Andrew Forrest-backed wind and battery project could be first to drop off federal CIS winners list

A giant wind and solar project in south west NSW – put forward by the Andrew Forrest controlled Windlab – looks set to be the first failure from the list of 19 winning projects from the federal government’s flagship renewables policy, because it has reportedly failed to gain access to the grid.

The $1.4 billion Junction Rivers project, which aimed to combine a 600 megawatt wind farm with a 200 MW, 800 MWh big battery, about 15kms south of Balranald, was one of the surprise winners of the federal government’s first auction under the Capacity Investment Scheme.

It was the only winner located in the highly contested south-west renewable energy zone in NSW, but its ambitions appear to have been thwarted because it is now reported – by the AFR – that it failed to gain access to that REZ under a separate auction conducted by the NSW state government.

That auction for so called grid access rights was conducted by AEMO Services last year, with 3.98 GW of capacity on offer. And, as Renew Economy reported in January, project winners, and losers, were advised in January. But the formal announcement, scheduled for February, has still not been made.

It is thought that the identify of two of the winning projects are the 1.5 GW Yanco Delta wind project owned by Origin Energy, and the potential 2 GW Pottinger Energy Park, owned by AGL Energy and Someva Renewables, and which will combine up to 1.2 GW of wind, 300 MW of solar and a 500 MW, 2000 MWh battery.

If those winners are accurate, then it leaves little room for other projects in the REZ, although that depends on the amount of capacity awarded. It is believe there are two or three other winners, potentially including Origin’s 450 MW Yarrabee solar project and an Engie project.

The failure to get access rights for Junction Rivers is likely terminal because a condition of its CIS tender win was the ability to connect to the grid.

A spokesperson for federal energy and climate minister Chris Bowen said CIS funding is conditional on developers achieving their own project milestones, including state and federal approvals, and grid access, which are independent of the CIS process.

Any unused capacity will fold into the next auction. That tender, in which initial bids have already been made, is already sized at more than 6 GW of new wind and solar capacity, and will be expanded to accommodate any drop outs from the first round.

“Like all major infrastructure projects, clean energy projects need to navigate financial uncertainty as they progress to construction phase. The Albanese Government’s Capacity Investment Scheme mitigates this,” the spokesperson said.

“The CIS has so far been incredibly successful in doing this, and we have awarded contracts to support an additional 7.9GW of new, clean, reliable renewable generation and storage so developers can progress their projects towards construction before 2030. 

It may be that the only option for Junction Rivers is to try and connect to infrastructure not directly related to the newly created REZ – but even if that was possible it is likely to be expensive, and no guarantee of being able to deliver all the power it produces.

Renew Economy reached out to Windlab, which is majority owned by Andrew Forrest’s private interests through Squadron Energy, for comment but did not hear back.

The situation highlights two of the difficulties in managing the transition to renewables, and meeting the federal government’s target of 82 per cent renewables by 2030.

One is the issue of overlapping tenders held by the Commonwealth and the state governments, even though both series of tenders were managed by AEMO Services. Clearly, the Chinese walls are working well!

But the biggest is the fact that not enough capacity is being built into the south west REZ in the first place.

That’s largely because of the decision made to size the new transmission line running from South Australia to NSW ta a 330 kV rather than 500 kV. The line forms the backbone of the new REZ, but the smaller capacity means less wind, solar and battery storage can be accommodated in that region, now emerging as one of the richest for wind energy.

More than 20 gigawatts of capacity has been competing for access rights to the grid. Some may be in a position to connect to non REZ infrastructure, while the only hope for Junction River is an increase in the head-room for the South West REZ, as happened in the central west REZ. But it is not clear if that can be done.

The lack of transmission capacity – and the slow rollout and cost overruns of transmission projects such as PEC (at least on the NSW) and others designed to link the controversial Snowy 2.0 project is bedevilling the efforts to accelerate the rollout of renewables.

Some have argued that more focus should have been put towards distribution networks, whose owners say have considerable unused capacity, but one of the biggest focuses of the market operator has been in interstate links and trading, and the push for REZs is based around the idea of grouping as much infrastructure in certain areas.

However, the push to central control has frustrated many in the industry, some of whom are choosing to focus on projects away from REZs in other parts of the grid.