The Mirage of a Return to Cheap Power

Australia’s energy debate is trapped between green idealism and coal-era nostalgia. Our transition demands realism, sequencing, and resilience — not ideological speed or nostalgic retreat.

Introduction

Australia’s energy transition needs discipline – not haste, and not denial. The goal should be resilience first, with speed only when the world moves together. The major political parties are stuck in the wrong decade. Labor and the Greens are living in an imagined future – chasing a rapid transition regardless of global context – while parts of the Coalition remain lost in a nostalgic dream of cheap power from the past. 

Australia needs a more honest approach. Our grid is not what it used to be: rooftop solar floods the system in the middle of the day, upending the old certainties. What’s needed now is a disciplined, sequenced transformation – one that protects reliability today while laying the foundations for tomorrow’s abundance and prosperity. And we need to accept a hard truth: for some time to come, power will be expensive, whatever path we take.

The Mirage of a Return to Cheap Power

Just “building coal plants” or “building nuclear plants” as if it were the 1960s isn’t an economically viable answer to where Australia finds itself today. The real tragedy is that Australia no longer enjoys cheap, abundant energy to drive its industries. We’ve already lived through one regulatory failure – the gold-plating fiasco – which nearly doubled power prices between 2007 and 2013 and locked in those costs for at least 25 more years. Now we’re repeating the pattern: the current round of grid restructuring to accommodate renewables will embed another generation of costs, locking in higher prices for the next 30 to 40 years.

Realism Over Ideology

The path forward must be grounded in realism, not ideology. Australia cannot afford to dismantle reliable generation before affordable, dispatchable replacements are proven at scale. Nor should we rush headlong into a “net-zero at any cost” strategy while major global emitters are still expanding their coal and gas use.

Net zero is a global, multi-actor challenge: emissions reductions only deliver real climate benefit when major emitters move in concert. If Australia races ahead while others expand fossil output, it risks higher energy costs and industrial decline without a meaningful impact on global temperatures. But discipline cuts both ways: Australia should not move faster than its peers without benefit, nor lag so far behind that its exports are penalised in decarbonising markets. Our ambition should therefore be calibrated to collective progress, not driven by symbolism. A credible plan would focus on sequencing: firming what we already have, integrating renewables where they genuinely lower costs, and investing in technologies that enhance reliability, not just virtue signalling. To their credit, current policy does recognise the need for gas and firming in the transition, but the political narrative still sells speed as virtue rather than risk.

The New Economics of the Grid

The economic landscape for power generation has changed fundamentally. Australia’s grid now experiences a daily feast and famine of electrons – a glut of cheap solar energy through the middle of the day, followed by steep ramp-ups in demand each evening. In this environment, large capital-intensive plants – whether coal, nuclear or otherwise – can’t recover their costs unless they run for many hours each day.

They’re increasingly crowded out by rooftop solar during daylight and called upon only in the narrow window of evening peaks. Much of this variability is now baked in: rooftop solar is expanding through household decisions beyond central control. Policy must therefore focus on firming and integration, not on trying to slow the inevitable. That makes large plants financially unviable without heavy subsidies or capacity payments. None of this is an argument against renewables themselves: solar and wind have transformed Australia’s supply curve and will remain central to any credible pathway. But cheap generation is not the same as a cheap energy system. The costs now lie in the firming, storage, and transmission needed to match variable supply to demand – and those costs are substantial.

Building from What We Have

A credible energy strategy would start from the system we already have, not the one we wish we had, nor the one we lost. That means embracing the abundance of rooftop solar – one of Australia’s great energy assets – while investing in the firming and flexibility needed to make it dependable.

Batteries, pumped hydro, and fast-start gas turbines can fill the gaps more efficiently and at lower cost than building new megaprojects designed for continuous baseload operation. These technologies offer a cost-effective bridge – flexible, relatively low-capital, and deployable at scale while longer-duration storage and low-carbon fuels mature. Battery costs are still falling, but large-scale storage remains capital-intensive and cannot yet bridge multi-day or seasonal gaps. Nuclear may have a role in the long term if its economics change, but under current conditions it faces the same utilisation and cost constraints as coal.

Grid upgrades should follow demonstrated need, not ideology or symbolic mega-transmission plans. Some anticipatory investment is necessary, but the lesson from the gold-plating era is clear: build prudently, not pre-emptively. Every pathway carries heavy capital costs – whether replacing ageing coal or building new renewables. The task is to manage those costs with discipline, not pretend any route is cheap. And while the goal of net zero remains important, it should be pursued at a pace that keeps power affordable, industry competitive, and the lights on. The task is not to chase purity but to build resilience – an energy system that works every day, not just in theory.

A Disciplined, Conditional Transition

Australia needs a disciplined rather than a hurried approach to grid transformation – one that can accelerate if global momentum toward net zero genuinely gathers pace but otherwise focuses on minimising cost and maximising stability.

The sequencing must be rational: firm what exists before adding more variability, reinforce what works before retiring what still performs, and invest only where the benefits are measurable. Discipline is not delay; it is the recognition that energy systems succeed through reliability, not ambition. If the world hastens its transition, Australia can hasten with it. Acceleration should be tied to verifiable shifts – such as falling firming costs, credible global carbon pricing, or coordinated industrial decarbonisation among major emitters.

But until then, prudence demands a path that secures affordability and resilience first, and speed only when global alignment makes it worth the cost.

A Distant Path to Abundance

Australia may one day regain the energy advantage it once enjoyed, but not soon. The next 30 to 40 years will be defined by the amortisation of enormous capital costs: transmission lines, firming assets, storage systems, and replacement generation. Those investments are essential, yet they lock in higher prices until the debt is paid down.

The long-term hope lies in what follows – when the infrastructure is built, depreciation flattens, and marginal generation once again becomes cheap. At that point, Australia’s natural advantages – high solar insolation, abundant land, and stable institutions – could re-emerge as a genuine source of low-cost power and export competitiveness. But that future depends on getting through the current investment cycle with discipline: building what’s necessary, sequencing it wisely, and resisting the temptation to chase every new technology before the last one has earned its keep.

Australia’s next energy advantage won’t come from racing ahead, but from getting it right.