The largest expansion of Australia’s outdated power grid in decades has finally been completed, opening up a new 900-kilometre link between NSW, Victoria and South Australia that will soon make it easier to add wind and solar farms to the network before the closure of more coal-fired power plants.
The lack of enough high-voltage power lines to connect more renewable energy zones to major cities has become one of the greatest obstacles to expanding the clean-energy rollout. Developers of key projects, including new transmission links, have been running into years-long delays amid soaring costs and strong community pushback, which officials fear could threaten the nation’s chances of keeping power supplies and prices stable once more coal exits the grid in the future.
Transgrid, the operator of the NSW high-voltage transmission network, will announce it has completed construction of its final section of the giant “EnergyConnect” inter-connector at an industry conference on Wednesday. After undergoing testing and regulatory checks later this year, the project, dubbed a renewable energy “superhighway” spanning three states, is set to be the first major transmission link to come online in Transgrid’s 2000-kilometre grid expansion designed to overhaul Australia’s outdated network over a 10-year period.
However, Transgrid’s section of EnergyConnect has faced major setbacks since work began in 2022. Plagued by construction delays, the collapse of a contractor and supply chain problems, the project has suffered a massive cost blowout and added to concerns about Australia’s energy transition. The $1.5 billion project cost increase, which brings EnergyConnect’s price tag to $4.1 billion, means extra charges will be passed onto consumers over time.
Transgrid chief executive Brett Redman insists any rise in transmission charges will be “minor”, and will be more than offset by wholesale electricity price cuts of between $30-$75 a year that the company’s modelling says will be created by unlocking more renewables and boosting the flow of lower-cost electricity across state lines.
“This critical inter-connector has not been easy to deliver – it needed more money than originally expected, and we do not take that lightly,” Redman said.
“But now the full route is connected, it will start to reduce constraints, improve resilience, and, over time, support lower-cost energy.”
EnergyConnect’s completion comes at a critical juncture for the electricity market. More than half of the remaining coal-powered generators on the eastern seaboard are scheduled to close by 2035, as their old, emissions-intensive equipment becomes less reliable and competitive against cheaper renewables.
Renewable energy, meanwhile, has surged from a third of the grid’s output in 2022 to nearly half today as investors and governments pour billions into renewables and storage projects, such as large-scale batteries. Transgrid’s forecast is for renewables to hit 90 per cent of the grid by 2035.
There are early signs the clean energy transition is having a positive impact on prices. The Australian Energy Regulator is preparing to lower retail power bills across much of the eastern seaboard from July as growing contributions from renewables and batteries have cut the wholesale cost of electricity.
However, the renewable rollout is still lacking the speed that energy executives and the Australian Energy Market Operator deem necessary to compensate for the next decade’s wave of coal plant closures and ensure reliable power during all weather conditions, meaning a further increase in investment remains critical.
In his speech on Wednesday, Redman will warn the industry that it is “on the clock” as ageing coal-fired generators reach the end of their operational lives. He will argue that the greatest risk for electricity customers in the 2030s is a shortfall in supply, storage, and firming capacity as coal exits the grid.
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Nick Toscano is a business reporter for The Age and Sydney Morning Herald.Connect via X or email.