Australians are not expected to reap power bill savings under the clean energy revolution despite the promises of politicians, experts say, as governments around the country seize control of the massive infrastructure program needed to modernise the electricity grid and reach net zero greenhouse emissions.

The cost of building a modern electricity grid to handle an inlfux of renewable energy will weigh on peoples’ power bills. Credit:Getty Images / Finnbarr Webster.

Victorian Premier Daniel Andrews announced on Thursday an ambitious green energy plan that he said would be “good for energy bills” while boosting the share of renewable energy in the state’s grid to 95 per cent by 2035 and aiming to cut the state’s emissions by 80 per cent by the same date.

A re-elected Labor government will invest $1 billion to build wind and solar projects, enough to replace the Loy Yang A coal power plant, and centralise control of planning and construction, as well as potentially reviving the defunct State Electricity Commission.

Andrews’ cut-price power pledge follows the Albanese government’s election promise to cut annual power bills $275 by 2030, and NSW Treasurer and Energy Minister Matt Kean’s commitment to replace coal with “cheap, reliable and clean energy” and save households $130 on their bills under his energy road map where public money underwrites private investment in renewables.

But the Grattan Institute’s Going for net zero report, which analysed the policy options for governments to deliver their emissions-reduction commitments, found that “renewables-based systems are not substantially cheaper than the coal-based system”.

That’s down to the costs of extra transmission lines required to link up far-flung wind and solar farms to the electricity grid and “firming” wind and solar with back-up power such as batteries and pumped hydro.

“It’s stupid when [governments] keep saying we are going to bring prices down when they can’t,” said Grattan’s energy director Tony Wood.

“Broadly speaking, because none of this is precise, those two [transmission and firming] balance each other out — at least ’til you get to about 80 per cent renewables. Then, like most things in life, the last 20 per cent, or it might be the last 10 per cent, or maybe even less, gets really hard and expensive, unless we find other ways of doing it. And that’s what our analysis showed very clearly.”

Power plans in Victoria and NSW lean on the public purse.

NSW is underwriting construction by providing long-term contracts to renewable power generators for a guaranteed minimum price in a bid to shield companies from future fluctuations in the power prices and to enable investors to bank on a minimum rate of return.

That means electricity bill customers will bear the risk of project cost blow outs, which would be recouped by higher network charges.

Victoria will take a 51 per cent stake in new renewables projects, with the rest earmarked to come from private investors like super funds. However, until more details are released it is unclear how exactly the plan would work. Victoria has promised to stump up an initial $1 billion investment, which appears modest given NSW says $32 billion is needed to decarbonise its electricity grid.

Federal Climate Change and Energy Minister Chris Bowen has charted a mammoth task ahead for the renewable rollout: 10,000 kilometres of new transmission lines must be built by 2030 and 60 million 500-watt panels installed in the same timeframe to reach the interim goal of 82 per cent renewables in the grid by the end of the decade.

But the need is urgent. Old coal plants are bringing forward their closure dates, with cheaper renewables outcompeting them on price as hefty maintenance bills on their ageing infrastructure pile up.

Melbourne University energy expert Dylan McConnell said the costs of building new renewables were inevitable, due to the need to refurbish the grid.

“The counterfactual is not doing nothing – we have to spend a fortune on our electricity system anyway because we’ve got ageing infrastructure,” McConnell said.

“We have to spend hundreds of billions of dollars on the electricity sector in the next couple of decades, regardless of what you think about climate change. That’s the reality.”

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