2025 Election: A tale of two campaigns

The election has been called and the campaigning has started in earnest. While both major parties are proposing a markedly different path to deliver the energy transition and to reach net zero, it’s worth taking a look at what sits beneath the big headlines and take an objective look at how the current Labor Government is tracking towards its targets, and how a potential future Coalition Government might deliver on their commitments.

Last week’s Budget and Budget Reply set out at a high level how each party sees the transition evolving. The Labor Government delivered more energy bill relief, lopping an additional $150 off every Australian’s energy bill out to the end of 2025, on top of the $300 already delivered in 2024/25. This announcement, coupled with the declaration that electricity prices were down 25 per cent year on year[1], seems geared towards providing cost of living relief to households in an election year rather than looking to solve any ongoing cost impacts for Australians as the electricity grid is transformed. It should however be noted that the reason electricity prices fell over the last year was due in itself to bill relief[2].

The Coalition too spoke in depth about reducing bills, pinning its hopes on a gas reservation policy and more gas fired generation on the east coast. Whilst it didn’t go into detail about the volume of new generation that would be built ahead of nuclear power entering the grid in the late 2030s, the clear inference is that more gas generation in the system, presumably in place of renewables and transmission lines, would provide a stop gap until nuclear was available that would keep prices low and reliability high. Peter Dutton did not fall into the trap of giving a dollar figure for how much lower prices would be, or how much new gas generation would be pushed into the system, instead preferring to spruik that the cost of gas would drop from $14 to $10 a GJ. The Frontier Report[3] relied upon by the Coalition to illustrate the cost reductions that would eventuate if the transition included nuclear suggests that by 2051 the NEM would have about 8 GW of available gas peaker capacity, an increase of only 0.1% on today’s 7.7GW.

The Coalition also previously committed to include gas fired generation (GFG) in the CIS, and reiterated this over the past week pointing to it as a driver for new GFG build between now and 2030. It has also committed to invest $1billion into a gas infrastructure fund to increase gas pipeline and storage capacity as part of its plan to get more gas into the system, which is not a quick fix.

Conversely, the current Labor Government position is that they will not fund or underwrite new gas generation, arguing it would be uncompetitive with renewables and battery projects currently supported by the CIS. This leaves the States focused on achieving reliability objectives, which will need to include consideration of the role of gas to complement renewables when output is low, raising energy reliability. Given AEMO suggests a doubling of the capacity of gas peakers available in 2050, the gravity of this task will almost certainly mean that the Federal Government will have a role to play in supporting more gas fired generation, either through underwriting, or by encouraging the states to agree to a wholesale market that appropriately values that capacity.

On market design, the Commonwealth is funding, on behalf of the Energy and Climate Ministerial Council, an expert panel led by Dr Tim Nelson to review and make recommendations on wholesale market settings that will promote investment in firmed, renewable generation, and storage capacity in the NEM following the conclusion of Capacity Investment Scheme tenders in 2027. The Panel is working feverishly to deliver this task and it is strongly supported by industry as a critical pre-condition to an effective market post 2030. The Coalition has not given an indication on whether or not it would proceed with this review should it win Government on 3 May, but irrespective of the outcome, from the perspective of the AEC, the Panel should continue its important work to ensure a strong and effective NEM into the future.

So where to from here? We are six days into a 37-day campaign, and no doubt energy will remain front and centre. Recent media[4] has pointed to a residential battery subsidy of some form being announced by the Labor Party, with expectations the Coalition would likely follow such an announcement in. While home battery subsidies are undoubtedly good politics in an election campaign and have been called for by many different organisations and lobbyists in recent weeks, it is critical that any subsidy or incentive is designed in such a way that in improves energy equity rather than impinges upon it. Household batteries remain an expensive proposition, and even with a subsidy, will likely remain an option for those with enough disposable income. One way to reduce this inequity would be to tie any subsidy to an incentive to participate in a retailer-led Virtual Power Plant (VPP) to share that battery’s excess capacity with the grid, reducing demand and minimising costs overall. This approach would provide two benefits – firstly, VPP participation would create an additional value stream for the customer and market, allowing a retailer to act on their behalf and share this capacity with those unable to invest themselves, and secondly, would reduce the cost to the Federal Budget, given that value stream would reduce the quantum of subsidy needed to achieve the same result for the household.

Gas supply will remain a hot topic, with detail and modelling about the Coalition’s reservation policy still to come. The Government appears likely to stick with its existing approach of using its Code of Conduct to pressure the gas industry to supply enough gas into the system.

Finally, given the polls are suggesting a minority government of some persuasion, the positions of the independents, the Teals, and the Greens will no doubt become a point of discussion should negotiations be needed. While for the most part the crossbench have presented themselves as very pro-climate, and keen to fast track the transition, there is very little detail to allow genuine analysis on practical steps to enable their delivery. The one exception to this is Allegra Spender’s proposal to provide zero interest loans for electrification to provide permanent bill relief, with Ms Spender likely to leverage this policy to secure her support in the event of a hung parliament It will be interesting to see how other crossbench positions evolve in the coming weeks, and where energy and climate sit in the negotiations likely to occur in early May.

The next five weeks will no doubt be spent talking about politics, campaigning, and electoral maps; better than Christmas for some. Whatever the result on May 3, the 48^th Parliament of Australia will be a critical one. There is a lot to do in energy, and the AEC looks forward to working with the future Government to ensure the transition continues at speed, keeping costs to consumers as low as possible.

[1] https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/speeches/2025-26-budget-speech-parliament-house-canberra 

[2] https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release 

[3] https://www.frontier-economics.com.au/wp-content/uploads/2024/12/Report-2-Nuclear-power-analysis-Final-STC.pdf, Page 26

[4] See, for example: https://www.smh.com.au/politics/federal/labor-takes-power-bill-election-fight-in-house-with-help-to-buy-home-batteries-20250329-p5lnj7.html