New transmission link between NSW and Victoria gets $75m funding boost

Network company Transgrid had secured $75 million in federal government funding to underwrite the development of a link between Victoria and New South Wales that will boost the amount of electricity that can be shared between the two states.

The funding will support Transgrid’s early works for the Victoria to New South Wales Interconnector West (VNI West) project that is expected to provide a much needed boost to network capacity in the Western region of Victoria and New South Wales.

It is also seen as crucial to supporting the additional capacity being added to the grid as part of the Snowy 2.0 expansion.

The Western Victoria region has seen a flurry of investment in new wind and solar projects – and is expected to host more through the further creation of dedicated renewable energy zones – but network investment has yet to keep pace.

It led to the Australian Energy Regulator warning that the Western Victoria region had become effectively ‘full’ for generation capacity, leading to some wind and solar projects in the region to face delays in getting connected to the grid and having their output curtailed.

The VNI West project is expected to help relieve these pressures and help unlock as much as 1,800MW of new project capacity that can then be shared with other states.

The project was identified as a priority ‘actionable’ project under AEMO’s Integrated System Plan – which could see the vast majority of Australia’s electricity supplies sourced from renewables within the next few decades.

The new interconnector would follow Transgrid’s other investments in HumeLink and Project Energy Connect, which will boost network capacity and the ability to share renewable supply across Victoria, New South Wales and South Australia.

“The new 500kV interconnector would improve supply reliability and increase customer access to cheaper, cleaner electricity from generators like Snowy 2.0, as energy storage becomes critical to support growing renewables.” Transgrid CEO Brett Redman said.

“Transgrid will link South Australia with New South Wales and Victoria with the new interconnector EnergyConnect and delivering the ISP vision to reinforce the backbone of the east coast’s transmission network with another major transmission project HumeLink.

“Together, our major projects will transform the grid by enabling a significant increase in the amount of renewable energy that can be delivered to consumers across the National Electricity Market.

“By delivering a reliable transition to renewables, we will help drive down customer bills and help reduce carbon emissions for a cheaper, more reliable and sustainable clean energy future,” Redman added.

Redman said the project was still in the early stages of the regulatory process but that the support from the federal government would help the project progress to a point where it could be ready to go.

“VNI West is currently being assessed for viability and Transgrid is undertaking early works. This agreement will maximise the opportunity to deliver the project aligned with the regulatory investment test for transmission (RIT-T) process,” Redman said.

Federal energy minister Angus Taylor said he expected the $75 million in funding would help to underwrite the early works for the VNI West project, including community consultation and technical design.

“We are investing in VNI West because it is expected to generate $1.9 billion in net market benefits and will be a key part of an efficient transmission backbone for the electricity market,” Taylor said.

“Our investment in this project will support reliable electricity supply, deliver substantial cost savings and help keep the lights on for Australian families, businesses and industries.”

Transgrid said that it expects the regulatory assessment process for the VNI West project to be completed by early 2023.