Australia's race to rewire the country amid a global transmission boom is not unique

Across the world a high-wire construction boom is underway.

From Europe to China to the United States, countries are stringing together millions of kilometres of new transmission lines, racing to rewire their electricity systems for a decarbonised future.

Over the past decade alone 1.5 million kilometres of transmission has been built — one-third of it in China.

To give an idea of the sheer scale of what is happening — that is enough high-voltage cable to wrap around the Earth 37 times.

The International Energy Agency (IEA) estimates the world needs another 80 million kilometres of new or refurbished grids by 2040 to hit climate and energy targets.

Australia is caught in the same global push. 

Constant electricity is something we take for granted, but the grid that provides it is straining and the transition to renewable energy demands a major rebuild.

About 10,000km of new lines are planned to connect sprawling wind and solar farms and big batteries, but competition for materials and skilled workers is driving up costs and pushing timelines out.

The speed and scale of the transition also requires engaging with communities and landholders who will host this infrastructure. 

Building social license takes time.

As delays mount, so do doubts about whether Australia can reach its goals on schedule.

Today, Australia's power grid spans across the entire eastern seaboard, only WA and the NT are energy islands.

But it was not always like that.

Up-scaling a legacy grid

It has been 160 years since the first public electric light in Australia was switched on in Tamworth.

The 1950s saw a rapid expansion of high voltage transmission, with the connection of Victoria and NSW. 

By the early 2000s South Australia, Queensland and Tasmania had joined the grid.

In that relatively short span the country has undergone a dramatic transformation — power lines have spread across vast distances and a simple system evolved into a sprawling, finely balanced grid.

Throughout the 20th century that grid came to depend on large coal and gas-fired stations. 

But Australia's old coal generation has become both less reliable and less viable, and the transmission infrastructure needs to evolve to accommodate new forms of generation and storage.

The pace of the transmission build-out far exceeds anything seen over the last two centuries, according to Craig Memery from the Justice and Equity Centre, a community legal and policy organisation.

"It was a small part of the bill to start with. However, because of the rate we're building it, it's turning into a very big part of the bill."

Who builds our energy network, and who pays?

Until recently, Australia's energy networks were largely built and owned by state governments. 

Victoria became the first state to privatise its transmission assets, and over the following two decades other states followed suit, selling parts — or all — of their networks.

Generators — whether coal plants or wind and solar farms — compete to sell power into the market. Retailers compete to sell that electricity to households and businesses.

Transmission businesses, by contrast, control the high-voltage lines within a defined region and face no direct competition. 

Instead, they are overseen by the Australian Energy Regulator (AER), which determines whether new projects are justified and how their costs will be recovered.

A crucial feature of this system is that once the AER approves a project its costs are passed on to consumers, whether the upgrade is a small neighbourhood project or a multi-billion-dollar transmission line.

And costs are climbing.

HumeLink, the new line needed for Snowy Hydro 2.0, began construction this month and is now the most expensive transmission project in Australia with a price tag of $4.9 billion, up from an initial estimate of $1.3 billion.

Earlier this year the Australian Energy Market Operator (AEMO) reported that transmission cost estimates had jumped by up to 55 per cent in a single year.

Mr Memery said some of the blowouts were due to genuine pressures, but he also believed companies deliberately underestimated early budgets.

"And underestimates that help transmission businesses to get projects into the regulatory cycle, after which time it's hard to get them out when the real costs are revealed."

Consumers left with the bill

While governments want new transmission, most of the cost does not come from state or federal budgets — it is recovered through electricity bills.

"What this means is that households are carrying a disproportionately large cost of the transition, and that's arguably not fair," Mr Memery said.

"It risks the social licence for the transition — the broader social licence of the entire community supporting it or not."

It was against that backdrop that federal Labor, while in opposition, launched its Rewiring the Nation policy, a $20 billion fund to help accelerate transmission construction. 

But the money was never intended as grants. Instead, it was provided as low-interest loans. 

They are cheaper than commercial finance, but still loans, and still repaid by consumers who ultimately bear the full cost of network projects.

So far the fund has committed just over $3.5 billion, most of it to HumeLink.

Mr Memery argued this approach was a missed opportunity.

Andrew Richards is the boss of the Energy Users Association of Australia, which represents industrial consumers of electricity.

He said transmission costs tended to be much higher for industrial users because they were directly plugged into the high-voltage network.

While those costs, historically, had been a relatively modest part of bills, he said the scale of the expansion — and the blowout in costs — risked radically changing the equation.

"We can see this monstrous wave starting to appear on the horizon," Mr Richards said. 

