Why Australia's most attractive renewables state is almost $1b behind

In 2020, the NSW Coalition government outlined a plan for a once-in-a-generation undertaking.

To power Australia's most populous state with renewable energy instead of coal, regional areas would be transformed into power stations.

Renewable energy zones (REZs) would cluster solar, wind farms and batteries around shared transmission lines.

But almost six years on, delivering the infrastructure is taking longer than planned and the state is racing to meet its own targets.

The agency responsible for the rollout, EnergyCo, has spent almost $1 billion less than budgeted over the past two years.

Ty Christopher, who spent decades delivering grid infrastructure in NSW for the previous state-owned energy corporation, Integral Energy, said there was no "single cause" for the delay.

He said it was the result of a "cumulative effect".

"I do think they are not proceeding at the pace that would be in the best interests of energy consumers in New South Wales," Professor Christopher said.

In 2025-26, EnergyCo had just over $1 billion to build the zones, but spent $686 million.

The year before, in its first year as a standalone agency, it spent $885 million of a $1.44 billion budget.

Over the two years it has spent $939 million less than allocated, more than a third of its budget.

An EnergyCo spokesperson said the gap between budgeted and actual spending "reflects the timing of project milestones, procurement and construction activities, and [is] not a direct measure of REZ delivery progress".

Zones at a glance

Capacity: 6GW initial with potential to reach 8GW by 2034.

The largest zone, legislated to account for two-thirds of the state's generation target.

Still in planning, the environmental impact statement for the revised transmission corridor is due in late 2026.

The tender for a network operator to build the transmission lines is expected to close at the end of 2027.

Capacity: 4.5GW

The state's first and most advanced zone, currently in the delivery phase.

The first transmission tower was erected in April 2026, and about $25 billion in private investment is expected.

Network operator ACEREZ apologised after an Indigenous rock shelter was destroyed in May 2026 during land clearing for transmission lines.

Capacity: 3.56GW

Work on the 700-kilometre transmission line connecting the NSW, Victoria and South Australian grids was completed in June 2026.

In August, the NSW government confirmed $225 million to convert the Dinawan substation and transmission lines to 500 kV in preparation for the renewable projects associated with the REZ.

Capacity: 1GW

Work in this zone involves upgrading existing power infrastructure in Newcastle and the Central Coast.

There are three coal-fired power stations within the zone, including Eraring, Australia's largest coal-fired power station.

Stage one of the upgrades was completed in May 2026, and the next phase will connect major regional hubs.

Capacity: 1GW

The NSW government announced the Illawarra would become the state's first urban REZ after delays to large generation projects such as offshore wind.

The zone will now focus on rooftop and community solar and batteries. A community reference group convened in August 2026.

Professor Christopher, now the director of the Energy Futures Network at the University of Wollongong, said the money could not flow until the transmission routes are settled with the communities they pass through.

"If they haven't been able to lock in the line routes with local communities, they can't spend the money to buy the easements, or start procuring equipment and building the lines," he said.

"The delays in that first stage, community engagement and consultation, are what we're seeing now in the expenditure against budget."

NSW Energy Minister Penny Sharpe's office said the amount of large-scale wind and solar operating in NSW had risen more than 80 per cent since the 2023 election.

Its delivery agency, EnergyCo, is held up as a model for other states to follow.

But according to the independent agency tasked with monitoring whether the state is on track to meet its energy goals, NSW needs to be moving a lot faster.

NSW is 7.9 gigawatts (GW) short of its legislated target of 12GW by 2030, and the amount of renewable generation commissioned each year must nearly double to close the gap, according to the NSW Net Zero Commission's latest progress report.

Slowest in the country

Most renewable projects proposed in NSW have drawn significant opposition.

Eighty per cent of wind farm proposals and 60 per cent of solar farm proposals in the state have drawn more than 50 opposing submissions, triggering a referral to NSW's independent decision-maker, according to the Net Zero Commission.

An Independent Planning Commission decision takes on average about 90 days, and objectors can then lodge an appeal, adding at least another year to the process.

This is one of the reasons approvals in NSW are among the slowest in the country.

Over the five years to March 2026, NSW had the longest average planning-approval times in the country for wind, solar and batteries, according to analysis by the Clean Energy Investor Group (CEIG).

