CEFC says major interconnector upgrades needed, as renewables replace coal

Australia’s inter-regional transmission lines would require significant upgrades, including a second interconnector between Victoria and Tasmania, to keep up with the transformation of the electricity sector from fossil fuels to distributed renewables, a new report has found.

The report, prepared by Jacobs for the Clean Energy Finance Corporation, found that large amounts of interconnection were required over the study period, with up to 3,500MW of additional
interregional capacity – the vast majority of it distributed renewables – expected to be added over the whole NEM by 2030.

“Given the range of emission reductions required and the immediate closure of coal fired plant explored under most scenarios, interregional transmission upgrades were required to allow exploitation of the available renewable resources (as well as gas-fired resources) to replace the coal fleet,” the report said.

In policies targeting renewables as the main source of emission abatement, the CEFC report found that interconnect upgrades would be necessary for “least cost development of the renewable energy, either by allowing access to lower cost resources or by facilitating more efficient levels of dispatch of those resources.”

It also noted that the faster the rate of closure of Australia’s remaining coal capacity, the sooner the interconnect upgrades would be needed. A new second link between Victoria and Tasmania, for example, would be required by 2025 under “most emission targets examined,” the report said.

The report identified some factors that could limit and/or slow the need for interconnector upgrades, including falls in electricity demand, and competition from battery storage.

“With large scale adoption of storage, surplus energy within a region could be stored for later use rather than being exported to other regions,” the report said.

But it noted that in the case of Tasmania, with its large hydro resource, a new Bass Strait interconnector “could enhance the usage of this notional storage capacity.”

“Of particular advantage for Tasmania,” the report continued, “is that it provides the opportunity for inter-seasonal storage of surplus solar energy which is abundant in the summer time and much
reduced in the southern states in winter.

“Tasmania could receive surplus solar energy in autumn and summer from the mainland and conserve its hydro yield for export in winter and spring.”

The findings follow the revelation that an investigation into the outage of the existing Basslink interconnector between Tasmania and the mainland returned a verdict of “cause unknown.”

The independent investigation, completed by UK-based Cable Consulting International (CCI), supported Basslink’s position that the fault, which took the under-sea cable out of action for six months, was a “force majeure” event.

The event was used in some quarters to boost the campaign for a second interconnector across the Bass Strait, a project the CEFC has indicated it would back.

In line with the Jacobs report, however, an earlier state government report suggested a new Basslink cable would not be worth the $1 billion investment unless at least 1,000MW of new renewable energy capacity was built in Tasmania.

“A co-ordinated development plan would be needed to optimise the utilisation of the existing hydro system within the current capacity of Basslink, the subsequent development of a new Bass Strait interconnection, and then the further development of hydro-electric and wind resources in Tasmania to maximise the value of these assets,” the CEFC Jacobs report says.

“Some commentators have argued that the role of major transmission systems could diminish in the future with the development of embedded generation and micro-grid,” the report said.

But it added that it was likely “a grid based system with transmission interlinks” would be required even if the cost of battery storage fell rapidly, “as such devices are not currently suited to energy storage over a yearly cycle.”