Issue 248, December 2025
So here we are: at the end of a year that, locally and internationally, has been hot mess for energy issues — and facing a new one that doesn’t, at first sight, offer much hope of improvement, with the local debate bleeding in to the international thanks to Australia’s Climate & Energy Minister controversially taking on a leading role for 2026’s CoP31 conference in Türkiye while energy prices and net zero bubble along as domestic points of contention. As an aperitif to the new year, the Australian Energy Council has published a survey of the CEOs of its member companies showing that at the top of their minds is the need for "a more open and honest dialogue about the challenges and costs of the energy transition". Good luck with getting the body politic to deliver that.
“Are Australia’s electricity prices higher than in most other countries?” asks The Guardian newspaper. “The short answer,” it says, “is No. The average electricity price for Australian households was 39 cents per kilowatt-hour between 2023 and 2025 and that is only just above the OECD average of 38c per kWh, making our residential power prices the 15th most expensive among 38 countries.”
“We will deliver affordable electricity for Australia as our number 1 priority” — Sussan Ley, federal Leader of the Opposition.
“Power prices have increased 40 per cent since Labor was elected.
“Businesses now rank the cost of energy as the chief concern for their future” — The Australian newspaper, citing a survey of 526 firms by software accounting firm MYOB.
"The research signals rising energy costs are the most significant challenge facing Australia’s mid-sized businesses today” — MYOB chief executive Paul Robson.
“Labor’s Future Made in Australia agenda depends on affordable gas being made available for industry” — Bluescope Steel CEO Mark Vassella. "Despite our massive gas reserves, Australia has one of the highest wholesale gas prices among producer nations in the world.”
“Finding competitively-priced energy remains a central challenge” — Tomago Aluminium, Australia’s largest single user of electricity, in a media statement warning price contract options from 2029 now on offer will make its operations “unviable.”
“While the cost of generating power from renewables is very low, we have underestimated the cost of getting this power to markets as well as ensuring the power can be firmed” — Grattan Institute’s Tony Wood. “This has left Australians wondering when, exactly, cheap renewables will bring cheap power.”
“Electricity investors and suppliers need confidence about the direction the system is heading” – Grattan Institute’s Alison Reeve. "They don’t need every policy detail to stay the same for the next 25 years. But they do need certainty that the overall policy goal will be consistent."
A survey of CEO opinion released by the Australian Industry Council in late November highlights concerns that energy prices may continue to trend higher over the next 10 years because of the scale of capital needing to be invested in the sector.
The survey of the CEOs of the leading energy retailers, generators and investors was undertaken by SEC Newgate.
"Replacing ageing, emissions-intensive generation is not costless,” the AEC declares in releasing the survey report.
The council adds: “The importance of ensuring affordability of Australia’s power supply is one of the key issues flagged along with the danger of price and supply shocks in the system, and concerns about the impacts these could have on vulnerable customers.
"CEOs noted that prices have never been under more pressure with the large-scale investment required to replace and decarbonise generation assets and delays in the rollout of some renewable projects."
“I think it’s the calm before the storm, and… the storm is coming around cost and competitiveness,” according to one gentailer CEO. “Network cost is only going to go up, and go up by increasing levels. And the Australian consumer is not really wise to that yet because they haven’t seen the worst of it,” another CEO noted.
AEC chief executive Louise Kinnear says: "The overarching and central theme that emerges from this report is the importance of affordability. We need to ensure clean, affordable energy remains accessible to everyone during the transition.
“Yes, renewable energy once it is built and operational is one of the lowest-cost sources of energy, but we still need to account for the costs of constructing new supply and adapting our existing energy system to accommodate and firm up low-emissions intermittent sources. In the long run, this approach will still be cheaper than continuing to invest in existing or new coal-fired power generation.
“But we need to ensure the transition is managed carefully. Ultimately, it can only go as fast as the industry and consumers can bear.”
The Clean Energy Finance Corporation is calling for investment in renewable energy sources to be “ramped up” to meet the federal government’s transition targets.
