As Australians gear up for the federal election, climate policy is heating up as a key issue. In recent days, the Coalition and Labor have reignited the “climate wars” we’ve seen in previous elections, with current debate centering around Labor’s “Rewiring the Nation” plan. The plan, a $20 billion investment to rebuild and modernise Australia’s grid, promises to drive down power prices, boost the economy and create thousands of new jobs – but the Coalition claims it will instead have a devastating impact on electricity prices.
In this article, we’ll break down the key points of Labor’s Rewiring the Nation plan, what it could mean for Australians, and the points of contention between the two major parties.
No Transition Without Transmission
Cheap, clean energy is critical to Australia’s future, but there’s a roadblock – the inefficiency of our electricity transmission system.
Australia’s electricity network is painfully outdated, with many parts of the grid dating back to the 1950s. There’s little argument that this is holding the country back from reaching our renewable energy potential.
A modernised grid would unlock huge amounts of renewable energy capacity, and allow it to be transported around the country where it’s needed most – and that’s just the tip of the iceberg when it comes to the potential benefits.
Both major parties agree that, when it comes to renewable energy, there will be no transition without transmission.
But will Rewiring the Nation get us there, and if it does, at what cost?
What is Rewiring the Nation?
First raised in October 2020, Labor’s Rewiring the Nation plan is centered on the delivery of the Australian Energy Market Operator’s (AEMO) Integrated System Plan (ISP).
The ISP is a detailed ‘whole-of-system’ plan that provides a blueprint for the efficient development of the National Electricity Market (NEM) over the next 20 years and beyond. The plan has been signed off by all governments under the NEM.
The ISP modelling describes a transition of the NEM from a centralised coal-fired generation system to a highly diverse portfolio dominated by renewable energy resources, including both distributed energy resources (DER) like rooftop solar, and larger-scale renewable “power stations”.
The ISP is AEMO’s attempt to bring some level of certainty to what Australia’s transmission future will look like, and how to prepare for it.
While upgrading the grid is intended to be “technology-neutral”, Labor says that renewable energy will benefit the most as it is the cheapest method of new production and will allow the distribution of the cheapest source more efficiently.
Under a Labor government, a public non-financial corporation called Rewiring the Nation Corporation (RNC) will be established, partner with industry and provide “low cost finance” to build the ISP.
Labor commissioned detailed modelling by consultants RepuTex, which concluded Labor’s $20 billion investment would unlock another $58 billion of private investment.
The Labor government has provided the following assurances:
- The grid will be rebuilt at the best price possible
- Cheaper electricity prices for homes and businesses (bills slashed by $275 by 2025 and $378 by 2030)
- The grid will be built by Australian workers using Australian suppliers
- Thousands of new construction jobs for Australians, many in regional areas
- The revitalisation of traditional industries like steel and aluminium and growth in new sectors like hydrogen and battery production
Coalition’s Controversial Modelling Claims
On Tuesday, Prime Minister Scott Morrison and his Energy and Emissions Reductions Minister Angus Taylor took aim at Rewiring the Nation in a press release, claiming that “government modelling” found the plan would slug the average consumer with a $560 hike on their annual electricity bill. The release also quoted numerous “independent energy experts” who pointed out flaws in Labor’s plan.
Given that Labor’s own modelling found that the policy would actually save households $275 a year by 2025, and $378 by 2030, what gives?
In an interesting turn of events, a number of the experts quoted in the government’s press release has come forward and disputed the so-called modelling, saying the supposed price hike figures have been calculated on the assumption that Labor’s $78 billion combined investment into the grid would be passed onto the consumer in full.
While the regulator does typically allow transmission costs to be passed on, Labor’s Climate and Energy Spokesperson Chris Bowen has stated that the majority of the investment would go towards generation and storage rather than transmission. Those costs are not directly passed onto consumers and the investment should indeed drive down prices.
Labor has hit back and accused Taylor of launching a “desperate attack” and “climate scare campaign”, calling on the energy minister to release the government modelling indicating electricity price rises would have a “devastating impact” if Labor is elected.
No modelling has been released to date.
Experts Claim Both Parties Exaggerating
As with many issues in politics, the reality of the Rewiring the Nation plan is likely somewhere in the middle.
Matt Harris, an energy and climate expert at Frontier Economics whose year-old article was referenced in the Coalition’s press release, has since claimed that there is little difference between the two parties when it comes to transmission investment.
Most of the projects and associated costs — some of which may be passed on to consumers in bills — that would occur under Labor’s plan, would eventually occur anyway, he says.
“If you’re committing to net zero by 2050 … then this is going to happen, regardless,” he says.
Grattan Institute energy program director Tony Wood, also quoted in the press release, agrees with Harris.
“The Liberals are saying Labor is going to build all this transmission and it will cost all this money. But they will need that transmission built too. The Liberals are taking credit for renewables being built — you can’t do that without more transmission,” he says.
The general consensus, according to the experts, is that Labor has tried to oversell the benefits of the plan, while the Coalition has tried to oversell the costs.
At the end of the day, the true cost and implications of Rewiring The Nation or indeed any energy policy is, at best, a calculated guess.
Speaking to The New Daily, Wood said electricity price forecasts are inherently uncertain, and it is disingenuous of either side to present its own figures as gospel.
“Anyone who thinks they can make accurate projections of what prices will be in two years’ time, let alone 10 years’ time, is having a bit of a lend of themselves,” Mr Wood said.
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