EnergyCo has come a long way, but still to convince developers NSW is open for renewables business

There was a bit to learn from the webinar held on December 10 by EnergyCo; essentially a new organisation having grown from 20 to 200 people in three years and with a new board headed by Paul Binsted, and now also a new CEO.

I have high confidence in the board: Alex Wonhas developed the ISP, Binsted did a great job as chair of Stanwell, Rebecca Colvin has a strong reputation in social license.

The new CEO Hannah McCaughey is much travelled, career-wise, most recently being a senior adviser at ClimateWorks and having also worked at Ausgrid, Gelion, APA and British Gas according to her LinkedIn profile.

I don’t propose to go into much detail about Energyco in this note ,but just to comment that:

1. The webinar did not address the issue of ensuring that the renewable developers will build the plant they have committed to. At the moment my strong understanding is that the developers wont commit until there is complete assurance that the transmission will be ready on time. Since the coal generators are definitely closing by the early 2030s, and will likely become even more unreliable well before then, it’s not an issue that can be ignored.

The job requires that all the things necessary to keep the lights on be achieved. That involves the transmission, the connections modelling, the social licence and that the generation be built. At the moment, my sense is that the New South Wales government is fully aware of the issue but just unprepared to tackle it.

2. I was personally unhappy with Andrew Kingsmill’s response to a question about the South West Renewable Energy Zone (SW REZ). Andrew stated that the Orana zone requires 100 km of new transmission (plus some reinforcement downstream) and that the New England zone requires 250 km. However, according to Kingsmill, the SW Zone requires 500 km.

That, for sure, is fair enough as far as it goes – and the SW zone, from a Sydney perspective, requires not just Humelink but also significant reinforcement of the Southern Sydney Loop.

However, the SW zone is so attractive from a resource and social license perspective – and also very well located from a NEM perspective, with connections via VNI West to Victoria and Energy Connect to South Australia as well as Humelink – that I just don’t think that answer is forward-thinking enough.

Equally, the quality of developer in the area and the project approvals that have already been obtained are way better than those in New England.

In simple English, New Englanders are full of Barnaby Joyce types who would not know a good idea if it hit them on the head, whereas Riverina people and councils are interested in regional development.

Technically it’s likely that SW development, excluding transmission, is cheaper as it is flat ground which makes crane access far more straightforward.

Equally it’s an EnergyCo director – Alex Wonhas – who has written about using batteries to avoid the N-1 issues of double circuit lines, an idea basically poo-pooed by Kingsmill who said that batteries could only offer minor improvements to line capacity. An alternative view is that batteries could double capacity.

At the very least, 4 GW switch gear could be used at Humelink, even though I will guess it wont be. Certainly they would be big batteries. If there was 4 GW going through Humelink and one circuit trips within 30 minutes AEMO needs to be secure for the loss of the second circuit, or so I’m told. Obviously I don’t know. I’m a financial analyst,

On the EnergyInsiders podcast we discussed the transmission links to the SW Zone with Brett Redman, CEO of Transgrid, who also expressed reservations. On the other hand, in another episode, Wonhas was very positive. So it’s clear that what the developers want and what the transmission people want are at odds.

In my view this needs to be sorted out. Otherwise, I expect the renewable developers may well take things into their own hands as Westwind has hinted at doing in Victoria. Certainly, a far more cohesive and thoughtful response is required than it was possible for Andrew Kingsmill to give in a 30 second response to a question.

In summary, EnergyCo is well on its journey now but it’s far, far too early to call it a success. Major issues still need to be sorted out. In particular I do think EnergyCo needs to be flexible, and to be fair it has shown flexibility, but also to think very hard about where the generation should be built and to ensure it is built by 2030.