Australia Risks Mass Blackouts If Political Disagreement Around Energy Continues: Energy Analyst

Saul Kavonic believes the constant back-and-forth on policy by federal and state governments is severely damaging Australia’s economic prosperity.

A car advertises its green credentials in Albany, Western Australia, on April 11, 2024. Susan Mortimer/The Epoch Times

Australia needs to have a serious discussion on diversifying its power grid—while reconsidering its rapid journey toward net zero—otherwise a major mishap with the country’s electricity supply could occur.

This is the view of leading energy and resources analyst Saul Kavonic, who said the constant back-and-forth on policy by federal and state governments is severely damaging the economic prosperity of the nation.

And he said this could soon result in mass blackouts and job losses.

“We’re at the point where the slow-moving trainwreck of our energy market—which was on the horizon—is now in front of us,” Mr. Kavonic, head of integrated energy research at MST Marquee, told The Epoch Times.

“The chances of a severe energy security event in the next few years is now a probability rather than a possibility,” said the former Credit Suisse analyst.

Opposition Liberal-National Coalition politicians across the country say that not utilising our natural resources such as coal, gas, oil, and uranium could lead to a stifling of market competition and job losses, driving up inflation and cost-of-living.

On the other hand, Labor lawmakers say the world is in the midst of an environmental crisis, which is why the Albanese government remains committed to its plan of net-zero greenhouse emissions by 2050.

To reach this point, the biggest-ever rewiring of Australia’s energy grid is currently underway, with $20 billion (US$13.5 billion) in funds set aside under the Rewiring the Nation program—Net Zero Australia estimates the total transition will cost over $100 billion.

Mr. Kavonic says Australia is moving too fast towards relying sorely on wind towers and solar panels to power the nation, with the intent to achieve a 43 percent emissions reduction by 2030.

This target has been heavily criticised, with Nationals Senator for Queensland Matt Canavan writing in CQ Today: “Net zero is a bad idea for Australia—it will make us weaker as a nation, and I will not support it because I support the jobs in central Queensland industries.

“When you see a coal train pass you on the Capricorn Highway, just remember that it has about $5 million in wealth for our nation. Each train helps pay for around 40 worker’s wages in the coal industry.”

Do We Wait Until Energy Catastrophe Comes to Pass?

The rush to replace coal-fired power stations with renewable generation assets has already put pressure on electricity infrastructure.

The Australian Energy Market Operator forecasts the country’s energy transition will require about 10,000 kilometres (about 6,200 miles) of new transmission lines by 2050.

It is this rapid movement away from natural sources—traditional fossil fuels such as coal, gas, and oil—for wind and solar that has Mr. Kavonic worried that mass demand could soon outstrip energy supply.

“[The severe energy security event] will be the wake-up call that we should’ve had multiple years ago,” he said.

“When we have big energy security outages, it'll have real economic consequences, so real human costs in terms of people’s jobs and livelihoods.

“And we should never have got to this point. When I speak to people in the industry, they have a lot more of a dire view of our energy security and cost outlook over the next 3–5 year window than I’ve ever heard before.

“And so, it’s important to remember that our energy system is run by engineers, not by politicians.”

Government Confident in Net Zero Rollout

The Albanese government is committed to a renewable rollout of the country to deal with climate change.

“Many of Australia’s legacy energy assets, like coal fired power stations, are increasingly unreliable and scheduled to close in coming years. Renewable energy is the lowest cost and lowest emission replacement for these assets,” the Department of Climate Change, Energy, the Environment and Water states on its webpage.

Minister for Climate Change Chris Bowen has been satisfied with a number of boxes he said have been ticked for the energy transition.

“Australia is well underway in transforming its energy system,” he said.

“Renewables in the National Energy Market momentarily reached 72 percent in 2023, with average penetration reaching just under 40 percent.

“Half of the 5,000 kilometres of transmission lines needed by 2030 are already underway.

“More than 60,000 people could be directly employed to build and maintain the new energy infrastructure between now and 2050.

“Coal is becoming more unreliable, more expensive and difficult to maintain, and less competitive against electricity supply.”

The Coalition’s Nuclear Policy

Meanwhile last month, federal Opposition Leader Peter Dutton announced his party would build seven nuclear sites across five states if elected.

They include Callide and Tarong in Queensland, Liddell and Mount Piper in New South Wales, Loy Yang in Victoria, Port Augusta in South Australia, and Muja in Western Australia.

The  Commonwealth Scientific and Industrial Research Organisation responded with caution, estimating that the nation’s first large-scale nuclear plant could cost as much as $17 billion (US$11.5 billion) in today’s dollars and would not be operational until at least 2040.

But Mr. Kavonic believes nuclear must be included in discussions regarding the future of energy in Australia, the main reason to meet mass demands.

“If you look at the rate of renewables penetration in Australia, over the past couple of years it’s slowed down to record low levels,” he said.

“That’s despite the fact that we have the most pro-renewables policy ever which has been in place over the past two years.

“That’s a sign that the renewables rollout is facing a lot of challenges in terms of social licence, regulatory approvals, transmission builds and costs.”

Meanwhile, Minister Bowen said renewables were a more popular form of power than nuclear for investors.

“Global investment in renewable energy sources constitutes three quarters of all power generation investment,” he said.

“Take just solar, for example. Last year, the world installed 440GW of renewable capacity. This is more than the world’s entire existing nuclear capacity built up through decades of investment.

“By early 2025, renewable energy will surpass coal as the planet’s largest source of energy, while coal, gas and nuclear will all shrink their market share.

“Nuclear and coal combined, however, account for only 16 percent of new global power investment.”

Work on Nuclear Sites Needs to Start Immediately

Mr. Kavonic said any plans to build nuclear plants should not be lost beneath arguments that the completion of these sites is too far into the future.

He said committing to planning processes now would be far better for Australia’s economic future than the current back-and-forth federal and state policies on the renewables versus nuclear debate.

“To build a big gas project, from discovery stage to up and running—like LNG projects—it typically takes over 10 years,” he said.

“So this is why we can’t keep having this chopping and changing policy framework every 18 months, which is what we’ve had for the past 10 years.

He acknowledged nuclear would take longer to kickstart in the country, attributing this to the nuclear ban.

“If this had never been banned, we would’ve at least been able to develop some of the framework structures around this which would’ve allowed us to get a bit of a jumpstart,” he said.

“The market is in a mess and we are going to need all of the above in our energy technology to satisfy our projected demands.”

Nuclear power plants operate in 32 countries, and the Climate Council said Australia was too far behind the starting line in adopting it as a mass energy source.

“A nuclear power station has never been built in Australia. As a result, we are not at the starting line for a nuclear energy industry,” it said.

“In fact, before we get there, laws and regulations would need to be set at state and federal levels, billions in funding would need to be secured and a large and highly skilled workforce would need to be trained.

“The nuclear industry’s own analysis shows power stations take an average of 9.4 years to build—and, with no domestic nuclear industry experience, Australia’s first nuclear power station will almost certainly take much longer.

“In contrast, major wind and solar projects take between one to three years to build.”