Australia renewable energy transition faces connection bottlenecks

The rollout of renewable energy in Australia’s National Electricity Market (NEM) is facing challenges due to grid connection bottlenecks and shifts in the effectiveness of the federal government’s Capacity Investment Scheme (CIS).

While the pipeline for new projects remains significant, the pace of connections has struggled to keep up with the accelerating rate of new project applications. This has led to implementation timelines extending to approximately two years. Currently, batteries dominate the 75 GW pipeline, accounting for 53% of capacity, as they offer better profit margins than traditional generation due to the daily energy ‘duck curve’ created by rooftop solar.

Critiques of the CIS suggest the scheme has not fully addressed market imbalances and has instead led to some underbid generation projects struggling to maintain viable business models. However, the surge in storage capacity is expected to reduce the role of gas in setting wholesale electricity prices.