The New South Wales Government will today launch the NSW Transmission Infrastructure Strategy, which aims to develop $2.5 billion worth of high voltage transmission projects to shore up the power grid and accommodate more renewable energy projects.
NSW Energy Minister Don Harwin told the Australian Financial Review (AFR) the strategy aims to improve transmission links with neighbouring states and Snowy Hydro, and get ahead of congestion problems that are stopping renewable projects from proceeding. The plan also aims to attract investment in renewable generation.
“We know that industry won’t invest if they can’t connect,” Mr Harwin told the AFR. “There are serious bottlenecks at the moment and in some parts of the state there is such limited transmission capacity that they can not bring on new projects.”
The New South Wales Government announced it would launch the strategy in July when the Australian Energy Market Operator (AEMO) launched its Integrated System Plan.
The New South Wales Government has had several major announcements supporting the uptake of renewables recently, in particular the recent announcement of the NSW Emerging Energy Program.
The program aims to dramatically scale back coal and transition to renewables by 2040.
The NSW Department of Planning recently approved a $117 million solar project to be integrated into the Vales Point coal power station.
Mr Harwin also recently announced the government would spend $20 million installing up to 900 smart batteries on government buildings such as hospitals and schools in order to turn them into virtual power plants.
Energy Networks Australia CEO Andrew Dillon said the NSW plan was a vital step towards a more integrated energy system that would deliver greater benefit to customers through a more resilient grid and more competitive wholesale markets.
“Around the world, modern energy systems are responding to more variable renewable generation by ensuring greater connection between generation sources and customers,” he said.
“NSW sits at the centre of the National Electricity Market (NEM) and is critical to the development of a more connected energy future.
“Fast-tracking the four key projects outlined in the strategy will bolster the grid’s capacity and put downwards pressure on prices – a priority for network businesses across Australia.”
Mr Dillon said the sequential nature of current regulatory arrangements was slow and unsuited to the transformation underway in electricity generation.
“By providing a funding guarantee for preliminary planning work, the NSW Government can fast-track priority projects while ensuring projects will only proceed where the benefits for consumers clearly outweigh the costs,” he said.
“Networks want to keep costs as low as possible while ensuring new renewable generation can be reliably integrated into our grid. The NSW plan will help achieve this.”
The Australian Energy Council said it is important that projects supported under the NSW Transmission Infrastructure Strategy undergo careful cost benefit analysis to demonstrate they will deliver value for the market.
The AEC’s Chief Executive Sarah McNamara said she understood the desire to fast-track transmission projects but that the investment case still needs to be carefully made.
“This is essential to both protect customers from unnecessary costs, and provide competitive industry confidence, as well as transparency in the way the network is developed,” she said.
“There is also a need, in an interconnected national market, to avoid state variations to the nationally agreed approach for transmission investment.
“The NSW Government’s strategy appears to be seeking to accelerate the initial stages of analysis for NSW projects but remains committed to a national process with respect to the investment case.
“The continued commitment to the national process is welcomed. It is important to maintain a stable and transparent process which occurs through the existing investment test.
“In that way we can minimise market investor risks and ultimately protect customers.”