Origin quietly abandons wind project citing 50pc cost increase - AFR

Origin Energy has abandoned a wind project after construction costs surged 50 per cent. The company cited cost inflation as the reason for withdrawing from the project, which it had previously committed to develop.

Where this fits

This is the first major sign that the renewable construction boom is hitting a hard cost ceiling. A 50 per cent blow-out is not a marginal project-variance. It shows that the headline price of renewable energy per megawatt-hour, while cheap, is not where Australia's electricity bill is determined. The whole-system cost, construction labour, steel, concrete, supply-chain inflation, grid connection, transmission upgrades to move wind and solar to load centres, is rising faster than the cheerleading around capacity announcements has prepared investors to pay. When developers walk away, the renewable build slows. That matters because Australia has committed to a grid with no firm dispatchable power and no nuclear option. A slowdown in renewable build means either less capacity gets built or gas fills the gap longer. Either way, the cost per tonne of emissions abated climbs.

What it means

A renewable grid requires not just panels and turbines but the transmission and firming infrastructure to make weather-dependent output reliable. When construction costs double, those costs are deferred to the consumer or the grid-operator. Origin's withdrawal is a signal that the true delivered cost of a renewables-only system is higher than the industry's disclosures have suggested. Australia is betting the grid transition on a single technology pathway, locked out of the lowest-emission alternative in nuclear, while dependent on China for the supply chain to deliver it.