New generation in North West Victoria will require investment

Connecting even some of the proposed 1500MW of generation in North-West Victoria will exceed the network capability of the local transmission network, according to data modelled by the Australian Energy Market Operator (AEMO).

In its Victorian Annual Planning Report (VAPR), AEMO identifies the key driver for potential network augmentation is shifting away from the need to manage peak demand, and is instead focused on enabling higher levels of concentrated generation in areas of low network capability.

AEMO managing director and CEO Matt Zema said increased certainty around the Large-scale Renewable Energy Target (LRET) has accelerated interest in new generation connections in Victoria, specifically in the North-West region of Victoria due to favourable conditions for wind and solar generation.

“Minor transmission line upgrades and local control schemes could support the connection of up to 200MW of additional generation in the area, with major augmentations required for further proposed generation to ease the risk of congestion,” he said.

“In an environment where the energy industry is transforming to include higher levels of renewable generation, major network augmentations to increase capacity might in fact be cost effective for consumers, as development would enable renewable generation to be connected to the grid and efficiently transported to demand centres.”

Following the publication of the VAPR, AEMO will commence a Regulatory Investment Test for Transmission (RIT-T) for augmentation in North-West Victoria to determine if the market benefits of augmentation are viable.

Rigorous consultation with a range of stakeholders will be crucial to better understand the opportunities and possibilities to deliver a safe, secure and efficient network for the future, according to Mr Zema.

With demand growth slowing, AEMO is working closely with distribution and transmission network businesses across the state to implement supply switching control schemes to defer the need for non-urgent network augmentation.

“AEMO’s mission is to maintain energy security for all Australians at the lowest cost to consumers, so wherever possible, AEMO recommends the design and implementation of low-cost control schemes to increase transmission network capacity without materially affecting the security and reliability of the grid,” Mr Zema said.

Acknowledging potential investment in augmentation may be required, the replacement of ageing assets continues to be the primary driver for transmission investment in Victoria, comprising approximately three quarters of transmission spend in the state over the coming three years.