NSW transmission strategy to unlock private investment in new projects

Drawing inspiration from Texas’ Competitive Renewable Energy Zones, the state government revealed plans to develop a new strategy centred around three priority energy zones.

The New South Wales government is to develop a new electricity transmission infrastructure strategy in a bid to attract investment into new renewable energy projects.

State energy minister Don Harwin said that the strategy would involve a co-ordinated, managed approach that included “upfront and early planning”.

He said: “The goal of the strategy is straightforward: to ensure NSW can access the low-cost power generation it needs. Integral to it is private-sector investment in replacement generation in NSW’s energy zones.”

Harwin announced the plans in a speech to the Energy Networks of Australia conference in Sydney on 6 June.

The NSW government announced in March the establishment of three priority energy zones in New England, the Central West and Central South regions, where new projects would benefit from reduced environmental and planning constraints, and would have easier access to existing network infrastructure and load centres.

Harwin made reference to a potential A$18 billion ($13.7 billion; €11.6 billion) pipeline of new generation projects in NSW that the strategy aims to unlock and compared NSW’s approach to Texas’ Competitive Renewable Energy Zones.

The minister also hinted that changes could be made to the Regulatory Investment Test for Transmission (RIT-T), which assesses the reliability and market benefits of any new transmission projects, to make new schemes easier to get off the ground.

“For many years, RIT-T has been an important test to protect consumers from inefficient transmission investment,” he said. “The current arrangements remain appropriate for discrete transmission upgrades or replacements. But they are unlikely to deliver the scale of new transmission needed to unlock new energy zones across the National Electricity Market in time to replace retiring generation capacity.”

The strategy will be designed to dovetail with the Australian Energy Market Operator’s Integrated System Plan, which is due for publication at the end of June, and will be consistent with the NSW government strategy that power generation is developed by the private sector, according to a source with knowledge of the process.

Questions over electricity capacity and reliability have repeatedly been debated in Australian politics in recent months. The federal government and state energy ministers are moving closer to an agreement on a new National Energy Guarantee, which will set minimum levels of reliability and sustainability, while the closure of existing coal-fired power stations without direct replacements has also prompted concern from some politicians.