Hidden assumption in the Transition

Australia’s Energy Transition Problem Isn’t Renewables — It’s the Order We Built the System Australia’s renewable transition is often described as “failing.” That diagnosis is wrong. Renewables are not the problem. The sequencing is. At today’s penetration levels, renewables should be lowering wholesale electricity prices. Instead, prices remain high and volatile. The reason is simple but uncomfortable: The firming required to support renewables was never delivered in the right order. ⸻ The Hidden Assumption in the Transition For more than a decade, renewable generation was accelerated under the assumption that firming could be added later, gas would quietly fade away, and the grid would somehow adjust over time. In reality, power systems don’t self-correct. They must be engineered. Firming is not a backup. It is part of the primary system. When firming is missing, the grid becomes dependent on emergency interventions, inefficient dispatch, and scarcity pricing rather than competition. That is exactly what we are seeing today. ⸻ Why Prices Are Rising Despite Surplus Solar Australia now has massive renewable investment and frequent periods of surplus solar generation. Curtailment is increasing, yet prices remain high. This happens because surplus energy exists at the wrong time, firm capacity is insufficient when renewables are unavailable, and scarcity continues to set prices even when total generation is abundant. Governments are responding by proposing more transmission lines and larger network investments. But grid expansion alone does not solve firming. It only moves surplus electrons around. Without adequate dispatchable capacity, the system remains unstable — and expensive. ⸻ This Is Not a Technology Problem This is not a failure of renewables. It is not a failure of markets. It is not a failure of technology. It is a sequencing failure. ⸻ The Correct Order: Firming First A credible energy transition must follow this order: 1. Define system requirements first (capacity, duration, ramping, resilience) 2. Build firm, dispatchable capacity to cover nights, wind droughts, peaks, and contingencies 3. Secure fuel for firming (transitional or renewable) 4. Scale renewables within the firming envelope so they reduce prices instead of creating scarcity 5. Upgrade transmission where it unlocks firming value, not just to chase surplus generation 6. Decarbonise firming fuels last, once system stability is secured When this order is followed, renewables do exactly what they are meant to do: lower prices, reduce emissions, and improve reliability. ⸻ The Core Lesson You don’t firm renewables after the fact. You design the system around firming from day one. Until that principle is restored, the transition will continue to push prices up instead of down and undermine confidence in clean energy — unfairly. The solution is not to slow renewables. It is to fix the order of operations.