Issue 251, March 2026
It’s a fact of life in our energy neighbourhood that never a week now goes by without sniping about the “transition” from conflicting sides based on widely differing views of the state of play, with the popular media routinely fanning the flames of contention rather than working to explain what is really happening in the market places and why. This situation is helped not at all by members of the body politic wielding reports like clubs and governments, especially the federal one, evading their responsibility to present responsible analysis, especially about system costs, the bedrock of charges levied on consumers of all shapes and sizes. With the “transition’s” arbitrarily-chosen 2030 deadline looming, a key question is what will happen when it is finally appreciated that the wheels on this bandwagon are seriously wobbly?
“It’s hard to see how the target that the government set back in 2022 of 82 per cent renewables by 2030 is going to be met” — Grattan Institute’s Tony Wood in late February. “It’s proven to be far more difficult than the governments at the time recognised.”
“If energy costs continue to rise, then Australia will become an industrial wasteland, with a less diverse and sophisticated economy, lower productivity, and, ultimately, lower living standards” — Leith van Onselen, chief economist, MB Fund and MB Super.
"Energy Minister Chris Bowen often cherry-picks data to support his narrative about Labor’s energy transition. In Parliament, he used a recent fall in the average quarterly wholesale price of electricity, to $50 per megawatt hour, to suggest cheaper energy was on the way. He forgot that one swallow doesn’t make a summer” — Jennie George, former ACTU president and Labor MP.
"The problems in transitioning to a weather-dependent renewables energy system are now clear. Labor’s promotion of renewables has come at the expense of acknowledging the multitude of risks in that transition. The consequences can’t be avoided by resorting to false narratives, spin and cherry-picking figures” — Jennie George.
“NEM reliability and affordability have deteriorated even as emissions have fallen, underscoring the complexity of the energy transition and the need to navigate carefully” — Vivek Dhar, head of commodities and sustainability research at CommBank.
“The sector must now find a way to overcome the challenge of the ‘energy trilemma’ — balancing the three competing goals of affordability, reliability and decarbonisation” — Dhar. "Our trilemma index for the east coast electricity market shows that reliability and affordability have worsened.”
“Australia needs an energy system that balances all three pillars of the trilemma, not just one” — Dhar.
"The many reasons for Australia’s slow progress on decarbonisation include a lack of transmission lines, poor federal coordination and uncertainty over the lifetime of coal-fired power stations” — associate professor Darryn Snell, RMIT, and adjunct professor Al Rainnie, Adelaide University.
"What we're seeing in Australia, to put a global lens on it, is the highest volatility in the world in electricity markets” — David Dixon, an analyst at global consultancy Rystad.
“The right-of-centre parties have been divided and confused on climate and energy policy. While they have run around in circles on this stuff, their traditional constituencies of suburban and regional families and small businesses have been crushed by soaring electricity bills” — Chris Kenny, associate editor of The Australian. "Manufacturing has been decimated, moving offshore, and heavy industry increasingly is kept alive only by government energy subsidies.”
"Hundreds of thousands of Australians are now on payment assistance plans with new families entering hardship schemes every week. That isn’t a sign of a healthy energy system” — Esther Krakue, British media commentator and a contributor to Sky News Australia.
In a submission to the federal government’s Energy Department in February, the Grattan Institute think tank has declared that the retail electricity market “is not delivering for consumers” — and that, as current bill rebates expire this year, “many customers will suffer bill shock.”
The institute, in comments on a proposal for legislative amendments to prohibit market misconduct by retailers, says that “if the government wants to tackle the clear problems in retail electricity, it should commission a comprehensive review.”
It adds that "Australians are rightly looking to government to rein in power prices and curb bad behaviour by electricity retailers but none of these are reasons to introduce further price regulation into the sector.” It says: " instead of further complicating an already complex patchwork of regulations, governments should commission a broader review of the retail electricity market settings.”
Grattan argues that the government should prioritise "interventions that will actually reduce customer bills, including expanding people’s access to electrification as well as implementing reforms to speed up deployment of large-scale renewables and associated transmission and firming capacity.”
