What America Can Learn From Australia’s Grid
The Dispatch · RC · trust 44/100
Unlocked Dispatch Energy What America Can Learn From Australia’s Grid Australia’s nested institutions work together to meet electricity generation and transmission needs. Lynne Kiesling / September 8, 2026 Loading = 3 && ageInMonths 3 months old . Some information may be outdated.'; } else if (ageInMonths = 6 && ageInMonths 6 months old . Some information may be outdated.'; } else if (ageInMonths = 12 && ageInMonths 1 year old . Some information may be outdated.'; } else if (ageInMonths = 12) { const ageInYears = Math.floor(ageInMonths / 12); this.message = `This post is more than ${ageInYears} ${ageInYears === 1 ? 'year' : 'years'} old . Some information may be outdated.`; } } }" { this.tooltipOpen = false; }, 200); } }" class="relative" Audio Turn any article into a podcast. Upgrade now to start listening.
Text Size { this.tooltipOpen = false; }, 200); } }" class="relative" Members can share articles with friends & family to bypass the paywall.
Welcome to Dispatch Energy ! In past articles, I’ve written about the American electricity industry, especially its technology, its regulation, and the pressures now coming from data centers. But my focus has been domestic, and it would be understandable if you concluded from all this that American arrangements are, shall we say, idiosyncratic. This industry is physically and economically complicated, built on enormous infrastructure. Is it really this weird everywhere, or just here?
I start, as always, with the physical reality that electricity does not care about state lines. A generator in one state can serve customers in another. Transmission networks let regions share reserves, tap different resources, smooth out weather and demand, and increase competition, lowering the cost of keeping the lights on.
Some of the most important changes, though, are happening at the opposite scale. Rooftop solar panels, batteries, electric vehicles, and flexible loads sit behind millions of individual meters, and their owners know things no grid operator can know for them, like what they’re willing to pay, when they can shift consumption, or how much inconvenience they’ll tolerate.
Modern electricity, therefore, poses an institutional puzzle: While coordination across enormous areas benefits some decisions, decentralized knowledge and individual choice drive others. International comparison helps clarify these competing demands by showing how different institutional arrangements divide authority, coordinate across scales, and adapt to similar technological and economic pressures. Australia is similar enough to the U.S. to make a comparison worthwhile. Both countries have a large land mass, a federal system dividing authority between a national government and the states, and long distances separating both population and varied energy resources.
Australia has built what I’ll call nested institutions : Different organizations make decisions at different scales, but their roles connect deliberately. The United States, meanwhile, more often has layered institutions : Federal, regional, state, utility, and local authorities overlap, sometimes productively and sometimes at seams that impose real transaction costs. The difference shows up at both ends of the grid, with wholesale markets and transmission at the top and rooftop solar at the bottom.
Australia’s electricity industry started, like America’s, as a decentralized mix of private, municipal, and small public utilities in the late 19 th century. But by the 1930s, Australian states had consolidated their systems into large public utilities and used that ownership to electrify rural areas. The United States took a different route, mostly keeping investor-owned utilities in place and reaching rural areas instead through the Rural Electrification Administration, which financed member-owned cooperatives with low-interest federal loans rather than nationalizing the industry.
By the eve of the 1990s reforms, Australia’s system looked like the traditional American utility model, but with public rather than investor ownership, with each state running its own vertically integrated utility and connecting to its neighbors only at the margins. That legacy of public ownership created a different starting point for reform than America’s landscape of primarily investor-owned utilities and cooperatives.
In the 1990s, the Australian government undertook a broad program of reforms similar to those in the United Kingdom under Prime Minister Margaret Thatcher—namely, privatization and market mechanisms for big infrastructure industries like power and telecommunications. That program meant unbundling the vertically integrated state authorities into generation, transmission, distribution, and retail, with implementation varying by state while the wires stayed regulated monopolies everywhere. The states then worked together to build a single National Electricity Market , launched in 1998 across the interconnected eastern and southern states.
The United States restructured on a similar timeline but a more decentralized path. The Energy Policy Act of 1992 reduced legal barriers to competitive wholesale markets, and utilities were encouraged, not required, to join the resulting regional markets. Several formed instead of one—PJM, New York ISO, ISO-New England, California ISO, and Texas’ ERCOT—while much of the Southeast and West never joined one at all.
Both countries confronted the same economic insight in the 1990s: Generation gets more competitive when transmission opens up and more generators compete and are dispatched across larger areas. And they built that insight into very different forms of federalism—Australia through a single national bargain, America through a landscape of separate regional agreements.
The National Electricity Market did not eliminate the role of the states, and Australia did not create a national regulator to plan and operate the industry. Different institutions instead acquired different…
Read the original at The Dispatch →
Open in TruthVane →