An itching frustration in Australia’s transition to clean energy is slowly being scratched, with the announcement of financing approval for new transmission to link NSW and South Australia.
NSW transmission company TransGrid has approved $1.83 billion in funding towards Project EnergyConnect, a 900km connection that will include a link to northwest Victoria. South Australian project partner ElectraNet is expected to make its final investment decision soon.
The new connection – expected to cost $2.28 billion – will free up vast amounts of new opportunities for developers of solar, wind and storage projects.
The Clean Energy Finance Corporation supported TransGrid with “its single largest investment to date” in the form of $295 million in hybrid debt.
The new link will unlock as much as 1,800MW of additional renewable energy across the three states, the CEFC said, and accelerate the decarbonisation of the National Electricity Market.
“In delivering this innovative $295 million subordinated note instrument for PEC, we were able to help co-investors address and overcome the unique financing challenges presented by a project of this scale and complexity,” said CEFC chief executive Ian Learmonth.
Energy Networks Australia CEO Andrew Dillon said the benefits for customers and the electricity system from EnergyConnect were significant.
“This project is essential to ensure the security and reliability of the grid so it can support increasing renewable energy connections across South Australia and NSW,” said Dillon, who expects EnergyConnect will lead to an average annual bill saving of about $64 in NSW and $100 in South Australia.
Keeping pace with wind and solar
Australian National University professor Andrew Blakers said transmission and storage need to keep pace with deployment of new wind and solar.
“Strong interstate transmission greatly reduces the amount of storage needed to balance high levels of solar and wind,” he told EcoGeneration. “Since 400GW of solar and wind are needed to reach zero emissions from fossil fuels via renewable electrification of transport, heating and industry, dozens of gigawatts of new interstate transmission will be needed over the next 15 years.”
Clean Energy Council CEO Kane Thornton said the interconnector will help to unlock “the next wave of clean energy projects”.
“This is a really exciting and necessary project that will help build a 21st-century electricity network,” Thornton said. “It also supports significant investment and jobs in renewable energy projects that are at the heart of Australia’s energy transition.”
The interconnector will form a crucial element of the energy network for the future, he said, resulting in increased reliability in readiness for the inevitable closure of ageing coal-fired generators in NSW.
Project EnergyConnect will generate 1,500 jobs in construction and boost investment in regional areas not just from the interconnector itself but also from new renewable energy projects.
“A lack of transmission investment is now one of the most critical challenges facing the Australian energy system. This is stifling new generation investment, constraining existing generation and resulting in increased energy security and reliability risks as well as higher power prices,” Thornton said.
“While it’s great to see Project EnergyConnect progress to this stage, the time taken to navigate the regulatory framework and the need for the CEFC to play a crucial role in financing is a stark reminder of the flaws inherent in the current regulatory environment.”
Thornton said the pace of change in the energy transition warrants an overhaul of the regulatory process for transmission, particularly in light of the implications and importance to push ahead with the remaining transmission projects identified in the Australian Energy Market Operator’s Integrated System Plan.