New transmission line linking most renewable state with biggest coal state about to start operations

The first stage of one of Australia’s most significant transmission projects – Project EnergyConnect – is about to start operations, linking the country’s most advanced renewable state South Australia with the most coal dependent, NSW.

The first stage of Project EnergyConnect – being built by ElectraNet and Transgrid – has completed its hold point testing and will allow up to 150 MW of capacity to be traded between South Australia and NSW, with a spur line also going into Victoria. It could start operations as soon as the end of this week.

It is one of the key transmission projects identified by the Australian Energy Market Operator in its Integrated System Plan, which identifies 5,000 kms of new transmission lines to support the shift to renewables.

It will particularly signifiant for South Australia, because it will provide a much needed new link that will enable its progression from an already world-leading share of 72 per cent wind and solar to its accelerated target of 100 per cent net wind and solar by the end of 2027.

NSW, on the other hand, has the most coal capacity in its grid with more than 8 GW, although Queensland pips it in terms of coal share of the grid output. Most of NSW’s coal plants are due to retire in the next decade, and the state government is looking at building enough wind, solar and storage to replace that capacity.

The addition of the new line to NSW will also allow more capacity to be supported on the current main link, the Heywood Interconnector. This in turn means that more wind and solar can be exported, rather than stored or curtailed, and more power can be imported when needed, rather than burning gas locally.

The second stage of the PEC will lift the capacity to around 800MW, but will not be fully operational until the end of 2027. That part of the project, in NSW, has been hit by cost blow outs and delays – factors that are affecting other major transmission projects across the country.

There is also frustration that PEC features only a 330kV line, rather than a 500kV line, which limits the amount of power that can be shared between the two states, and will limit the capacity of new wind and solar in the key south-west renewable energy zone in NSW.

Some project developers have proposed building giant batteries at each end of the transmission line to allow it to support more capacity.

These big batteries, dubbed “virtual transmission”, act as a kind of shock absorber, because of their rapid response, so can allow the market operator to run the transmission line at full capacity. And they are cheaper than upgrades.

However, when PEC is completed, the combined transfer limit across the Heywood and PEC interconnectors will be 1,300 MW for imports into South Australia, and 1,350 MW for exports.

AEMO said in a note to stakeholders on Tuesday that inter-networking testing is due to start from October, 2026, with full capacity anticipated from the final quarter of 2027.

AEMO has had to introduced a number of changes to its complex settlement systems to deal with the new transmission connections.

It says the 900kms transmission line – when complete – will deliver a range of direct benefits for consumers including lower power prices and improved energy security.

Note: Date of network testing changed from July, 2026 to October, 2026, after AEMO corrected their own statement.