Countries worldwide are experiencing a significant construction boom in high-voltage transmission lines. From Europe to China and the United States, nations are working to rewire their electricity systems to support a decarbonized future. Over the past decade, approximately 1.5 million kilometers of new transmission lines have been built, with one-third of that total in China. This amount of high-voltage cable could wrap around the Earth 37 times. The International Energy Agency (IEA) estimates that an additional 80 million kilometers of new or refurbished grids will be necessary by 2040 to meet climate and energy targets.

Australia is part of this global effort. The country’s electricity grid, which spans the eastern seaboard, is under pressure as it transitions to renewable energy sources. Plans are in place for about 10,000 kilometers of new lines to connect extensive wind and solar farms and large battery systems. However, competition for materials and skilled labor is driving up costs and extending project timelines. Engaging with communities and landholders who will host this infrastructure is also essential, as building social license takes time. As delays accumulate, concerns grow about whether Australia can meet its energy goals on schedule.

The history of Australia’s power grid dates back 160 years, with the first public electric light turned on in Tamworth. The 1950s marked a period of rapid expansion, connecting Victoria and New South Wales. By the early 2000s, South Australia, Queensland, and Tasmania had joined the grid. This transformation has led to a complex, finely balanced system that has historically relied on large coal and gas-fired power stations. However, as coal generation becomes less reliable and viable, the transmission infrastructure must adapt to accommodate new forms of energy generation and storage.

Craig Memery from the Justice and Equity Centre noted, "We are paying to build it out more than ten times quicker than we ever have in the past in terms of how much new transmission is going in on a year-to-year basis." He added that while transmission costs were initially a small part of electricity bills, they are now becoming a significant expense due to the rapid build-out.

Historically, Australia’s energy networks were built and owned by state governments. Victoria was the first state to privatize its transmission assets, a trend that continued across the country. Generators, whether coal plants or renewable sources, compete to sell power, while transmission businesses control high-voltage lines within specific regions and face no direct competition. The Australian Energy Regulator (AER) oversees these businesses, approving new projects and determining how costs are recovered. Once a project is approved, its costs are passed on to consumers.

Costs for transmission projects are rising. The HumeLink project, essential 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 increased by up to 55 percent in just one year.

Some projects, like a high-voltage powerline linking South Australia to New South Wales, are running significantly over budget and behind schedule. Memery suggested that some of these cost overruns stem from initial underestimations. "A lot of what we're seeing is actually because of low-balling of estimates in the first place," he said.

As the costs of transmission projects rise, consumers are left to shoulder the financial burden. Memery pointed out that households are disproportionately affected by these costs, which could undermine public support for the energy transition. In response, the federal Labor government launched its Rewiring the Nation policy, a $20 billion fund aimed at accelerating transmission construction. However, this funding is provided as low-interest loans, which consumers will ultimately repay.

So far, the fund has committed just over $3.5 billion, primarily to HumeLink. Memery expressed concern that this approach may not provide sufficient consumer benefits. Andrew Richards, head of the Energy Users Association of Australia, noted that industrial users face even higher transmission costs, which could significantly impact their operations. He warned, "We can see this monstrous wave starting to appear on the horizon."

Despite the challenges, Gavin Dufty from the St Vincent de Paul Society acknowledged the value of the Rewiring the Nation policy, stating it would unlock essential transmission projects for meeting emissions targets. However, he also recognized that direct savings for households might be limited.

The rising costs of transmission projects have led to questions about their viability in Australia’s decarbonization efforts. David Dixon, an analyst at Rystad, noted that original cost estimates for projects have changed dramatically. "When we initially were doing the sums for the 500kV network, it was about $3 million to $4 million per kilometer. But now they're quoting a number closer to $10 million per kilometer."

Dixon suggested that developing wind and solar farms closer to demand centers might be a more cost-effective strategy, even if the renewable resources are not as optimal. He also pointed out that while transmission costs have surged, the price of batteries has decreased significantly, indicating a potential shift in strategy may be necessary.

In addition to large-scale transmission, Australia is witnessing a surge in household solar installations. More than 4 million households and businesses now have rooftop solar systems, reaching a total capacity of 20 gigawatts. This growth is accompanied by increasing interest in household batteries and electric vehicles. Tim Nelson, chair of a government review panel, emphasized the need to integrate these technologies effectively into the energy system.

As households increasingly become producers of energy, the potential benefits of these developments could be substantial, provided they are managed correctly within the market framework. Virtual power plants may play a crucial role in balancing the grid as Australia navigates its energy transition.