Issue 247, November 2025
As the first quarter of this century nears its end, it is remarkable how much division, doubt and disbelief still hangs over the national decarbonisation task that began in 2000 with legislation to introduce a renewable energy target. The change of the year at the end of next month also puts the country on the run-in to having 82 per cent of on-grid electricity generated from renewables, a self-inflicted goal for 2030 the present federal government insists can be met despite ever-growing and ever-louder claims by many that it cannot and will not. Beyond this lies the target of Australia achieving net zero carbon emissions by 2050, about which there is even louder dissent and, frequently, derision — and about which believable estimates of cost remain wholly obscure. It is an ugly picture and, on the present outlook, not likely to become less so any time soon.
“The entire economy will get botched if energy policy fails. The government can’t get this wrong” — federal deputy opposition leader Ted O’Brien in a media interview.
“Chris Bowen thinks his green transition is going fine, but in the real world everyone knows that the government's energy policy is a slow-motion train wreck” — Sky News host Peta Credlin.
"Almost nothing in the energy sector has gone according to the plan Bowen outlined when he took up the portfolio more than three years ago” — Nick Cater, Menzies Research Centre.
“The fact that we have now had a month where renewables have provided more of our electricity than any other source is a key turning point in our transition” — federal Climate & Energy Minister Chris Bowen.
“The policy is ambitious and achievable; it is also investable” — Bowen.
"Australia’s energy story over the next decade must be one of delivery. Done properly, it’s a recipe for affordability, reliability and fairness” — Dominique van den Berg, CEO, Energy Networks Australia.
“The real debate is about the practicalities: over what will happen over the coming decade” — Australian Financial Review columnist Jennifer Hewett. "The difficulties in establishing transmission lines, regulatory delay, the lack of return for large-scale solar and increasing antagonism to the growth of wind farms in many regional areas are all part of the problem.”
“The federal government is running out of time to put in place policies to encourage long-term investment and ensure a smooth transition to renewable generation” — Origin Energy CEO Frank Calabria.
“About 70 per cent of the funds required for new renewables projects in Australia need to come from overseas sources with the most recent data suggesting that new investment in 2025 is flowing only at a third of the required rate” — an Australian Financial Review report.
"Of course, governments could attempt to meet the 2035 and 2050 targets by continuing their current approach: pushing renewables into the market until coal becomes uneconomic. The problem is that this risks having to pay coal generators to stay open because there isn’t sufficient firm capacity to replace them. These payments have consequences for consumers and for climate targets; and the uncertainty they create has consequences for investors” — Alison Reeve, Grattan Institute energy program director.
A new paper published by the Centre for Independent Studies at the end of October claims that Australia has “the most volatile power market in the world” because of the push for renewable energy by governments.
The author, Jude Blik, the think tank’s senior policy analyst for energy, also asserts that the energy transition now under way “will lead to higher prices for consumers, more frequent retailer failures and less power supply competition.”
Blik says wholesale energy prices have risen 10 to 25 per cent in most regions quarter-on-quarter as of July this year.
The report argues that the national surge in rooftop solar usage “has created a hidden cross-subsidy where non-solar households effectively are paying more for power as retailers are forced to pass through losses from solar customers.”
Blik adds that there were only 18 extreme price events in the electricity market in 2012 but more than 600 last year. He says: “The derivatives retailers need to manage all this volatility have only gone up in price and this is driving high electricity costs in Australia.”
Grattan Institute energy and climate change senior fellow Tony Wood has listed five key issues for enabling Australia’s electricity generation targets.
In a newspaper op-ed at the end of October Wood says they are:
• Building renewable infrastructure and storage at an unprecedented rate.
• Aligning that growth with the closure of increasingly unreliable coal generators.
• Accommodating demand growth from data centres and electrification of gas and transport.
• Integrating battery storage to deliver major improvements in system productivity.
• Working out how to deliver the last 5-to-10 per cent of electricity in a system dominated by solar and wind supply.
He also criticizes the federal government’s recently announced “electricity and energy sector plan” to be set alongside its net zero plan. He says the plan "lacks clear policies to deliver the changes and to follow the pathways,” adding, “beyond numerous assumptions, there is little quantitative analysis, including of the risks ahead, to connect actions with outcomes.”
Wood declares: "The scale is daunting, there are multiple pathways and unknowns, 2035 is alarmingly close and 2050 is on the horizon.”
And he says: "Addressing climate change is not our choice. Our only choice is whether we achieve the energy transition well or badly. A clear and predictable action plan is the answer.”
