NSW Renewable Zone Costs Surge Past $5.5B

A renewable energy project in regional New South Wales that began as a $650 million plan has now blown out to more than $5.5 billion. This sharp increase raises concerns about cost, timelines and whether Australia’s energy transition can keep up with public expectations. Although the Central-West Orana zone is meant to deliver 4.5 gigawatts of grid capacity, rising transmission costs could fuel renewed interest in coal and nuclear options.

The Central-West Orana Renewable Energy Zone, located near Dubbo, is one of five projects in NSW aimed at accelerating the shift from coal to clean power. Originally proposed in 2020 at a smaller scale, the project has since grown significantly to support up to 7.7 gigawatts of generation from solar, wind and battery installations. Much of the current cost blowout is linked to difficult market conditions.

The increasing cost of specialised materials, a shortage of skilled labour and pressure on global supply chains have made construction far more expensive. According to the Australian Energy Regulator, the $5.5 billion figure is nearly double what it was in mid-2023 and more than 8 times the initial projection. These increases reflect a broader trend, with transmission costs rising by about $6 billion nationally this year alone. Only a few projects, including EnergyConnect between South Australia and NSW, have made substantial construction progress.

The rapid cost increases have wider implications. Households may see power bills rise just as Australia is aiming for 82% renewable energy by 2030 and net zero emissions by 2050. Some energy market agencies say transmission costs may have doubled in just two years. This has prompted calls to consider alternative solutions such as localised power sources or off-grid battery storage. As a result, some policymakers are reopening debates around coal and nuclear as possibly cheaper short-term solutions.

To move away from coal, Australia will need around 10,000 kilometres of new transmission infrastructure. The challenge is not just to build quickly, but to do so in an affordable way while managing financial pressures, scheduling risks and growing public concern around project delays.

Source: Australian Financial Review, Australia Energy Regulator, TBH Consultancy, AEMO Services

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