Victoria moves to exit the NEM

AEMC whole of system plan, Queensland NSW Interconnector, rockhampton, ISP, electricity project, OMERS, COVID Safe, transgrid, forecasts, forecasting, Garderos, Powerlink, Western Power, Empired, Energy Networks, AER, transmission, AEMC, Victoria, TransGrid

The Victorian Government has announced in an effort to upgrade its transmission network it will introduce legislation that will allow the government to override what it says is the “complex and out-dated national regulatory regime”. 

The government says the legislation will fast-track priority projects like grid-scale batteries and transmission upgrades, and give Victoria the power to unlock renewable projects and improve the reliability of Victoria’s energy supply.

“The vulnerability of the national energy network has been highlighted in recent months, with each of Victoria, New South Wales, and South Australia narrowly avoiding load-shedding in late January,” the Victorian Government said in a statement.

“Extreme heat has created unprecedented demand for electricity while ageing, coal-fired generators repeatedly let Victoria down. The transmission system is also vulnerable to bushfires and severe weather events, like the mini-tornado that brought down the Heywood interconnector this summer.”

The changes it is proposing, which will be used in close consultation with the Australian Energy Market Operator (AEMO) will focus on projects that deliver clear benefits to consumers, according to the Victorian Government.

As a first step to secure additional transmission capacity the government will ask AEMO to call for expressions of interest to increase the capacity of the Victoria-New South Wales Interconnector.

There have been concerns expressed about the Victorian Government’s “Vicxit from the NEM”.

The Energy Users Association of Australia said it is very concerned with Victoria’s plan to “ignore the energy market rules and go it alone on grid augmentation”.

“While there is certainly potential to improve the rules governing the energy market and regulated grid investments, they are in place to protect consumers from poor decision made by others,” said EUAA Chief Executive Officer, Andrew Richards.

“If the Victorian government want to have their version of Brexit, a Vicxit, and bypass important consumer protections and ignore the rules, how will consumers be protected?

Related article: UQ reveals solar technology breakthrough

“It is unclear what changes the Victorian Government is proposing to make as these have not been detailed. We will be seeking clarification to better understand which aspects of the National Electricity (Victoria) Act 2005 the government is proposing to alter and their impacts on consumers.”

The Australian Energy Council has echoed this sentiment, saying there is a “real risk of increased costs for end users as a result of poor investment decisions”.

The Australian Energy Council’s Chief Executive, Sarah McNamara, said that no industry consultation had been undertaken on the proposed Bill, nor had it been sighted.

“There is already a robust investment test for transmission in the energy sector, run by the Australian Energy Regulator (AER), which serves energy customers’ well,” she said.

Related article:ACCC: East coast gas prices too high and future uncertain

“Bypassing that rigorous process is fraught. Every transmission and network investment will unavoidably affect market investments, so careful and individual assessments carried out at arm’s length from politics are necessary.”

On the other hand, the Clean Energy Council says the Victorian government’s proposal to accelerate much-needed investment in transmission will provide greater investment confidence for the clean energy sector, help improve reliability and drive down power prices.

Clean Energy Council Chief Executive Kane Thornton said he welcomed today’s announcement and hoped the Victorian government initiative would help to reverse the recent collapse in renewable energy investment.

“Our transmission network has simply not kept pace with the transition to a 21st century energy system and is causing major concerns for investors in clean energy,” he said.

“Across Victoria there are existing renewable generators that are having their output constrained and renewable projects that are experiencing difficulties connecting to the grid due to system strength and congestion issues. This is not only inhibiting the state’s transition to a cleaner, more reliable and more affordable energy supply, but has also contributed to a significant slow-down in new clean energy investment.”