Meanwhile Bernadette Cullinane, leader of Deloitte Australia’s energy advisory unit, in another newspaper commentary, has warned that “the patchwork energy policy needs better co-ordination.”
She says: "After years of political squabbling that stalled policy progress at a federal level, we now have a clear framework for reaching net zero. However, this progress masks fragmented energy policy that is stifling private investment, putting both energy security and the pace of decarbonization at risk.”
She adds: "A lack of political unity over the preferred energy mix, a confusing patchwork of State, Territory and federal policies and processes, and lingering doubts over validity of the energy transition itself hang over investment cases like a cloud.”
Another critic is Westpac bank, Australia’s largest lender to renewable energy projects. Its global head of energy and resources, David Scrivener, says in a newspaper review that: "To fast-track the energy transition, we need to shift the national conversation from emissions reduction to a simpler, more pragmatic question: How much new energy is needed to keep the lights on? Where is it needed? And, by when?”
The bank recommends that the federal and local government roles for approvals should be collapsed to give autonomy to State governments to build for Australia's energy needs.
Scrivener adds: “Today’s best-case approvals take a minimum of three to five years. The average across our clients is five to seven years and we have many examples of project approvals taking up to a decade.”
Currently, he points out, "there’s no clear view across all States aligned to the optimal development path” of the Australian Energy Market Operator.
Daniel Westerman, CEO of the Australian Energy Market Operator, says that he expects data centres to be taking up an eighth of all market-generated electricity by 2040.
His comment was made as consultants Bain & Company, in a new global review of data centre development out to 2030, warned that the speed at which they can access crucial utilities such as power and water is emerging as a central challenge for the industry.
Bain's research shows that connections to essential utilities are the most prominent delays to project delivery, with power, water, and sewerage potentially requiring between one and five years to be established.
Bain forecasts that data centre development will double globally over five years.
The Australian Financial Review’s annual conference on energy and climate, held in Sydney in mid-October, has highlighted a “broken” national gas market threatening “a tragedy of de-industrialisation” — and also some hard answers from gas producers.
In a report on the event, AFR resources writer Peter Ker points out that “billions of dollars of taxpayers’ funds have been committed this year to rescuing smelters and steel mills, with potentially more to come as big energy consumers in NSW and Tasmania negotiate with governments over new power contracts.”
Megan Wheeldon, BlueScope Steel’s head of energy and carbon, told the conference: "Over the past 10 to 15 years we have seen new supply come into the market, we have seen demand destruction, we have seen manufacturers leave and fold and we have seen domestic gas prices triple — that is fundamentally a broken market.”
However, in a contribution to the event, Stephen Harty, CEO of the Santos LNG operations at Gladstone, argued that fears of a gas supply crisis have been forecast by regulators for almost a decade, but have never eventuated and are "continually moved to the outyears — currently to 2029.”
In part, he said, this pattern is because regulator assumptions have ultimately been proven wrong -- "but it is also because the Gladstone LNG exporters have always stepped up to ensure the market is well supplied through agreement with the federal government.”
Harty asserted: "There is enough time to avert any 2029 shortfall by accelerating projects like Santos’ Narrabri gas project and streamlining approvals for all new gas developments. But it is not really supply shortfalls that are at the heart of the current debate – it is gas prices.”
He declared: “What manufacturers want is cheap gas that no longer exists.” And he challenged them to invest in new supply sources, claiming that: "The truth is manufacturers do not have the appetite for the large amounts of capital and the risk required to develop new gas fields. They want risk-free, long-term contracts on a cost-plus margin basis. This is a bargain that will never work for gas producers – they will simply take their capital elsewhere.”
Harty told the conference: "Market interventions and regulated wholesale gas prices based on cost-plus margins will simply see drilling stop and investment dry up. There will not only be no cheap gas, there will be a genuine gas supply shortfall.”
As was noted multiple times at the event, the federal government is conducting a major review of Australia’s east coast gas market and is widely expected to announce new domestic supply conditions on Queensland’s LNG export industry amid sustained high prices and repeated warnings of eastern Australian supply shortfalls.
On a visit to India, Climate & Energy Minister Chris Bowen has boasted of Australia’s rooftop solar power development.
Speaking to the Australia India Institute in New Delhi, Bowen declared: "Australia has the highest rate of rooftop solar deployment in the world. One in three Australian homes have solar – and rising steadily. And around 400,000 now have a battery, so that we can use that solar energy day or night.
