NSW Electricity Infrastructure Roadmap to support A$32bn of private investment

The New South Wales government has published a new Electricity Infrastructure Roadmap that the state hopes will support A$32 billion ($23 billion; €20 billion) of private investment in electricity infrastructure by 2030.

The roadmap lays out plans to deliver Renewable Energy Zones, more energy storage including pumped hydro, and measures that will improve certainty for investors.

As part of the plan, the government will introduce Electricity Infrastructure Investment Safeguards, a framework for offering long-term agreements to projects dependent on their type.

These agreements will be awarded through a competitive reverse auction process. Projects in Renewable Energy Zones can secure options contracts that offer guaranteed minimum energy prices, while long-duration storage projects will have the option of competing for availability payments. The auctions will be run by a newly created “consumer trustee”, the government said.

Analysis from National Australia Bank that accompanied the roadmap showed that the introduction of the Safeguards could eventually lower the weighted average cost of capital for investors by 0.64 to 1.30 basis points for new generation projects, leading to “a lower wholesale cost of electricity and substantial economic growth for NSW”.

NSW will prioritise the delivery of three Renewable Energy Zones, including a 3GW zone in the Central-West Orana region and an 8GW zone in the New England region. The Energy Security Board has been working on interim arrangements for access to REZs, creating special planning arrangements for these priority zones.

The NSW government acknowledged in its roadmap that “our regulatory and market frameworks are not set up for the private sector to deliver the electricity infrastructure we need in the time and at the scale needed”. Investors have been critical of a lack of joined-up thinking in energy policy over the past two years.

The use of REZs will help to improve the co-ordination of investment to ensure that it is “orderly, timely, optimised and efficient”, the government said.

Overall, the plan will support an estimated A$32 billion of private investment into NSW’s electricity infrastructure by 2030. This in turn could see 12GW of additional wind and solar capacity added to the system alongside 2GW of storage, more than is planned by the governments of Queensland and Victoria combined.

The Clean Energy Investor Group, a group of 15 institutional investors that includes BayWa, John Laing, Lighthouse Infrastructure, Macquarie Capital, RWE Renewables and Windlab, the renewables company owned by Squadron Energy and Federation Asset Management, welcomed the NSW announcement.

“The commitment today by the NSW government to provide financial mechanisms to support investor certainty … is a welcome development that will strengthen investor certainty at a critical time,” CEIG chair Simon Corbell said in a statement.

“This focus on reducing the cost of capital for new renewable energy projects, enabled by long-term contractual support, is key to enabling investors to deliver the low-cost capital required to help NSW achieve the clean energy transition in a cost-efficient way which also protects consumers.”