Electricity may flow invisibly through copper and silicon, but its implications are tangible: rising bills, collapsing grids, stranded renewables, and vulnerable communities. As we enter an era of climate disruption and AI-fuelled energy demand, it’s clearer than ever that Australia has failed to build an energy system fit for the 21st century.
I’ve written before about smart energy systems and my involvement in Smart Grid Australia, which once championed the shift to a more intelligent, consumer-centric network. But despite the urgency, we lost a critical decade of progress under the former Coalition government—years in which regulatory inertia, utility protectionism, and a lack of vision squandered our early leadership. That failure is now becoming a liability.
The world has changed. Our grids have not.
The myth of the free electricity market
There’s a widespread assumption that our energy market is competitive and efficient. In reality, as American energy expert Travis Kavulla compellingly argues, there has never been a free market for electricity. Utilities are state-sanctioned monopolies that operate on a revenue model incentivising capital expansion, not innovation. They earn more by building more—regardless of whether it’s needed, useful, or efficient.
I reference Kavulla here not because I share his ideological position—in fact, I challenge much of it—but because his insider’s view of utility regulation shines a revealing light on how entrenched incentives drive systemic inefficiencies. By dissecting his arguments, we can better understand the structural flaws we must overcome, while also recognising where his critique misses the broader environmental and democratic stakes.
However, while Kavulla’s regulatory critique is sharp, his analysis omits key externalities. His stance on greenhouse gas emissions stops short of addressing climate change directly. At one point, he even suggests that “doing nothing” might be preferable to imperfect emissions policies. This highlights a critical blind spot: if we frame the energy crisis only as a market failure, we risk ignoring its planetary implications.
This explains much of the dysfunction we’re now seeing. Kavulla notes that utilities are rewarded for spending—not saving. The more poles, wires, and substations they build, the more guaranteed income they receive, often at the public’s expense. Consumers are locked into this logic, forced to underwrite gold-plated infrastructure even as their own rooftop solar or community battery is ignored or penalised.
Australia shares this pathology. We treat energy like a government-contracted monopoly that pretends to be a market. It’s not.
Renewables are not the problem—but they expose the system’s weakness
Renewable energy has become a political football in Australia, but the problem is not the technology. It’s the grid architecture we keep trying to bolt it onto. Our transmission networks, market rules, and regulatory incentives were built for centralised fossil fuel generation—not variable, distributed renewables.
Kavulla points to market imbalances such as negative electricity prices and nuclear shutdowns. But these are not symptoms of too much solar—they’re signs of inflexible infrastructure that can’t cope with rapid shifts in supply and demand. Nuclear closures, for instance, stem from age and cost, not just pricing.
Australia’s newly announced $2.3 billion household battery subsidy marks a potentially transformative shift. Rather than pouring more capital into large-scale grid extensions, this policy supports behind-the-meter storage—enabling households to store and manage their own solar output. It’s a structural decentralisation of power, both literally and politically.
This move also addresses concerns raised by power companies themselves about the high costs of expanding traditional infrastructure. With distributed generation and storage, the role of incumbent electricity companies is beginning to shift. The transition will challenge their centralised delivery model, and may force them to evolve from energy providers into energy service platforms.
Globally, businesses are taking similar steps. From USA to Europe, microgrids and on-site renewables are being deployed to insulate against market shocks, outages, and climate extremes. It’s a move away from dependency toward resilience.
The AI data centre dilemma
Australia’s energy market must now contend with another stressor: the rapid growth of AI-powered data centres, which can consume more energy than entire regional towns. The Australian Energy Market Commission (AEMC) has proposed reforms to better manage this impact, but the underlying logic of energy distribution must change.
Without new rules that mandate integration of renewables and storage, these mega-loads risk overwhelming local grids. My earlier article on data centres and AI outlines how ill-prepared our current framework is for this new wave of demand.
Conclusion: what we need isn’t just smarter grids—it’s smarter governance
Australia’s energy transformation can’t be driven by utilities, consultants, or AI developers alone. It requires democratic renewal—empowering citizens, communities, and small-scale innovators to shape the system from the ground up.
We can’t afford another lost decade. With renewables booming, climate shocks increasing, and AI reshaping demand, we stand at a crossroads. Either we modernise our vision—or we remain trapped in an outdated model that serves neither people nor planet.
The shift signalled by the battery subsidy is a step in the right direction—but only if it’s embedded in a wider vision of reform that addresses regulation, equity, and access.
Let’s choose connection, not just consumption. Let’s put people at the centre of power—literally.
In next week’s follow-up piece, I’ll explore how business models, peer-to-peer energy sharing, and civic-led reform could help Australia leap from a fragile, centralised grid to a future defined by flexibility, equity and participation.
Paul Budde