“And we’re also a global leader in solar innovation,” he added, “a pioneering force in solar research and development. The ground-breaking solar cell technology developed by Professor Martin Green and his team at the University of NSW in the early 1980s is now used in about 90 per cent of all the silicon solar modules produced in the world – including in India.”
The Clean Energy Regulator has boosted its projection for wind and solar development approvals in 2025.
The CER says it now expects between 3 and 3.5 gigawatts of projects to be approved this year, up from an earlier forecast of between 2.7 and 3.1 GW.
However, it also reports that the number of projects reaching final investment decision stage this year is only 75 per cent of the average seen since 2019 — with only 672 megawatts in the second quarter, all solar power plants.
A major international renewables investor has cast a shadow over the future of marine wind generation in Australia by walking away from a project in in the offshore Gippsland basin, a zone seen by analysts as Australia’s best bet for offshore wind development,
Germany-based RWE has withdrawn from pursuing the 2,000 megawatt Kent development in Victorian waters, citing cost difficulties, regulatory uncertainty and the project's lack of commercial viability.
The 133-turbine wind farm was intended to come in to operation in the mid-2030s.
In a statement, RWE said it will continue to invest in Australia, including in onshore wind and battery projects, but does not see commercial opportunities in the offshore wind sector. “This decision follows a review of the project’s competitiveness in current market conditions, as well as ongoing uncertainties around supply chain costs and the future design of the auction framework.”
However, Spain’s Iberdrola has announced it plans to pursue a 150-turbine wind project in the offshore Gippsland zone delineated by the Victorian government.
Offshore wind is a key plank of the Victorian government’s plan to have 95 per cent of its electricity sourced from renewables by 2035.
One of the more depressing things in my current life is trawling through Australia’s media each month in search of content for this newsletter — not because I don’t enjoy writing about energy, having been producing this publication monthly since my retirement at the end of 2004 from running what used to be the Energy Supply Association, but because each current exploration highlights just how many aspects of electricity and gas supply are a cause for gloom.
We are not alone in this slough, however. I also read widely about international energy affairs and the Brits, the Americans and the Europeans, to name just three, are up to their armpits in supply hassles, a lot of which are down to politicians doing what they do.
In our local case, the added sauce is that this situation has been going on for most of this century and the outlook towards 2030, 2040 and even 2050 from our current vantage point is too much towards “more of the same” rather than a guide to sunlit uplands.
Call me a grumpy old man — you won’t be alone! — but the evidence is all around us and it is reinforced via some excellent conferences and forums that are staged each year, for example the Australian Domestic Gas Outlook (ADGO) and Energy Week talkfests staged by Quest Events and the one covered to an extent in this edition of the newsletter, the Australian Financial Review’s annual “Energy & Climate Summit.”
In a weekly newsletter the AFR emails to subscribers titled “Current Climate,” reporter Ryan Cropp writes “Get on with it. That was the message from top corporates, regulators and politicians (at the forum).”
And he observes, "Australia’s clean energy transition has been spluttering along for more than a decade now, but for the people tasked with running the system, the direction of travel is clear. It’s no longer a question of if we slash electricity emissions, but how – and when.”
Of course, the caveat to this is the quality and sustainability of policymaking and management.
There’s the rub, as the saying goes.
I was also interested to note comments in the media’s conference coverage by the Clean Energy Investor Group’s Richie Merzian to this effect: "The honeymoon phase of Australia’s net zero transition has ended and now the nation is tasked with working out how to bring regional communities along through the transition’s messy middle to large-scale renewables uptake."
The “messy middle” is only too obviously where the whole transition shebang is now located.
Also writing about the event, AFR columnist Jennifer Hewett has observed: "The big changes and increasing complexity of the energy market still come down to two opposing views about the pace and scale of change, although not about the general direction of decarbonisation. Getting that timing wrong will inevitably lead to some expensive mistakes and policy dead-ends. The Australian consumers will count the cost of getting the energy calculations wrong.”
To which her editors added in a same-day editorial, "There is no point in Bowen denying the inconvenient truths spoken by leaders of three of the country’s biggest energy companies on day one of the summit about time running out to ensure a smooth transition from coal to wind and solar backed up by batteries and gas.”
This comment came after a "combative speech” in which Bowen took aim at institutions, including the Review masthead, that are criticising the pace of the renewable energy rollout.
Legitimate coverage of the challenges facing the rollout should not be mistaken for death-riding Australia’s decarbonisation challenge as the minister appeared to suggest, the paper grumped.
I’ll second that.
Keith Orchison
26 October 2025