AEMO claps back against “reckless” claims made in scathing critique of VNI West

The Australian Energy Market Operator has hit back at claims that the VNI West transmission upgrade planned for Victoria will be costly, dangerous and “useless” to the build-out of new renewables, describing them as “reckless,” and “at odds” with industry and other expert analysis.

In an unusual move, AEMO on Wednesday posted a statement on its website refuting the claims made by Bruce Mountain and Simon Bartlett – both in a detailed submission on VNI West and in RenewEconomy this week.

AEMO, in February, set out its final preferred route for the 500kV Victoria-New South Wales Interconnector (VNI) West transmission line it is proposing to develop with network company Transgrid.

According to the market operator, VNI West is a vital interstate link that promises to unlock up gigawatts of new renewables and tap into the massive, but delayed, Snowy 2.0 pumped hydro storage project.

But in a 118-page submission to AEMO’s final draft for VNI West, Bartlett and Victoria Energy Policy Centre’s Mountain argue that the transmission link is a “monumental mistake” and should not go ahead as planned.

According to Bartlett and Mountain, VNI West will drastically increase Victoria’s susceptibility to statewide blackouts through exposure to natural disasters and terrorism, will double transmission charges in Victoria and delay the transition to renewables until its completion in a decade’s time.

And in an op-ed published on RenewEconomy on Monday, the two energy market experts put an even finer point on their objections to the huge project, describing it as “allowing for a piddling amount of new VRE” before turning that part of the grid into an “electrical ‘parking lot’.”

“As we set out in our submission, AEMO’s generals are fighting the last war, pursuing a network development dream (nightmare) that fights the huge reduction in wind and solar electricity generation costs and the rise of battery storage, since it first committed the “NEMlink” nightmare to paper in 2010,” the authors say.

“If transmission expansion to accommodate VRE at the lowest cost to land holders, consumers and the environment is the goal (as it should be), it is possible to do very much better than WRL-VNI (is it possible to do any worse?)”

AEMO said this week that it would respond in full to Mountain and Bartlett’s submission “along with responses to all the written submissions to the consultation report following the publication of the final regulatory report for the project in May.”

But before then, the market operator obviously felt the need to address some of the claims more directly – and more publicly.

It says here that a series of claims made in the VEPC’s submission “are contrary to both government policy and numerous independent economic analyses” of the energy market transition.

More specifically, AEMO disputes the claims that renewables developments and augmentations to the grid in Victoria’s Gippsland region could remove the need for VNI West; that VNI West will potentially triple transmission costs in Victorian electricity bills; or that it will increase the threat of bushfires and of grid sabotage.

“Detailed engineering and economic analysis in our ISP demonstrate Victoria will need to harness both existing transmission between the Latrobe Valley and Melbourne and build new transmission infrastructure to connect renewable generation from the west and northwest regions of Victoria with demand in towns and cities across the state,” said AEMO executive general manager system design, Merryn York, in the statement.

“This is not an either-or situation – robust expert modelling detailed in multiple iterations of the ISP demonstrates that new transmission infrastructure is needed in both the east and the west of Victoria to ensure secure electricity supply to meet growing demand from Victorian consumers.”

On cost and the impact of the new transmission link on consumer bills, York says Mountain and Bartlett’s claims are overblown.

“We estimate an increase in the order of 25% for consumers in the Victorian transmission cost component as a result of the VNI West and WRL projects, however this will be more than offset by lower wholesale costs from utilising a portfolio of renewable generation sources,” she said.

And on the claims the new infrstructure would increase the potential for increased acts of sabotage, York describes this as “reckless,” considering Victoria is already home to more than 6,000km of existing transmission line.

“There are transmission lines that deliver electricity to customers throughout Australia, so suggesting additional lines would increase risks is not supported by any evidence,” she said.

AEMO chief executive Daniel Westerman also weighed in, describing the need for new transmission to bridge the gap between new renewables and exiting coal as “urgent.”

“Governments and system planners worldwide are wrestling with the urgent need to build new transmission to guarantee the safe, secure and reliable supply of basic services to towns and cities,” he said.

“The rigour and public consultation process we undertake to develop the ISP has earned AEMO widespread recognition and is fundamental to ensuring robust, evidence-based decision making to maintain downward pressure on electricity prices.

“AEMO is proud to be Australia’s independent, not-for profit, system operator and system planner. Our staff are recognised globally as experts in their field, and act solely in the best long-term interests of Australian energy consumers.”

The VNI West Project Assessment Conclusions report will be published in May along with the submissions and responses to submissions for the consultation report, AEMO says.

Bartlett and Mountain said on Wednesday that the “most unusual” statement from AEMO does not respond to any of their substantive criticisms, and mischaracterises their submission as being “anti-transmission.”

“AEMO is evidently under a great deal of pressure, as it rightly should be,” Mountain says.

“The point is that what AEMO has proposed will be expensive and ineffective, as evidenced by their own analysis. It is not clear why AEMO has sought to characterise our submission as they have.

“WRL-VNI presents very grave risks to the security of the power system. It is not clear why AEMO has failed to respond to our concerns and instead has sought to mis-state them,” he says.