ESB suggests staged rollout of renewable energy zones as it seeks input on rules

The Energy Security Board is seeking input into a proposed set of rules that will guide the design of future renewable energy zones, that will require transmission network companies and energy market bodies to lead the preparation of infrastructure investment plans.

The Energy Security Board said that a special set of planning requirements were required for renewable energy zones, given the need to coordinate investments across multiple project developers and network infrastructure operators, as well as the potential impacts on local communities.

“In recognition of these differences, the ESB proposes that REZs are subject to a special planning regime that includes measures to take into account evidence supplied by generation developers and the views of local communities. The REZ planning arrangements should also ensure that the REZ leverages and contributes to the efficient design of the broader power system,” the consultation paper says.

In conjunction with the release of the consultation paper, the Energy Security Board has published a draft set of planning rules, to be incorporated into the National Electricity Rules, which will set out the requirements for project developers, network companies and system planners to participate in the planning process for new renewable energy zones.

The Energy Security Board has suggested that a ‘staged approach’ to the design of renewable energy zones may be optimal, allowing project developers and network operators the opportunity to most effectively time the completion of new infrastructure.

“Under a staged approach to REZ development, the REZ design reports would set out a cohesive, long term plan for the development of the REZ that leverages and contributes to the broader development of the power system. This holistic plan could be broken down into a sequence of projects which are able to be delivered over an extended period (e.g. a decade). A staged approach reduces risk by building in flexibility to adapt to changing market conditions, since stages within the REZ can be accelerated or deferred,” the consultation paper says.

New South Wales has the most progressed proposals for renewable energy zones, announcing plans for two zones located in the state’s central-west and north-west regions respectively, which will see the NSW government coordinate transmission infrastructure investment and network accesses in regions with high suitability for new wind, solar and storage projects.

The Energy Security Board also highlighted the need for new grid infrastructure in both Victoria and Queensland, which have seen the impacts of a situation where such infrastructure had lagged investment in new wind and solar projects.

“There are already areas in the NEM, where a lack of coordination, compounded by lack of transparency regarding future investments and available capacity, has resulted in network congestion, low marginal loss factors and technical difficulties. Generators have been exposed to additional costs from their commissioning and lower revenues until remedies can be devised, approved and implemented,” the consultation paper says.

“A lack of coordination between generation and transmission investment potentially exposes customers to higher network costs than optimal as there is no assurance that the overall development of the power system through this approach will deliver the most efficient outcome,” the consultation paper adds.

“As generation investment is market driven, commercial investors bear the risk that their investment will not deliver the anticipated benefits. However, where the access regime imposes systemic inefficiencies on connecting generators more broadly, customers will ultimately bear higher costs.”

The Energy Security Board said that the proposed rule changes would build off earlier work towards an ‘actionable integrated system plan’, with guidelines set to be implemented by the Australian Energy Regulator, which will guide the introduction of high priority projects identified by AEMO through the integrated system plan process.

The Energy Security Board has called for submissions to be provided in response to the consultation paper, and the draft planning rules, by 8 September and will hold a webinar for interested parties on 20 August.