The Australian Energy Market Operator (AEMO) has conducted power system planning for many years, beginning with the inaugural National Transmission Network Development Plan (NTNDP) in 2010. Following the 2017 Finkel Review, which recommended a more strategic approach to network development, the biennial Integrated System Plan (ISP) was introduced in 2018. While the ISP establishes an Optimal Development Path (ODP) intended to maximise long-term consumer benefits, the framework has significant weaknesses. It does not directly coordinate new generation connections, ensure regulatory adherence to delivery timelines, or mandate construction by Transmission Network Service Providers (TNSPs), even though they hold exclusive building rights.

The goal posts keep changing

Analysis by Nexa Advisory reveals that critical transmission projects are facing persistent delays, particularly those originally targeting completion in the early to mid-2020s. Of the key actionable projects identified between 2015 and 2020, only VNI Minor has been completed, while Project EnergyConnect and QNI Minor remain under construction. The average delay across the National Energy Market (NEM) is three years. On a jurisdictional basis, Victoria averages a four-year delay, New South Wales and Queensland average two years, and South Australia averages one year. These delays mean that projected completion dates for projects like the Western Renewable Link and VNI West now extend beyond the scheduled closure of major coal-fired power stations, such as Eraring in 2025 and Yallourn in 2028, threatening system reliability.

Key roadblocks continue to hinder transmission buildout

Transmission buildout is hindered by a regulatory environment that is no longer fit for purpose, a lack of national planning coordination, and unresolved social licence issues. Increased costs for transmission, generation, and storage have inflated the eventual cost to consumers, resulting in a $10 billion (37 per cent) reduction in the net market benefits of the ODP between the 2022 ISP and the Draft 2024 ISP, which fell from $27.7 billion to $17.45 billion. This erosion of benefits is compounded by a planning process that can span over 10 years.

The regulated pathway is not fit-for-purpose

The Regulatory Investment Test for Transmission (RIT-T), introduced in 2010, was designed for a steady-state power system requiring only incremental upgrades. It often evaluates benefits solely for the customers of the investing TNSP rather than for the market as a whole, creating a mismatch between regional and market-wide benefits. Furthermore, the multi-year gap between regulatory approval and the Contingent Project Application allows material cost increases to erode a project’s net benefits.

Lack of national transmission planning and coordination

Due to the slowness of national regulated processes, state governments have developed their own planning and delivery frameworks. While some schemes have supported quicker delivery—such as the Waratah Super Battery in NSW, which is expected to be delivered within three years of its 2022 announcement—other major lines remain stalled. For example, the Central West Orana (CWO) REZ transmission delivery date has been pushed back from 2025 to 2028, indicating that broader systemic issues persist beyond the RIT-T.

Further work is needed to build social licence and community acceptance

Social licence is a critical factor in the success of the energy transition. Impacted communities often hold negative sentiments due to perceived health and visual amenity impacts from transmission lines. There is an urgent requirement for early, targeted, and ‘on-the-ground’ engagement throughout the planning and construction phases to ensure that the benefits of the transition are visible to those hosting the infrastructure.

Recent developments are a small step in the right direction

Incremental reforms, such as incorporating emissions reductions into the RIT-T and the Commonwealth’s $20 billion Rewiring the Nation fund, provide useful support. Concessional financing has been allocated to projects including HumeLink, Marinus Link, and VNI-West. However, these projects continue to face delays due to ongoing questions regarding social licence and cost allocation.

Recommendations

Nexa Advisory proposes three key recommendations to address these roadblocks. First, AEMO and governments must identify and fund the ‘gap’ between diminishing benefits and increasing costs caused by delays. This requires a detailed risk analysis of wholesale electricity costs, reliability standards, and firmed renewable generation connections. Second, national coordination must be improved by expanding Renewable Energy Transformation Agreements (RETAs) to include timely delivery incentives for actionable transmission. This should include construction incentives for private unsolicited projects. Finally, governments must improve sentiment towards transmission through collaborative awareness campaigns and targeted legacy benefit projects, modelled on initiatives such as the First Nations Clean Energy Strategy, to ensure communities receive bespoke benefits from infrastructure development.