Who pays for the grid? Why Australia is held back by transmission bottlenecks

Australia’s clean energy ambitions hinge on a massive expansion of its electricity grid – an estimated 4,581 km of new transmission lines are needed by 2030 to hit national renewable targets, according to Intergrated System Plan forecasts. “No energy transition without transmission,” as Energy Networks Australia and the Clean Energy Council bluntly put it.

Yet getting these crucial power highways built has proven painfully slow. Costs are surging, approvals dragging, and a fundamental question looms: who will foot the bill for these grid upgrades? Below, commentary from energy operators, investors, and policymakers shed light on why transmission bottlenecks threaten to stall Australia’s renewable boom and how debates over funding are unfolding.

Costs soar and plans get rethought

The price tag of new transmission projects has spiked dramatically, forcing a strategic reappraisal of rollout plans. In May 2025, AEMO revealed that cost estimates for major transmission lines have jumped 25–55% in real terms since 2023, with some components nearly doubling after inflation.

These blowouts – driven by supply chain pressures, a tight workforce, concurrent mega-projects, and costly community consultations – have made planners pause. AEMO “recognises that [such cost increases] would impact bills for electricity consumers” and says the next ISP “will re-visit transmission network projects previously identified as needing to proceed… seeking to ensure that overall costs for consumers are optimised.”

That means some lines could be delayed, re-scoped, or alternatives considered, rather than simply passing costs onto ratepayers. AEMO also concedes that social licence challenges are adding delay and expense. Transmission companies now budget extra for consultation and even rerouting lines to avoid high-opposition areas – lessons from earlier projects where poor engagement inflamed resistance.

As AEMO told The Guardian in May, the “optimal transmission line is the one you can actually get built.” Incorporating proper value for community buy-in has inflated upfront costs but is seen as essential to delivery. The grid build-out is proving costlier and more complex than imagined, prompting both industry and government to reassess timelines.

Financing the grid: investors, governments, or consumers?

The question of “who pays” has become a flashpoint. Under Australia’s regulatory framework, most transmission investment is recouped from electricity users via regulated charges – but the scale of projects now needed has strained this model.

Network operators warn that current rules make financing mega-projects untenable. In 2023, Energy Networks Australia lodged a rule change proposal to ensure “financeability of [ISP] projects,” arguing that under today’s settings a Transmission Network Service Provider could jeopardise its credit rating due to insufficient early cashflows. The regulator tweaked rules in April 2024 to allow faster depreciation, but investors remain skeptical.

Soon after, super funds Cbus and Aware Super sold down equity stakes in Transgrid and ElectraNet, citing low cash returns if they were required to finance further ISP projects. These investors effectively voted with their feet, signalling the problem wasn’t fixed.

Governments are now stepping in. The federal Rewiring the Nation program, via the CEFC, is providing billions in concessional loans and equity. Transgrid’s A$4.9 billion HumeLink project – a 500 kV line in NSW – secured about $450 m in CEFC low-interest debt plus $1 b in subordinated finance, alongside $1.5 b in new investor equity. CEO Brett Redman was blunt: “The Australian Government’s commitment to provide concessional finance for these mega projects is critical as they would not be possible otherwise.”

     Source: Transgrid CEO, Brett Redman                                                                             Source: Hume Link            

In Tasmania, the $4.8–5 b Marinus Link has become a political flashpoint, with industrial users warning of network charge hikes of up to 45%. Opposition leader Dean Winter argued it is a national project: “the mainland needs Marinus – so they can pay for it,” setting the stage for a wider debate over cost allocation.

Source: Marinus Link

Should states, taxpayers, or private investors carry the burden? Australia is trialling all three. Without creative financing solutions, critical grid projects risk delay or downsizing – imperiling the pace of the renewables rollout.

Gridlock in approvals and planning

Money isn’t the only bottleneck. Lengthy planning and permitting is also slowing projects. In August 2025, the Productivity Commission bluntly labelled the environmental approval regime “sluggish and uncertain.” Commissioner Martin Stokie said it can take years to get to a yes-or-no on critical infrastructure, which “often [leads] to lengthy project delays and contentious final decisions.”

The PC’s interim report urged clearer standards, dedicated “strike teams” to fast-track approvals, and even a Clean Energy Coordinator-General to cut through red tape.

AEMO notes transmission projects face years of design, land acquisition, and permitting, while community opposition, workforce shortages, and supply constraints drag schedules further. The result: lines needed “yesterday” won’t arrive until tomorrow. At a June 2025 BloombergNEF forum, analysts warned that policy and market design must catch up to engineering reality, with faster planning and stronger long-term signals needed to match developer appetite.

Stakeholders demand solutions

The logjam has united market operators, networks, investors, energy users, and even communities – usually adversaries – in agreement the status quo isn’t working. Everyone has a stake, because if the build-out fails, everyone loses: generators can’t connect, and consumers pay more due to congestion and curtailment.

Consensus is forming on several points: generation is futile without wires, with wind and solar already being curtailed; inaction costs more, as delaying transmission will drive higher, less reliable prices; new funding models such as “beneficiary pays,” special-purpose vehicles, and contestable builds are being trialled, but investor pull-backs show regulatory certainty is critical; and smarter planning – including federally backed Priority Projects and greater use of distribution networks – could reduce the need for endless new high-voltage lines.

Australia’s renewable future hinges on breaking this impasse. The transition is no longer about “if” but “how fast” – and right now, the wires are the limiting factor.