Speaking at a Committee for the Economic Development of Australia forum in November, Ian Learmonth, chief executive of CEFC, said another 29 gigawatts of large-scale renewable generation needs to be installed by 2030 in the east coast’s national electricity market., "That’s about 6.3 gigawatts a year, 520 megawatts per month or a decent wind farm every month,” he declared.
“Our estimate, using Bloomberg, NEF, Reputex and some of our own modelling, is that in order to decarbonize, Australia needs investment of some $500 billion in transmission, generation, storage and electrified transport,” he added. “Public finance alone cannot do the job.”
Learmonth said faster project approvals are needed to meet the federal government’s net zero target.
Higher renewable energy output and less market volatility contributed to a fall in wholesale electricity prices across all National Electricity Market regions during the September 2025 quarter despite growing demand.
The Australian Energy Market Operator’s latest quarterly “energy dynamics” report shows wholesale electricity prices for the NEM averaged $87 per megawatt hour in the September quarter, a fall of 27 per cent year-on-year and 38 per cent since the second quarter of this year.
Queensland recorded the lowest average quarterly spot price of $72/MWh, followed by Victoria ($77/MWh), New South Wales ($90/MWh), Tasmania ($91/MWh) and South Australia ($104/MWh).
AEMO executive general manager Violette Mouchaileh told media that the fall in prices arose despite increasing demand as significantly colder weather fuelled increased heating requirements. “Electricity demand growth was driven by colder weather alongside broader trends of increasing electrification of homes, adoption of electric vehicles and rising data centre consumption,” she said.
Compared to the third quarter of 2024, demand from grid-scale generation increased 2.3 per cent to average 22,323 megawatts, while underlying demand (grid-scale and rooftop solar) was up 3.2 per cent to a new Q3 high of 25,154 MW.
An average NEM-wide minimum demand of 10,175 MW was reached for the quarter – making it a fresh Q3 low.
Mouchaileh added that demand growth was partially offset by "an increasing wave of new generation and storage projects connecting to the NEM — with 1,600 MW progressing through commissioning to reach full output in Q3."
Investor Akaysha Energy has described the failure of part of a major battery storage development in New South Wales as “catastrophic."
The $1 billion Waratah battery, being built near Budgewoi as the NEM’s “giant new shock absorber," suffered a breakdown of one of its three transformers just hours before it was due to be fully operational.
In a message to employees published in the media, Akaysha CEO Nick Carter said the transformer is “beyond repair” and a second one “has been de-energized and put in to a safe state pending inspection.”
According to the Australian Energy Market Operator, a revised target for completion of the 850 megawatt battery, which has been described as one of the most powerful energy storage units in the world, is now May next year.
Writing in the Australian Financial Review, senior resources journalist Angela Macdonald-Smith has commented that "the problems at Waratah have added to the bumps in Australia’s transition to low-carbon power, amid slow progress and cost blowouts at several transmission and infrastructure projects.”
Michelle Manook, chief executive of the global industry organisation FutureCoal, addressing the National Press Club in Canberra in November, has called for “some balance to be restored to the conversation about electricity.”
She said government should address policies at low-emissions technologies for coal power as well as targetting renewables and other clean tech initiatives.
Manook said: “Electricity is the first domino in the cost-of-living chain. When it becomes expensive, everything becomes expensive. Every item in a supermarket basket carries the cost of energy.
"Australians feel this with every bill. Prices have risen because the entire system is being rebuilt at once. Global fuel prices pushed up generation costs, ageing plants struggled after years of investment uncertainty, and rapid renewable expansion required major upgrades to poles, wires, storage and transmission.
"Renewables are cheap to install, but only when viewed alone. Once you include the extra infrastructure required to firm them, storage, backup generation, frequency control, system-strength services and new transmission, the economics change. Study after study in Australia and overseas shows that as renewable shares rise, total system costs rise with them.
"In simple terms: Australians are paying more because fuel, networks, firming and transmission all cost more than they once did. And many experts warn that the current policy direction, built around an 82 per cent renewables target by 2030, prioritises some technologies while sidelining others, including modern low-emissions coal with CCS that could support reliability.
"Put another way: affordable electricity, including cleaner coal, does not mean harming the planet. It means keeping the first domino standing, so your cost of living doesn’t collapse with it, and so households aren’t left funding system failures through their own bills.”
