AEMC to fast track approval of SA-NSW interconnector

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By allowing for greater low-cost renewable generation capacity to be accommodated on the grid, the proposed $1.5 billion electricity interconnector between Robertstown in South Australia and Wagga Wagga in New South Wales holds the promise of reducing power bills in both states, while improving network and energy security.

Identified as a priority project in the Australian Energy Market Operator’s integrated system plan, published in 2018, the project is still awaiting approval from the Australian Energy Regulator (AER), with a final decision expected by the middle of 2019. Provided the project is waved through, it should be built by the point the Liddell coal-fired generator is due to retire from the NSW electricity market in 2022.

While it has won broad backing, the interconnector has also appeared on the imminent agenda of the Australian Energy Market Commission (AEMC).

Acting on a proposal from Kerry Schott, Chair of the Energy Security Board, the network rule maker will be amending the National Electricity Rules to reduce the time between the completion of the cost-benefit analysis (the RIT-T) undertaken by ElectraNet and when the AER makes its determination on whether ElectraNet can recover the cost of the project.

While it does not remove any steps in the regulatory process, the rule change would save time by allowing the AER to start its assessment of how much revenue can be recovered at the same time as it considers whether the proposed project is the best option for consumers.

According to Schott, running these two processes concurrently could save up to six months, provided ElectraNet gives the AER any extra information it requests in a timely manner.

“The AEMC plans to initiate this rule change next week. The changes proposed by Dr Schott are closely related to those being considered by the AEMC as part of the early implementation of ISP priority projects rule change,” the rule maker said.

With a capacity of 800 MW, the proposed 916 kilometer, 330 kV transmission line stretching between SA and NSW, and an added connection to Victoria, the EnergyConnect project will support a large amount of new generation connecting to the grid in the coming years. 

According to a report released by ElectraNet and TransGrid on Wednesday, the project would reduce power bills by $66 a year for South Australian households and $30 in New South Wales, amounting to $1 billion consumer benefit.

Other benefits the interconnector would bring for South Austria include: access to surplus power interstate, including Snowy 2.0 project in NSW, as well as displacement of the costly gas generation in the state with the help new energy storage, such as batteries and pumped hydro. For NSW, the interconnector would enable a smooth transition from its ageing coal-fired power fleet to low-emissions energy generation, allowing the state to bask into the surplus wind and solar power generated in SA.

While it will enable the development of new renewable projects at connection points and facilitate the growth of associated industries, the project is also forecast to create approximately 200 jobs in SA and 800 jobs in NSW during construction, as well as around 250 ongoing jobs in SA and 700 ongoing jobs in NSW from new energy generation projects that would be enabled by the interconnector.

On top of that, it will increase in real incomes in regions hosting the interconnector infrastructure by $163 million in SA and  $131 million in NSW, according to the project proponents.

In order to address grid bottlenecks and unlock low-cost, low-emission generation in new areas of the state, the NSW government released last year its own grid strategy, called the NSW Transmission Infrastructure Strategy, with a plan to leverage up to $23 billion of private investment in renewable energy held back by grid capacity constraints.  

Looking to accelerate $2.5 billion worth of transmission projects planned for the period between 2022 and 2024, the state is working with transmission operator Transgrid to upgrade the existing interconnectors between Victoria-NSW and Queensland-NSW and to build a new SA-NSW interconnector from Robertstown in SA to Wagga Wagga and a new transmission from Snowy Hydro to Bannaby, via Wagga Wagga.