Victoria is offering a one-off, slightly easier process to a select number of developers when the state launches its new grid access regime next year — but only if they can prove they have projects are close to construction.
Vicgrid is changing how projects are allowed to connect to the state’s grid with a new network access regime from July next year, moving from the current National Energy Market (NEM)-wide open access and replacng it with a system that prioritises projects inside renewable energy zones (REZs).
But Vicgrid has had to address concerns that projects that are “well advanced” would have to compete with those that aren’t.
It has created a time-limited, one-off process for projects that have development approvals or a federal underwriting deal to win grid access under the new regime.
The Victorian grid manager, created five years ago to take over grid planning from the Australian Energy Market Operator, is preparing the ground for the Victorian Access Regime, the new framework for connecting projects to the grid, on the grounds that open access is creating challenges for developers in choosing where to invest and for communities through uncoordinated development.
The latest update refines the draft rules released in September last year, but with the proviso that actual regulations controlling the detail on how it will all work are still in the works, with a draft expected later this year.
“Renewable development in Victoria needs to be well managed so we can deliver the new energy sources we need in a way that minimises impacts, treats communities with respect and creates real benefits,” said Vicgrid CEO Alistair Parker in a statement.
“The Victorian Access Regime will help us focus development in the right places and give developers inside renewable energy zones certainty their access to the grid won’t be impacted in the future by projects outside the zones.
“Under this new regime, all developers, whether they are inside or outside a zone, will be required to demonstrate how they will meet government expectations on community engagement and benefit sharing as a condition of being granted access to the grid.”
Third way for “advanced” projects
After July next year, projects inside Victoria’s REZs get priority via a competitive access process, and those outside have to go through the alternate Grid Impact Assessment (GIA) pathway to make sure they don’t take up network space prioritised for REZs.
But Vicgrid’s one-off third way for advanced projects will look after those with a grid connection letter and either state planning approval or a federal environmental approval, or a Capacity Investment Scheme (CIS) contract.
It will be the same competitive application process as under the new renewable energy scheme (REZ) process, but with a shorter window and it will apply across the state.
The idea is to minimise the impact of the change on projects that have been built around the current open access arrangements.
However, there’s still work to be done to figure out how these projects will be assessed to make sure there’s still enough grid capacity for projects under the full new regime.
The CIS winners are creating a dilemma; they’ve already gone through a competitive process to win their underwriting agreement, but many mainly wind projects are struggling to progress.
Vicgrid is planning to put them through a separate course, looking only at differences to the original CIS submission and progress to date – with a warning that those which aren’t on track to meet the 2030 deadline may not pass the new threshold.
“This assessment approach seeks to reduce duplication across competitive processes,” the Vicgrid update says.
“It is anticipated that CIS projects will be granted access authorities, unless there have been significant deviations to the deliverability of the projects, or a failure to adhere to commitments made.”
Wind energy projects have struggled to get going, largely because of rising costs, transmission delays and the inability to seal significant off-take deals with the country’s big four gentailers and other corporate buyers.
Last week, energy minister Chris Bowen said CIS contracts are not open to renegotiation, but developers are welcome to withdraw and then bid again with the new economics.
Gas is out, batteries are TBC
What Vicgrid is yet to work out is how to treat generation that is backed by batteries, or batteries by themselves.
Right now, hybrid projects with both generation and battery storage are set to be assessed inside REZs in the same way as any generation project.
But Vicgrid is still considering how hybrids will impact on REZ access limits, proposing an assessment based on the generation element’s nameplate capacity.
“VicGrid is proposing that stand-alone storage projects, regardless of location within or outside of a REZ, will be subject to the GIA,” the Vicgrid update says.
“In response to feedback… VicGrid is considering an alternative modified [GIA] assessment.
“The next iteration of the draft GIA Guidelines will detail the proposed approach for consultation.”
The update also firmly closed the door on REZ access for hydro, and any non-variable renewables technologies including gas, oil, waste and coal.
If you would like to join more than 29,000 others and get the latest clean energy news delivered straight to your inbox, for free, you can click here to subscribe to our free daily newsletter.
