De-risking the NEM: CEO signals on investment, firming and the cost of transition

Australia’s energy transition is entering a phase where engineering ambition collides with consumer tolerance. As coal exits accelerate, renewables and firming capacity lag, and network investment surges, affordability has shifted from a peripheral concern to the defining constraint on transition velocity. That message came through unequivocally from energy CEOs last month, signalling a new inflection point for policymakers as the system moves from planning to the delivery phase.

The Australian Energy Council’s inaugural CEO Survey captures senior leaders managing the transition ‘at the coal face’: the gentailers navigating reliability risks, the retailers supporting households through price shocks, and the investors grappling with rising capital and permitting costs. Their views present a clear warning: the transition remains delicately poised, and affordability - not technology, renewables uptake, or emissions targets - may determine its ultimate success or failure.

“There is constant debate around the ‘how’ - how we can achieve the desired mix of lowest cost energy sources while delivering against the sacred energy trilemma of reliable, affordable and sustainable energy supply,” said AEC CEO Louisa Kinnear. “We need to ensure the transition is orderly. Ultimately it can only go as fast as the industry and consumers can bear.”  

The affordability ‘Achilles heel’

Executives report rising anxiety about price pressures across the system. While renewable energy remains the lowest-cost source of generation once built, CEOs are blunt that the costs of constructing new supply, connecting it to the grid, and firming intermittent output are pushing bills higher - and will continue to do so for years.

Transmission and distribution augmentation, environmental permitting delays, labour constraints and global construction inflation are compounding. Several CEOs expect retail prices to remain under sustained upward pressure through most of the decade, even as rooftop solar and batteries proliferate.

The risk is not simply higher bills; it is loss of political and social licence. Wholesale reform, coal-to-renewables sequencing, and REZ network builds all require community permission, yet public expectations of falling bills remain mismatched with system realities. CEOs warn that if the public perceives the transition as synonymous with cost escalation, the credibility of national emissions targets - and the investment needed to meet them - will erode quickly.

“One thing that comes through loud and clear for me is that our CEOs want a more open and honest dialogue about the challenges and costs of the energy transition… to ensure that we take the community with us,” Kinnear said.  

Avoiding a disorderly transition

The most urgent operational concern is whether replacement supply will be ready when coal capacity retires. Australia is on track for up to 90 per cent of coal-fired generation to exit by 2035. Yet CEOs describe renewable and transmission deployment as four to five times too slow to meet that timeline.

Wind faces lengthy environmental approvals and escalating construction costs. Long-duration storage remains commercially unproven at scale. Meanwhile, the Capacity Investment Scheme - while welcomed - cannot resolve permitting bottlenecks or ensure that shortlisted projects reach final investment decision.

Several CEOs argue that delaying some coal closures may become unavoidable unless reliability risks can be mitigated. Others caution that relying on ageing coal stations introduces safety, reliability and cost challenges of its own. What unites them is a call for coordination: a nationally consistent pathway that synchronises coal exit schedules with renewable and firming build-out, supported by transparent investor signals.

Gas as the reliability anchor

The survey reveals that CEO’s believe gas remains critical to an affordable and orderly transition.

Flexible gas generation is essential during low-renewable periods, peak demand events and seasonal troughs - functions that batteries alone cannot yet deliver at scale or duration, the survey found. But sentiment toward gas development has cooled politically, and regulatory barriers remain high. Without clarity on future supply and the investment case for gas-fired peakers, many fear a widening reliability gap through the late 2020s.

The upcoming Federal Gas Market Review is therefore seen as pivotal to signalling whether gas will continue as a strategic reliability backbone alongside batteries and pumped hydro.

Unlocking CER value and preventing energy inequality

Consumer Energy Resources (CER) - rooftop solar, home batteries, EVs and flexible loads - represent one of Australia’s strongest structural advantages. CEOs see CER orchestration as a potential check on future network costs and a hedge against wholesale price volatility, provided households can be encouraged to share stored energy through VPPs and time-shifting tariffs.

But they warn that CER uptake risks entrenching inequality. Households unable to finance solar and batteries - often renters or low-income groups - bear proportionally higher network charges and miss out on bill-reducing technologies. A more explicit policy framework is needed to prevent entrenched energy poverty as CER adoption accelerates.

Where policy needs to shift

Across the survey, CEOs outline a consistent set of technical and regulatory priorities:

• Stability and certainty in market design, particularly around long-term contracting, system security services, and the evolving role of gas.
• Streamlined environmental approvals to shorten multi-year delays for wind, storage and transmission.
• Network efficiency improvements and better utilisation of existing assets to reduce capital duplication.
• More harmonised state–federal policy settings, particularly around planning, CER integration and retailer obligations.
• Targeted bill relief, focused on vulnerable consumers.

Most strategically, CEOs call for an open public conversation about the cost trajectory. Energy bills may need to rise before they fall, and managing expectations will be as essential as managing megawatts.

The stakes

The transition’s technical direction - renewables firmed by batteries, gas and pumped hydro - is broadly uncontested. What remains in question is whether Australia can align investment, community support and system reliability at the pace required.

As one CEO put it, “the transition is right now delicately poised.”  If Australia fails to centre affordability in every decision made over the next decade, the transition will slow - not for engineering reasons, but because the public simply cannot bear the cost.

The AEC will release its Energy2050 vision early in the new year, setting out how net zero can be achieved through the lens of the trilemma pillars of reliability, affordability and sustainability.