New Victoria to NSW “electric highway” gets kick-along from federal and state funds

Works on a badly needed new electricity transmission line that will link New South Wales and Victoria  – and allow for more renewable energy to be connected to the grid – are to move forward under a joint funding agreement between the Victorian government and the federal Coalition.

Under the bilateral agreement, the federal and state governments will provide up to $200 million in underwriting support (shared on a 50:50 basis) for the Victoria to NSW Interconnector (VNI) West project, considered key to unlocking the rich renewable resources of the state’s north-west region, and alleviate grid congestion and system strength issues.

The funding will focus on supporting early works on a first stage of the VNI West project, including the development of a preferred route for the interconnector, known as KerangLink, in a bid to get it up and running by 2027.

“KerangLink will provide a massive economic stimulus, supporting $3.9 billion in economic value to Victoria, creating 870 jobs and using more than 60,870 pounds of steel – nearly three times more than the Melbourne Metro tunnel,” Victorian energy minister Lily D’Ambrosio told the AFR Energy summit on Monday.

“Importantly, the Victorian and Commonwealth governments have also agreed to work collaboratively on reducing the cost of KerangLink, including through early and greater community consultation.”

The new support for the VNI West project follows a warning from the Australian Energy Market Operator that the West Murray Zone of the National Electricity Market – which straddles north-west Victoria and south-west NSW – was effectively full, and any new solar or wind projects would cause others in the region to be heavily constrained.

As RenewEconomy has reported, projects like the VNI – which will deliver an extra 1,800MW of capacity during peak demand periods and allow Victoria to export 1,930MW to NSW – will provide much-needed relief from grid congestion, but will take years to progress along complex development pathways.

The joint funding aims to speed this up, somewhat. For the federal government’s part, the $100 million for the VNI West is part of its commitment to provide up to $250 million to accelerate three major transmission projects, including the Marinus Link between Tasmania and the mainland, and Project Energy Connect, between South Australia and NSW.

“The Government is strongly focused on getting the best energy outcomes for all Australians, which is why we are working with states and territories to ensure their specific energy needs are met,” federal energy minister Angus Taylor said in a joint release.

“The Commonwealth Government is now advancing all major priority transmission projects in the Australian Energy Market Operator’s 2020 Integrated System Plan,” Taylor said.

For Victoria, opening up the state’s grid for more large-scale solar and wind energy capacity will be crucial to meeting its renewables target of 50 per cent by 2030.

The Australian Energy Market Operator recently detailed a $3.5 billion Transmission Roadmap for Victoria, to help guide it as it works to add at least 5.4GW of new large-scale renewables projects and DER investment to meet the 2030 VRET.

“KerangLink will be a renewable energy superhighway, creating a wave of new jobs right across the state,” D’Ambrosio added.

“This project will unlock more wind and solar power in Victoria than ever before, and is crucial action to address climate change. It will enhance renewable energy investor confidence. It will also enable investment of in over 2,000 megawatts of renewable energy projects.”

“We know that renewable energy will play a vital role in powering the future of Victoria’s economy,” D’Ambrosio added, noting that VNI West would support around 2,000 direct jobs during construction.