Australia once built prosperity on cheap, reliable power. Three decades of regulatory failure and moral vanity squandered that advantage and locked in mediocrity for a generation.
Introduction
Australia once had some of the world’s cheapest electricity. That advantage underpinned our industry, competitiveness, and living standards. Thirty years of regulatory failure and political theatre destroyed it, replacing an abundance mindset with one of managed decline.
In the 1990s, we had every advantage: cheap coal, reliable baseload, and a fully paid-off grid. We could have planned the next chapter rationally. Instead, we drifted. We turned a functioning system into a political battleground and confused moral gestures with strategy.
If we had planned properly in the 1990s, we could have replaced baseload coal with firm, low-carbon power. A nuclear program launched when costs were low and technology stable could have delivered steady supply before global construction costs exploded. Even if not as cheap as coal, it would have been cheaper than the regulatory disasters that followed, and it would have given us clean, abundant electricity for decades.
Instead, we built a patchwork grid that punishes reliability, rewards volatility, and makes planning almost impossible.
The Lost Decades
Through the 1990s and early 2000s, the challenge was obvious. Our coal fleet was always going to age out by mid-century, giving decades to plan replacements. But no one wanted to make a hard call. Governments changed, reports gathered dust, and planning became unfashionable.
By the time we stirred, the window had closed. Nuclear was politically toxic, the grid was over-engineered, and renewables were sold as virtue rather than design. We went from having some of the world’s cheapest electricity, leveraging abundant coal and economies of scale, to middle-of-the-pack electricity costs despite still having all those natural advantages. That’s a spectacular squandering of competitiveness.
The Forgotten Disaster: Gold-Plating the Grid
Before we argue about carbon prices or renewables, remember the real economic vandalism of the 2000s: the gold-plating fiasco.
Between 2007 and 2013, regulators actively incentivised network companies to massively overinvest in poles and wires through guaranteed returns on capital. Utilities gamed the model. Demand forecasts were inflated and billions were spent upgrading for growth that never came.
Roughly $45 billion went into unnecessary network investment. Network costs doubled. Those inflated assets were then locked into the regulatory base for 30 to 40 years, meaning Australians are still paying for the mistakes of that era on every bill today.
It was textbook regulatory failure, a local case of the Averch–Johnson effect, where guaranteed returns drive wasteful over-capitalisation. Perverse incentives, weak oversight, and guaranteed private profit at public expense. The incentive signal behind gold-plating was, in practice, far stronger than anything in the carbon price, a distortion that reshaped the entire market.
How Gold-Plating Drove the Solar Boom
The consequences didn’t end with higher bills. The gold-plating disaster also supercharged rooftop solar uptake. As retail prices nearly doubled to pay for the bloated networks, households took matters into their own hands. High grid costs made small-scale solar look irresistible.
That might seem rational individually, but systemically it fractured the grid. By the 2020s, one in three rooftops had become a micro-generator, turning a centralised network into a fragmented, semi-autonomous system. The physics of the grid flipped: midday oversupply, evening scarcity. We engineered volatility and called it progress.
The result is a daily feast-and-famine cycle. At noon, oversupply and negative prices; by evening, scarcity and high prices. It’s a system hostile to steady-state generation. Nuclear, hydro, or even efficient gas can’t survive in a market that collapses every sunny afternoon. The missing ingredient is “absorptivity” — the ability to soak up surplus generation and smooth variability. We still don’t have it. Batteries help but are short-duration; pumped hydro is years behind schedule; flexible demand remains mostly theoretical.
The price shock caused by regulatory failure created a decentralised system that made baseload economics even worse, compounding the challenges for aging coal plants and killing any prospect of large-scale nuclear investment.
The Pattern Repeats
We locked in a generation of costs through gold-plating – thirty to forty years of paying for infrastructure we didn’t need. Before those costs were paid off, we began repeating the mistake. The current renewable grid restructuring is embedding another generation of costs: massive transmission builds, firming capacity, and storage systems. All of this is required only because we failed to plan from the beginning, taking advantage of the infrastructure that was already in place.
Two forty-year lock-ins, overlapping for three decades. Australian school-leavers today will spend their entire working lives paying for both regulatory failures simultaneously. We learned nothing from the first disaster.
Gas: The Reluctant Bridging Fuel
When coal stations began closing faster than firm capacity could replace them, gas filled the gap. Gas peakers became the emergency backstop – flexible but expensive, high in carbon, and exposed to global fuel markets. This was never a plan; it was a reflex. A country rich in sunlight and uranium ended up depending on export-parity gas prices to keep the lights on.
The Carbon Price and the Limits of Pricing Alone
The carbon price was meant to send a clean-energy signal. In theory, it should have encouraged investment in low-emission generation. In practice, it landed on a system already distorted by gold-plating and political instability.
A price on carbon can work, but only if paired with an industrial strategy that builds capacity. Without parallel investment in firm, clean supply, it just makes existing energy expensive without creating abundance. The goal should never have been austerity through pricing; it should have been abundance through construction.
China’s Discipline, Our Disorder
China treated energy as industrial strategy. They standardised nuclear, built hydro, expanded renewables, and managed costs through scale and replication. They planned.
We argued. Every election became a referendum on coal, carbon, solar, wind and nuclear. The result: paralysis, policy whiplash, and investment flight. While China built, we performed politics.
Energy as a Class Divide
The social split is now stark. Households with capital – rooftop solar, batteries, EVs – enjoy low effective costs. Everyone else pays for the gold-plating fiasco, the current round of grid restructuring, and the stranded-asset bills through rising network charges. Cheap energy has become a private luxury rather than a public utility.
That isn’t market failure; it’s the logical end-point of decades of bad incentives. It is policy and governance failure. We’ve incentivised the wealthy to withdraw from the grid rather than funding its reform.
Abundance vs. Austerity
Australia’s real energy divide isn’t ideological; it’s philosophical. For a century we built for abundance: energy as infrastructure, not indulgence. We built ahead of demand. We over-engineered for reliability. We treated electricity as the foundation of industrial growth.
Since the 1990s we’ve drifted toward austerity: energy as moral calculus, where scarcity is confused with virtue and policy aims to constrain rather than expand. The result is a fragile system, expensive power, and an industrial base that no longer trusts the grid – and all too often just shuts up shop and leaves.
Competence begins with rediscovering abundance: planning twenty years ahead, rewarding reliability over symbolism, and treating energy as the backbone of prosperity, not a stage for moral theatre.
The Reckoning
We built ghost infrastructure, paid for it twice, and called it progress. Gas keeps the lights on while we congratulate ourselves on world-leading rooftop solar uptake. The politics of virtue replaced the discipline of engineering.
The real betrayal wasn’t choosing renewables or rejecting nuclear. It was abandoning the commitment to abundance – the idea that clean energy should be plentiful enough to power industry, not rationed like a virtue.
Cheap, clean, reliable energy isn’t utopian. It’s what competent countries build.
excellent series. well done. some minor criticisms but it is a great series. Well done
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