How a lack of contingency planning has contributed to the current energy crisis

Dr Anne Kallies (anne.kallies@rmit.edu.au)

Topics: energy crisis, renewable energy, energy infrastructure. 

“Australia has not made appropriate contingency plans to replace infrastructure at the end of its lifespan. Coal generators, which still supply the majority of Australia's electricity demand, are now outdated and failing. Coal exit is happening and replacing this generation of infrastructure with renewables is simply not happening fast enough.

“Infrastructure investment has long lead times and replacing ageing infrastructure needs to be locked in well in advance. Planning should have happened a long time ago.  

“For a long-time, centralised planning was considered a bad thing and there was an expectation that the market frameworks for electricity will deliver the necessary investment. However, the market has not delivered.

"At the same time, climate impacts, such as extreme weather events, are exacerbating the crisis. Finally, there is the gas crisis (due to the Ukraine-Russia war, among other things), which means that the standard emergency backup by gas plants is impacted.

“The issue we face is that the energy transitions will require simultaneous updating of both generation and network infrastructure. There needs to be coordination of what goes where, including storage to ensure we have a reliable system in the future.

"The national electricity market frameworks have shifted to recognise this need. We now have renewable energy zones and the tools to plan for network connections. But building this necessary infrastructure will still take years.

 “The good news is all governments, federal and state, are supporting this as a necessity. While the federal government has for a long time been very hands-off, and leaving solutions "to the market", I suspect we will see more engagement in the future.

 “State governments have actively explored ways to support a failing system for years. For example, both Victoria and NSW have passed legislation which allows them to bypass National Electricity Market rules when this is necessary to leverage timely investment. Victoria's big battery was facilitated with the help of this legislation, and we would not have seen this investment otherwise, or at least not that quickly.  

 “While the electricity industry is largely privatised, electricity is an essential service and expectations to ensure a safe and reliable supply still sit with governments, in particular state governments.”

Dr Anne Kallies  is a Senior Lecturer at the RMIT Graduate School of Business & Law, researching in the areas of energy, environment and climate. The emphasis of Dr Kallies’ research is on energy and environmental law, with a special focus on renewable energy and electricity market regulation.

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