Contributing to Ansarada’s recent white paper, Renewable Energy Infrastructure Outlook 2026, MBB Director, Shane Devlin talked through issues and potential solutions for transmission projects in the renewable energy space. The talk ranged from why transmission is the real bottleneck in Australia’s energy transition, to how governments are rethinking risk and where procurement processes most often fail.

The articles has been published in Ansarada’s new white paper and reproduced here.

From your perspective, what are the main procurement issues shaping renewable energy and transmission projects in Australia right now? How established is the ITC model across Australia and how are different states approaching it?

Most of my work has been in the transmission sector – largely government investment and procurement, where the investment isn’t happening on its own.

That’s a very different situation to the green energy developers, particularly solar and battery, who are operating in a different market.

In the transmission space, the big topic is Incentivised Target Cost (ITC) contracting. It’s being used as a way for the public sector side to accept more risk, rather than trying to push it all into a lump-sum contract with the delivery market. The model is well established in places like the UK, but in Australia some jurisdictions are still getting to grips with what it means to have a target cost, what risks they’re taking to their board and how ‘pain-share/gain-share’ is going to work in practice.

In Victoria, it’s well embedded. Treasury has implemented it as a standard form contract, largely because of experience in the transport sector. There’s a view that transmission and other linear infrastructure share a lot of the same risk profiles, so that approach has been moved across and standardised.

In Queensland, people are using the language of ITC, but may not have signed contracts in that form yet. They’re directionally on the journey, but the circumstances are different and some of the risks that make the model a clear fit in Victoria aren’t as clear here.

How urgent is transmission right now, given the pace of generation investment?

In my mind it’s the biggest constraint.

If you talk to battery developers, they have tailwinds in a lot of other ways – capital costs are coming down, and battery prices are still falling faster than many projections. Land can be simpler because they’re often buying freehold.

But they can’t get projects financed if they can’t secure connections, and those connections are underpinned by transmission upgrades. So, if you ask a battery developer what help they need, it often comes back to transmission.

Renewable Energy Zones (REZs) are intended to coordinate generation planning with future transmission investment. Is that how they’re working in practice?

What I’ve seen is that planners are allocating REZs geographically based on the highest-value use of land, and those zones can shift once they’re established.The intent is that they sit at the end of a transmission network – states aren’t establishing REZs in places that aren’t planned to be connected – but some of them aren’t connected yet.

It’s fine to say a zone will be there and try to bring in private investment, but if the transmission project that connects it is delayed, or perceived as high risk, it becomes difficult to fund the projects you want to build inside the zone. Where REZs can help is coordination. Giving someone control over a defined region can support better matching of solar, wind and batteries, and that matters for system stability.

In your experience, where do procurement processes for transmission projects most often go wrong?

A common issue is clients not being clear early on about what they want – even basics like whether they’re procuring an asset or procuring a service. Some organisations are only familiar with one approach, so they don’t properly explore the full range of options at the strategy stage.

Another issue is how prescriptive clients can be when they go to market.

A very hands-on client might issue a detailed technical specification where a functional specification would be better. That can rule out good bidders, or it can fail a process because nobody can comply with what’s been put to market. Sometimes clients only reach that understanding after they’ve run a few failed processes and get direct feedback from industry.

How common is it that procurement processes fail outright?

It happens enough that we focus closely on it. A lot of this links back to government organisations that just haven’t done major projects for a long time.

If you’re an organisations that’s been spending tens or hundreds of millions a year on maintenance for the last decade and you’re now ramping up to billions per year, your existing suppliers and procedures may not be proven at that scale.

The public sector appears to be less satisfied with the degree of efficiency and automation in their renewables procurement processes. Is that consistent with what you see?

Broadly, yes. Public sector organisations are working under very well-documented processes – and that doesn’t necessarily mean good processes. People are often not authorised to step outside those frameworks.

Those procedures are usually tied back to state policies and then overlayed with internal frameworks and procedures. So, if you want to materially change how procurement is done – including standardisation  and the use of better, dedicated systems – it’s not just a project decision. Effectively, a new framework has to be developed that has to go through its own governance journey.