The analysis website Finder says in a February commentary that its most recent polling shows that 26 per cent of Australians contacted claim their energy bills are causing them stress.
Finder reports that residents of South Australia currently have the highest average quarterly power bill — $509 — ahead of those in New South Wales ($443), Queensland ($419) and Victoria ($350). The Western Australian household average is $296.
Average quarterly gas bills run from $344 in NSW, followed by $244 in South Australia and $240 in Victoria with the lowest charges of $181 in Western Australia and $193 in Queensland.
The Centre for Independent Studies think tank has called on policymakers to remove "unrealistic assumptions about green hydrogen" from official plans, including the NEM integrated system plan, "to prevent us committing today to investments and strategies which have no real prospect of success”.
CIS says in a statement that green hydrogen is intended to form a core part of Australia’s future energy system and play a critical stabilising role. "Without it, the future grid that is being planned will not function. Yet the extent to which our official plans rely on hydrogen belies the major challenges facing the industry.”
It adds: "The energy-intensive nature of electrolysis, high capital costs and inefficiencies in storage and transport — driven by hydrogen’s low density and material challenges — render it uncompetitive without sustained subsidies. The failure of numerous high-profile projects and the stalled progress of most others in Australia’s hydrogen pipeline further underscore these challenges.”
CIS says: "Scaling green hydrogen to meet national or export goals would demand trillions in subsidies. Proponents of green hydrogen might argue that the subsidies would never amount to trillions because they will kick-start innovation and investment that will eventually make hydrogen so cheap that subsidies are no longer required. In contrast, we believe that the cost challenges are fundamental and largely extrinsic to scale.”
It declares: "Yet it remains the government’s official plan to give hydrogen a critical role in the energy system of the future. Policymakers must reassess hydrogen’s role in the energy transition and prioritise more viable decarbonisation pathways. The only thing worse than beating a dead horse is betting on one. When the wager is Australia’s future, hydrogen is simply a bad bet.”
The Energy Users Association of Australia has reacted strongly to a regulatory application by Transgrid for approval to pass on to customers through their power bills $1.1 billion of the $1.5 billion cost blowout on EnergyConnect, a 900-kilometre power cable being built between South Australia and New South Wales.
Andrew Richards, head of the lobbying group representing large industry, has told media that the bid has caused “anger and concern” among his member companies.
The EnergyConnect project, which now will cost now $4.1 billion, is deemed by the market operator to be critical infrastructure for eastern Australia’s energy transition. Due for completion in September, it will connect several gigawatts of solar and wind farms in eastern South Australia and south-western NSW and beef up SA’s energy security.
Tennant Reed, director of climate change and energy at Australian Industry Group, has told the Australian Financial Review that the interconnector is "going to be very useful to help bolster supply and keep a lid on prices as coal-fired power plants exit the National Electricity Market."
But, he says, "question now is how to divide up the extra cost, rather than whether to bear it at all — the right answer is going to be sharing the pain between energy users and the network.”
The Centre for Independent Studies’ energy director, Aidan Morrison, says Transgrid's demand “is emblematic of the troubles plaguing renewables projects.” He adds: “This is the next chapter in what is a long and sordid story of consumers picking up the tab for inevitable blow-outs in poorly planned, and ultimately unwarranted, transmission projects supposed to support the transition to renewables.”
Another critic is Saul Kavonic, MST Financial’s head of energy research. He declares: "Allowing Transgrid to privatise gains when things go well and socialise losses when things go poorly, as here, sets a diabolical precedent for the sector and undermines all future infrastructure award processes.”
Kavonic adds that "major infrastructure projects are proving far more expensive and lengthy than widely anticipated.”
“The path for makeup of the electricity grid needs to be re-assessed,” he argues.
“The rollout of new renewables infrastructure may need to slow down until productivity reforms are implemented to reduce costs,” he says. “Household bills and manufacturing jobs are paying the price for both an overly optimistic renewables rollout ambition by government and poor investment decisions by private infrastructure operators.”
Transgrid responds that the additional cost of constructing EnergyConnect has been driven by "unforeseen external factors" including flooding in 2022-23, COVID-19 plus increased cost of labor and materials "due to unprecedented global demand, inflationary pressure and the collapse of one of the project’s original joint venture delivery partners.”