The Clean Energy Council has urged its wind farm members to test for traces of asbestos across their supply chains.
The move follows the Federal Opposition calling on the Albanese government to impose a temporary moratorium on new wind turbine installations.
The issue came to light in late November with a Tasmanian wind farm operator, Goldwind, revealing it had discovered asbestos in turbine lift brake` pads — and this was followed by investigations being launched by the Clean Energy Regulator, Safework NSW and Worksafe Victoria.
Danish-owned Vestas, which operates more than a dozen projects across Australia, has declared it is also investigating any potential risks of asbestos exposure after ordering brake parts which may contain asbestos.
The Australian Workers Union’s national secretary, Paul Farrow, has told media that “blindly importing" Chinese parts is an unacceptable risk to worker safety. “This latest discovery highlights the risks of relying entirely on overseas supply chains for Australia’s renewable energy transition,” he said. "The feedback I get from industry experts is that we could very easily boost local content to 40 per cent. The capability is there, the only thing lacking is the political will to make it happen.”
Federal Opposition leader Sussan Ley says nuclear energy is “vital” for Australia’s national security and has pledged to also “throw off the chains” restricting Australia’s natural gas sector if the Coalition can win government.
Delivering the 2025 Robert Menzies Lecture in mid-November, Ley declared: “When energy is unaffordable, everything is unaffordable and that means key materials and processes fundamental to the defence of our nation are at risk of being offshored.”
Ley said energy security, including oil supply, is “among the most important things determining our national preparedness to endure a conflict or crisis”, adding the current situation is “dire”.
“This is why we need to embrace energy abundance and put affordability first.
“Without a larger, diversified energy supply that includes nuclear, greater sovereignty may well be unaffordable for Australia.”
In this segment of the December newsletter a year ago I wrote: "I don’t think where we are today with respect to energy supply is a comfortable or safe place to be and, if I was to offer today’s governing breed, federal and State, two words of advice, they would be “Reality bites.”
I think every word still applies as we move in to 2026. It also would have done at the end of 2023 and 2022 — in fact, each year of this decade to date.
This is a depressing thought — and there is a price, literally, to pay for our political leaders in government (at all levels) failing to come to terms with Australia’s multifaceted energy realities year after year.
There are, of course, people engaged in the national climate and energy debate who talk good sense and continue, despite the unfortunate state of affairs, to argue for a much healthier approach.
One such is the Menzies Research Centre’s Nick Cater, who wrote in the media in recent days that Australia should have had an honest energy debate a decade ago.
Another is my friend Barry Murphy, who spent 30 years in energy sector senior management here and internationally and went on to lead State and federal corporations in energy, transport and airport management. In recent times, he has been a prominent spokesman for a commonsense approach to nuclear energy for Australia and has just shared with others in his circle a communication despatched recently to the Prime Minister.
In short, he said to Albanese:
(1) Climate change is real and potentially dangerous. It is a global problem.
(2) Reducing carbon-based electricity generation is necessary, but there is a need for long-term context in which to take short-term actions.
(3) Australia cannot afford to maintain its nuclear prohibition for this purpose. It was not based on science or lived experience, is now an obstacle and must be removed to encourage proper investigation.
(4) Short-term populist thinking will see us drifting into a future of unreliable costly electricity, with relatively small effect on global emissions. Increasing urbanisation, uncompetitive industry and job losses will force change, but when?
(5) We need to take a hard look at modern advanced nuclear technology as a component of our future clean energy portfolio before it is too late, so that better long and short term decisions can be made.
(6) This is not to seek un-informed preferment for “new” nuclear -- just unbiased and open assessment, as with all such energy options.
This advice belongs prominently in the overall reality check of our national energy situation and what needs to be done.
Instead, what the Prime Minister and Climate & Energy Minister have had in recent focus is a strange move to offer households in some parts of the country three hours of free solar power supply — the “solar share offer” — a development not even discussed with gentailers before it was announced.
As the Australian Energy Council CEO, Louisa Kinnear, rather drily observes: "This lack of consultation risks damaging industry confidence, as well as creating the potential for unintended consequences.”
And so it goes………
Keith Orchison
28 November 2025