Transmission Delays to Add $1,100 to NSW Electricity Bills: Nexa Advisory

Nexa Advisory also warns small businesses in NSW could see electricity costs soar by $7,000.

Power transmission lines and wind turbines as seen with the Rocky Mountains in the background near Pincher Creek, Alta., on June 6, 2024. The Canadian Press/Jeff McIntosh

Electricity bills in New South Wales could increase by $1,100 per year due to delays in transmission infrastructure upgrades, according to a new report.

Transmission infrastructure includes high-voltage cables, towers, and transformers that move electricity from coal or wind towers to homes and businesses.

Australia’s energy transition will need updates to this transmission network to accommodate new capacity from renewable energy.

Research from Nexa Advisory said the cost of delays could impact electricity costs.

“Our report reveals that delays in building energy transmission infrastructure will lead to higher electricity bills for households and businesses, compromise energy reliability and jeopardise emissions reduction targets,” the advisory said.

“Nexa Advisory’s research shows the cost impacts of the delays are most significant in New South Wales. Residential consumers could face up to $1,100 in additional costs if transmission project delays continue at the average of three years observed in recent years.”

The report found that small businesses could pay thousands more, which could also contribute to inflation.

“Small businesses in New South Wales could also pay up to $7,716 a year more. This increases to $24,124 with a seven-year delay,” the report said. “That means that transmission delays are also likely to have broader knock-on inflationary impacts across the economy.”

“In order to connect the renewable generation and storage capacity required to replace ageing coal-fired power stations and transition to a clean energy power system, Australia needs to effectively plan and deliver thousands of kilometres of transmission lines in the next decade,” the report (pdf) noted.

Speed Up Renewable Rollout or Rely on Coal: Nexa CEO

Nexa Advisory CEO Stephanie Bashir said the factors contributing to the “slow pace” of the energy transition are complex.

“Nationally significant projects cannot languish in the purgatory of planning and regulatory processes that are not fit for purpose. We have to forge a way forward urgently, focused on accountability, coordination, and rigour,” she said in a statement.

“This research is about the here and now and getting the transition away from coal done as orderly as possible so that it does not cost Australian families and businesses their financial future.”

The report states that delayed transmission buildout will result in a greater dispatch of thermal coal assets to “meet demand,” that will supposedly contribute to wholesale prices and emissions across the National Electricity Market.

The report noted that Queensland would have a “muted impact” from transmission delays because it is less dependent on transmission interconnection than other states.

“In addition, Queensland’s coal fleet is younger and as such currently more reliable than that elsewhere. More than 93 percent of Queensland’s coal-fired generation capacity is not due to close until after 2035, and nearly 38 percent will still be operating after 2040,” the report stated.

10,000 Kilometres of New Transmission Lines Needed: EY

Meanwhile, a separate research report from auditing giant, Ernst and Young (EY), estimated Australia needed 10,000 kilometres of new transmission lines by 2050 to achieve renewable energy targets.

EY found three major obstacles to building the infrastructure: supply chain challenges, labour constraints, and the approvals process, including regulation and planning.

“Most of this renewable energy generation will be built at a distance from our capital cities, requiring an estimated 10,000 kilometres of new transmission infrastructure by 2050,” EY noted.

“However, in its most recent update to the Electricity Statement of Opportunities (ESOO), published in May 2024, AEMO noted significant delays to key transmission projects and called for urgent investments in transmission capacity.”

EY said “all but one transmission line project” has suffered delays, with some projects more than five years behind.

Renewable Energy Zone in Outback NSW

In June, the NSW government approved the Central-West Orana Renewable Energy Zone (REZ) transmission project.

This paves the way for the construction of transmission infrastructure to connect solar, wind and energy storage projects to the electricity grid.

The government claims this will drive $20 billion in private investment in renewable projects while supporting 5,000 jobs.

“The project will deliver at least 4.5 gigawatts of transmitted electricity, which is equivalent to powering 1.8 million homes,” the NSW government said.

About 240 kilometres of transmission lines and infrastructure will be constructed within the Central West Orana renewable energy zone, in the west of the state.

The federal Labor government is committed to net zero by 2050, and transitioning the energy grid to 82 percent renewables by 2030.

In contrast, if it wins the next election, the Liberal-National Coalition is planning to build seven nuclear power plants to support the push to net zero.