The Grattan Institute is calling for reform of the NEM’s integrated system plan, a key component of the efforts to achieve net zero for Australia by 2050.
Tony Wood, senior fellow at the institute, says that "after a succession of changes since it was created about eight years ago, the ISP’s role and even its purpose have become increasingly unclear and its results misunderstood or misused.” This, he declares, must change.
Wood points to the Australian Energy Market Commission’s current “fit for purpose” review of the ISP, due to be completed in 2027, as an opportunity to ensure "it is the central, whole-of-system plan for the NEM to get to net zero at the lowest cost while remaining reliable and secure.”
He says the revised plan should be based on a clear set of physical, financial and policy assumptions and constraints "so that it becomes a robust and credible optimal development pathway”.
As well, he proposes, the ISP should cover the whole energy system, not just electricity, and generation and storage should be integrated into the planning process.
Failing to make the change, he argues, risks an outcome where "we end up building the wrong infrastructure in the wrong places and at the wrong times and are not prepared for the plausible changes ahead”.
One of Australia’s major business lobbying bodies, the Australian Industry Group, representing more than 60,000 companies, is calling on the Victorian government to rethink its controversial plans for offshore wind development in State waters.
AI Group says the plans’ costs have “risen significantly” since 2022 when the Victorian government announced a target for development of four gigawatts of marine wind power by 2035.
Tennant Reed, climate and energy policy director at AIG, says a new assessment of Victoria’s least-cost energy options is needed before the State locks itself into a particular pathway. “Every Victorian will pay for the energy system we end up with,” he warns “If we go with a more expensive option to avoid social licence concerns with onshore developments that is a price all Victorians will pay. We really want to be confident that we are making the best choice that we can.”
The State government has announced that it will now offer a tender in August for an initial 2.2 gigawatts of wind generation offshore Gippsland after postponing launching it last September.
One of the significant energy developments in 2026 will be the report by the Australian Energy Market Commission on electricity pricing reform for the eastern seaboard market, the NEM.
The commission publicly dropped its draft review commentary in December and opportunities for responses closed in mid-February.
The next step will be publication of a final report in the second quarter.
The AEMC prefaces the report’s appearance by declaring that the existing arrangements are "failing too many consumers” and that "big changes are needed to make it simpler, fairer and more affordable.”
As its chair, Anna Collyer, put it in a trade press commentary towards the end of last year; “We’re piecing together a complex puzzle. Each piece represents a crucial reform that, when connected, will unlock the full potential of consumer energy resources for all Australians.”
She added: "As we navigate this new landscape, we’ve realised that our current market arrangements were developed when energy flowed in one direction and consumers’ energy use was inflexible. That’s why we’ve initiated a comprehensive review of electricity pricing."
Inevitably, the exercise is controversial, as illustrated by public responses to December’s draft paper.
In particular, the AEMC’s proposal to shift network charges from variable rates that depend on users’ energy consumption to a fixed connection charge is attracting more than a little muttering.
The commission says this proposed change seek to provide a more equitable pricing framework for all consumers.
The Solar Citizens lobby group, for example, opines: “When fixed charges rise, the portion of the electricity bill that households can control shrinks. This weakens the business case for solar, batteries and energy efficiency upgrades, lengthens payback periods and reduces the reward for shifting demand to times that benefit the system.”
Other critics complain that increasing fixed network tariffs will penalize consumers using less energy from the grid, such as many low-income households, and those with energy efficiency upgrades, rooftop solar and storage.
The Australian Energy Council, the latest organisational iteration of power suppliers’ lobbying from the one I reformed and managed in the 1990s — then ESAA (the Electricity Supply Association of Australia) — has published a review of the AEMC process on its website in recent days in which it warns: “Major interventions in pricing dynamics are blunt instruments. If Australia goes down this path, we must do so with very clear objectives, careful calibration and a strong implementation plan that avoids weakening the very competition we also rely on to drive innovation."
Or, as one green newsletter editor comments, the commission’s latest effort revives a longstanding core issue: who should pay what for the grid and why?
Keith Orchison
26 February 2026