocates worried, given that the costs for poles-and-wires projects, such as transmission lines, are recovered through people's bills over decades.

Bedevilling the project in NSW have been inflation, supply disruptions and labour shortages caused by the pandemic, and major flooding.

To cap it off, the lead contractor for the NSW part of the project, Clough, collapsed in 2022, leaving Spanish firm Elecnor Group to pick up the pieces.

SA Energy Minister Tom Koutsantonis says the project had supposed to be an advertisement for new transmission lines.

EnergyConnect, for example, was supposed to pave the way for two gigawatts of new wind, solar and battery projects that would involve $10 billion of investment.

In doing so, it would enable up to 800 megawatts of largely green electricity to be traded across borders, helping to push out fossil fuels and propel the energy transition.

But Mr Koutsantonis says the problems affecting EnergyConnect are threatening to turn the project into an advertisement for all the wrong reasons.

"It's really concerning me a great deal," he says.

"The thing about these transitions is everyone always closes on time, but the new infrastructure is never ready on time.

"So, the moment a generator says, 'We're closing on this date,' they meet that deadline.

"But of course, the interconnector is not open yet.

Costly delay for consumers, climate

According to Mr Koutsantonis, the delays in finishing EnergyConnect are having real consequences for South Australian energy consumers.

He says the case for the transmission line had been based, at least partly, on grounds it would allow AGL's aging Torrens Island gas plant near Adelaide to be closed.

Not only would EnergyConnect allow SA to export more of its abundant solar and wind energy, but it would also enable the state to import cheaper sources of generation from NSW.

Among them was black coal, which the Australian Energy Regulator noted would help "replace more expensive South Australian gas-fired generation" when it approved the project back in 2020.

"The higher the estimated level of gas usage in the absence of the project, the higher the net benefits of reduced gas usage as a result of implementing the project," the regulator determined at the time.

But in light of the delays, Mr Koutsantonis says the South Australian government is having to negotiate with AGL to keep Torrens Island online for longer.

The minister says he has some sympathy for Transgrid, noting :"I think our side's a bit easier than the NSW side, to be fair."

But he worries the setbacks could have ramifications for other transmission projects.

Ultimately, he says the project risks undermining the blueprint for the country's energy transition — the so-called integrated system plan developed by the Australian Energy Market Operator.

And that is a plan, he says, which is based almost entirely on new transmission lines that can hook up big amounts of new large-scale renewable energy capacity.

"It's a big problem," he says. "It's a very, very big problem.

"We've got existing transmission lines, but unfortunately, the renewable resources at the end of those existing transmission lines might not be good enough to put a wind farm up or a solar array.

"It is something this country has gotten wrong from the very beginning of the NEM (National Electricity Market).

"We always build things where the resource is, not where the transmission lines are. It's always an afterthought and it's a mistake."

Costs loom regardless

Transgrid, for its part, is standing by the merits of EnergyConnect and its handling of the project.

A spokesman for the company labels the transmission line "nation-critical" and says it will "boost the transfer capacity by 800MW and meet growing demand" in southern Australia.

"EnergyConnect also enables an extra 1,800 megawatts of new renewable generation to connect in NSW ahead of the closure of coal-fired generators," the spokesman says.

"The Australian Energy Market Operator has consistently identified EnergyConnect as an urgently needed, actionable project in its integrated system plans."

The spokesman notes a 159km section in western NSW has been completed, while the construction of lines across 540km further to the east is 80 per cent done.

But on the question of cost, the spokesman demurs.

He simply notes that Transgrid is in discussions with the regulator, the body that will have to decide how much of the cost blowout can be passed on to consumers.

"Transgrid is working with the Australian Energy Regulator and independent consumer representatives on recovery measures for the revised cost to complete this important project," he says.

A spokeswoman for federal Climate Change and Energy Minister Chris Bowen stresses Australia's grid "is in urgent need of upgrading if we want to meet our growing demand for electricity".

The spokeswoman also argues these upgrades are required "irrespective of whether the electricity comes from renewables, coal, gas or expensive nuclear".

She says the Commonwealth is endeavouring "to make transmission as cheap as possible for consumers".

Mr Koutsantonis notes the risks to a large-scale renewable energy transition from the sorts of woes buffeting EnergyConnect.

But he also points out that Australia would be facing an "investment shock" regardless of whether the country tried to decarbonise its electricity system.

"Let's say climate change hypothetically wasn't real, and carbon wasn't a problem, and the planet wasn't heating," Mr Koutsantonis says.

"We'd be facing a massive investment crunch now, anyway, building new coal-fired power stations.

"Either way, this investment shock was coming.

"The problem we've got now is we've got to go and educate communities that the resources have moved.

"We used to build things near a coal mine.

"Well, now we're building things where the wind blows and the sun shines. It's a big difference."

Small-scale transition or large-scale transmission?

Over time, Mr Koutsantonis says it's possible that some transmission lines will not be built as rising costs, community unrest and better options make them unviable.

To that end, he suggests it's entirely likely that more of Australia's energy transition will take place in the small-scale distribution network of street poles and wires across the country's suburbs and towns.

Focusing on small-scale measures such as rooftop solar, batteries and clean tech in homes and businesses might be faster, cheaper and easier than a large-scale plan relying on transmission lines, he argues.

Mr Ricciardi from SA's ElectraNet takes a slightly different view.

He still sees the need for big transmission lines to enable large-scale renewable energy developments.

"Well, there's that famous saying, 'There's no transition without transmission,'" he says.

"You've got to be able to deliver the energy to where it's being consumed.

"Transmission is a very important part of ensuring that renewable energy is in place and efficiently produced and delivered to consumers."

However, he acknowledges the integrated system plan — and the transmission projects outlined in it — face difficulties.

"We will all be competing for the same resource, same equipment.

"So, yes, it's going to be a bit of a challenge to ensure how we deliver our next project, as well as the last three that we've delivered."