"Everyone seems to be all cool with that, but actually, no, we're not cool with that because once that hits it's going to cause some damage."

 St Vincent de Paul Society national director of energy Gavin Dufty said Rewiring the Nation still had value. 

He noted the policy would unlock transmission projects essential for meeting Australia's emissions targets and rising electricity demand, and that low-interest finance was better than the alternatives.

But Mr Dufty also acknowledged direct savings for households were limited and would ultimately amount to "not much".

"Maybe there needs to be more on that," he said.

"But again, that's the role of government and how [they] actually facilitate the transition."

Does the plan still stack up?

The woes affecting transmission projects have fuelled questions about whether they remain a viable option for Australia as it pushes towards its decarbonisation goals. 

David Dixon, an analyst at global energy consultancy Rystad, said the original business cases for most of the projects were based on numbers vastly different from today's.

"When we initially were doing the sums for the 500kV network … it was about $3 million to $4 million per kilometre," Mr Dixon said.

"But, evidently, costs have blown out. Now they're quoting a number closer to $10 million per kilometre. 

"And obviously, when you have such a cost increase, the economics of transmission tend to change."

According to Mr Dixon, developing wind and solar farms closer to centres of demand — typically big towns and cities — might be a better option even if the renewable resources were not as good.

"If it's costing you two or three times more [to build transmission] then perhaps you take a hit on the solar and wind resource and build it closer to load, with shorter transmission connections, to really get that cost down," he said.

While transmission costs have blown out, the price of batteries has fallen by just as much, if not more. 

Mr Dixon said the diverging fortunes of the two technologies suggested a change of plan may be worthwhile.

"Some of the solutions that might not have been economic two or three years ago might be more economic today," he said.

"A really good example of that would be the utilisation of batteries in the network to get greater value out of the network."

Household power plants

Amid all the challenges to large-scale transmission, another part of Australia's energy transition has been leaving targets in its wake. 

More than 4 million households and businesses across the country now have rooftop solar, and by 2023 rooftop systems had reached 20 gigawatts of installed capacity.

Under ideal sunshine that is more power than 10 large coal-fired stations.

Other small-scale technologies are rapidly catching up, with subsidies and falling prices fuelling strong growth in household batteries while interest in electric vehicles and home energy management systems accelerates.

This shift is front and centre of a major government review of Australia's largest wholesale electricity market. 

The panel, chaired by former energy executive Tim Nelson, is devoting significant attention to the opportunities created — and challenges posed — by the rise of household-scale clean tech. 

Mr Nelson said the growing role of these "behind-the-meter" technologies was unmistakable, but so was the need to integrate them more effectively.

"With the proliferation of rooftop solar and now the emergence of significant volumes of embedded or behind-the-meter batteries, electric vehicles, home energy management systems … consumers are becoming producers as well," he said. 

Mr Memery agreed that other options needed to be considered.

"I would say there isn't time to keep going in the same direction," he said.

"Transmission is proving to be so costly, so slow to build, so fraught from a social licence perspective.

"At the same time we could be making really strong progress by integrating more batteries into the system, by maximising flexible demand, by looking at other options for storage, by focusing not just on transmission but what opportunities there are in the distribution network."

Race against the clock

Australia's transmission challenges are not unfolding in isolation. 

Around the world, countries are scrambling to build new lines, upgrade aging networks, and connect vast amounts of renewable energy — all while facing the same rising costs, supply shortages and labour constraints.

But Australia has a lot of natural advantages and is in many ways already ahead of the pack.

With one of the highest rates of rooftop solar uptake in the world and decades of experience operating long-distance transmission lines across sparsely populated regions, Australia is often viewed as a leader in integrating renewables into a large, modern grid.

Countries in Europe, Asia and the Americas are now confronting the same engineering and social licence challenges Australia has managed for years.

VicGrid CEO Alistair Parker said those global pressures were being felt and would continue to shape Australia's transition.

"We've seen a lot of inflation, the Ukraine war put up a lot of prices. Demand in the [energy] industry has really put pressure on prices as well and we don't know where that's going to end," he said.

Mr Parker stressed that despite the challenges, slowing down was not an option.

"We expect most coal-fired power stations to have closed by 2035, the next one closes in 2028. So we're moving quickly to make sure we've got renewables in place," he said.

"We believe we are on track to do that but we don't have a lot of time to slow down and delay things."

With coal closures looming and global supply chains stretched thin, the nation's clean energy future will depend not only on building fast, but building smarter. 

The window to get it right is narrowing.