It currently takes on average almost four years to approve a wind farm in NSW, which compares to just five months in WA and is more than five times longer than in Queensland.

However, investors still rate NSW the most attractive state for renewable investment, according to the CEIG survey.

Speaking to reporters in August, Ms Sharpe acknowledged the process had "been way too slow".

She pointed to wind guidelines the government "inherited" that she said were "designed to make building wind farms as hard as possible".

"There's been a huge amount of work … to really try and streamline that," she said.

"We are seeing more projects being approved and coming out of the system, which is very welcome."

In May the government introduced legislation aimed at fast-tracking approvals for priority clean energy projects.

Lines yet to be built in largest zone

Most of EnergyCo's budget was allocated to fund the early development, planning and land acquisitions required ahead of private operators building transmission lines.

New England is the biggest of the five zones, legislated to supply 8GW, two-thirds of the state's entire 12GW renewable generation target.

More than a year after shortlisting builders, none has been appointed and construction has yet to begin.

The transmission route has been redrawn multiple times.

In May it was altered to avoid landholders, challenging landscape and an environmentally sensitive cave system.

EnergyCo said such refinements were "a normal part of developing major infrastructure projects".

But each adjustment delays the start of construction.

In 2023, the government said New England would not generate power before 2029.

By May 2025, delivery had slipped further, with an initial 6GW now split between 2.4GW by 2032 and 3.6GW by 2034.

A NSW parliamentary inquiry in July found EnergyCo had "failed to perform its central coordinating role", particularly in the sequencing of development and coordination of infrastructure.

The NSW government is currently considering the inquiry's recommendations.

EnergyCo does not expect to appoint a network operator for the New England REZ before the end of 2027.

Approved projects aren't being built

Of the projects that are approved, many are taking too long to be built or are not being built at all.

Part of the reason is the cautious approach of clean energy investors.

CEIG's survey found more than three-quarters of investors believe the renewable landscape has worsened over the past year.

And just 8 per cent of investors believed Australia was on track to achieve its target of 82 per cent of electricity coming from renewables by 2030.

The cost of building a wind farm has risen by up to 50 per cent, making projects harder to fund.

Of the 31 wind projects awarded support under the federal Capacity Investment Scheme, only four have secured the funding to be built.

Investors also worry they won't be able to sell their power once a project is built.

An influx of wind and solar increases the risk of curtailment, being switched off when the network is full.

Ms Sharpe acknowledged the problem.

"There are projects that have been approved," she said.

"The more challenging issue is: are they getting to financial close?

We have seen real changes with costs and supply chain changes over the last few years."

To help projects reach construction, the NSW government has set up the Energy Security Corporation.

What's coming?

Getting more generation online is the key to allowing coal-fired power stations to close.

The closure of Australia's biggest power station, Eraring in the Hunter, has been delayed twice, most recently pushed back to 2029.

According to the NSW Net Zero Commission, its closure is directly linked to the completion of the Hunter Transmission Project, which connects the large inland REZs with the bulk of the state's energy consumers in Newcastle, Sydney and the Illawarra.

If that line is delayed, the aging plant may have to keep running.

At the same time, energy demand is set to surge.

Data centres currently account for about 4 per cent of NSW's power consumption, but that is expected to surge to about 20 per cent within a decade, according to the Australian Energy Market Operator.

The government has introduced legislation requiring data centres to build enough new renewable generation to meet their needs or sign power purchase agreements.

Ms Sharpe described it as both a risk and an opportunity, saying it could help get renewable projects "over the line" by creating new demand for their power.

Reaching the target

To meet its 12GW target by 2030, the commission says NSW must nearly double the amount of renewable generation it commissions each year.

But an accelerated rollout is likely to keep meeting community resistance.

Professor Christopher was candid about the state's chances of meeting its legislated targets.

"Do I think we'll hit it? Probably not quite," he said.

"Do I think it's in anyone's interest to rewrite the target now? Absolutely not."

Professor Christopher said the plan had been optimistic from the outset.

"The only thing that was overly naive … was people not fully countenancing the degree of community challenge," he said.

"That was underestimated."

But Professor Christopher warned against giving up on the target.

"Bold outcomes will never be achieved from setting timid targets," he said.