This weekend Australia will vote for blackouts.
Australia’s aggressive pursuit of renewable energy, championed by the Teal independents and the Labor government, is sold as a path to cheaper electricity and a cleaner future. The promise is seductive: wind and solar will slash power bills while saving the planet.
Yet, recent events in Europe – most notably Spain’s massive blackout and Germany’s ongoing grid struggles – expose this narrative as dangerously naive. Forcing intermittent renewable energy onto aging grids without adequate investment in stability measures is a recipe for chaos, and this weekend, I suspect, Australia will vote to barrel down the same path.
Spain’s blackout: a wake-up call
On 28 April, 2025, Spain and Portugal suffered an 18-hour blackout that plunged 55 million people into darkness, halted trains, shut airports, and disrupted hospitals. At the time, Spain’s grid was running on 60.64 per cent solar and 12 per cent wind power, a testament to its renewable energy leadership. Yet, this high penetration of renewables became a liability when two rapid “disconnection” events in the southwest – likely tied to solar generation destabilised the grid, causing a collapse that severed connections with France and Portugal.
Initial attempts to downplay the role of renewables gave way to a grudging admission: the grid lacked the resilience to handle the intermittency of wind and solar. Unlike traditional coal, gas, or nuclear plants, which provide inertia through large spinning turbines to stabilise grid frequency, renewables rely on inverters that offer no such buffer. This leaves grids vulnerable to sudden fluctuations, as seen in Spain when a 15-gigawatt drop, equivalent to 60 per cent of demand, occurred in seconds.
Reuters, in a piece titled “Don’t blame renewables for Spain’s power outage,” argued that the issue was not renewables themselves but poor grid management and insufficient investment in storage and upgrades. This is a distinction without a difference. The rapid integration of renewables outpaced the grid’s ability to adapt, a problem experts have warned about for years. Spain’s grid operator, Red Eléctrica, had flagged risks of “high penetration of renewable generation without the necessary technical capacity” in a recent report, yet the push for renewables continued unabated.
Germany’s troubles: a cautionary tale
Germany, with 64 per cent of its electricity from renewables, faces similar challenges. The country’s energy transition, or Energiewende, has led to soaring electricity prices – among the highest in Europe – and growing grid instability. Periods of low wind and solar output, known as Dunkelflaute, have forced reliance on coal, gas, and imports to prevent blackouts. Social media posts noted that Germany’s grid has avoided collapse only due to these fossil fuel backups, underscoring the fragility of a renewable-heavy system.
Germany’s experience highlights the hidden costs of renewables. Wind and solar’s intermittent nature demands massive investments in grid upgrades, battery storage, and backup generation – costs that are rarely factored into the “cheap renewables” narrative. Without these, grids become non-linear systems prone to cascading failures, where small disruptions can spiral into catastrophic outages.
Australia’s blind march
Australia’s Labor government aims for 82 per cent renewable energy by 2030, a target that ignores the global evidence of grid strain. The Teals and Labor tout falling renewable costs, but this glosses over the systemic expenses of grid stabilisation. Spain and Germany show that renewables, while low-cost in generation, require billions in infrastructure to maintain reliability. Spain’s government plans to invest €52 billion by 2030 to upgrade its grid for renewables, a sum that dwarfs the cost of maintaining traditional power sources.
Australia’s grid, isolated from neighbouring countries, is uniquely vulnerable. Unlike Europe, where Spain could import power from France and Morocco to recover, Australia cannot rely on external support during a crisis. Australia’s push for renewables, with a current mix approaching 45 per cent, risks replicating Spain’s 56 per cent and Germany’s 64 per cent renewable grids, both of which teeter on the edge of instability.
The South Australia blackout of 2016, caused by a storm but exacerbated by reliance on wind power without adequate backup, was a preview of what’s to come. Energy expert Bruce Miller noted that Spain’s blackout mirrored South Australia’s, with insufficient battery storage and flexibility leaving the grid exposed. Australia’s failure to learn from its own history, let alone Europe’s, is a policy failure of staggering proportions.
The false promise of cheap power
The Teals’ claim that renewables will lower electricity prices is contradicted by global evidence. Germany’s consumers pay some of the highest rates in the world, despite its renewable dominance. Spain’s blackout revealed the fragility of a system lauded for reaching 100 per cent renewables just weeks earlier, a milestone that masked underlying weaknesses. In Australia, the cost of grid upgrades, battery storage, and backup generation will inevitably drive-up bills.
Who will you vote for?
Renewables advocates often ignore the need for “grid-forming inverters” and other technologies to mimic the inertia of traditional generators. These are expensive and still underdeveloped, yet essential for preventing frequency oscillations that can topple grids. Spain’s outage underscored this gap, with experts noting that greater investment in such technologies could have mitigated the crisis. Australia’s current trajectory, prioritising renewable deployment over grid resilience, invites similar disasters.
Australia must heed Europe’s warnings. First, grid upgrades and storage investments must match the pace of renewable adoption. Spain’s lack of battery storage left it vulnerable, a lesson Australia cannot ignore. Second, maintaining baseload power –whether gas, coal, or nuclear – provides critical inertia until renewable technologies mature. Germany’s reliance on fossil fuels during Dunkelflaute shows that abandoning traditional sources prematurely is reckless. Finally, policymakers must be honest about costs. The €52 billion Spain plans to spend on its grid is a sobering reminder that renewables are not a free lunch.
The alternative – ignoring these realities – risks plunging Australia into its own mega-blackout. Spain’s collapse was not a freak event but a predictable outcome of underinvestment in grid stability. Australia’s isolated grid and ambitious targets amplify this danger. Without a clear, coordinated plan to ensure reliability alongside the transition to renewables, we risk becoming the next cautionary tale in the global energy shift.
The lights must stay on, and that requires facing the hard truths Europe has already learned.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
He is also author of best-selling investment guide-book for the stock market, Value.able – how to value the best stocks and buy them for less than they are worth.
Roger appears regularly on television and radio, and in the press, including ABC radio and TV, The Australian and Ausbiz. View upcoming media appearances.
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