Federal Labor and the New South Wales Coalition governments have joined forces to fund eight critical electricity transmission and renewable energy zone projects in the state, including the new lines needed to “plug Snowy 2.0 into the grid.”
The joint $7.8 billion deal was announced by the Albanese and Perrottet governments on Wednesday, to fast-track grid upgrades to accommodate huge renewable energy build-outs, including the massive Snowy 2.0 pumped hydro project, which continues to run behind schedule and over budget.
The deal will combine $4.7 billion from federal Labor’s Rewiring the Nation plan and $3.1 billion from the NSW Transmission Acceleration Facility, as Australia’s most coal dependent state seeks to halve its greenhouse gas emissions by 2030, largely through a rapid shift to renewables.
The billions will be used to “unlock” the NSW transmission projects considered most critical to the state’s shift to renewables, including HumeLink, a more than $3 billion project being developed by Transgrid principally to connect and distribute power from Snowy 2.0.
VNI West – the construction of around 400km of double-circuit 500kV lines to link north-west Victoria and south-east NSW – is also on the list for funding from the deal.
That project, which is also being developed by Transgrid in partnership with AEMO, has an estimated capital cost of around $3.2 billion: $1.6 billion in Victoria and $1.6 billion in NSW. It is considered a “critical part” of a more secure grid for the eastern seaboard.
Also on the list of critical transmission and REZ projects to share in the funds are the Sydney Ring – Hunter and Sydney Ring – Southern transmission projects, the Central-West Orana REZ, the New England REZ, the Hunter-Central Coast REZ, and South-West REZ.
“Support for critical transmission infrastructure like Sydney Ring, VNI West and HumeLink, to get across the line, will help transform Australia into a renewable energy superpower,” said prime minister Anthony Albanese on Wednesday.
Australia’s electricity grid needs to be strengthened and reconfigured to meet the demands of the rapidly changing electricity market it serves.
“The Commonwealth has worked hand in glove with the states and territories to shield Australian households and businesses from the worst impacts of the energy crisis caused by Russia’s illegal invasion of Ukraine.
“But as well as that critical short-term action, the Australian economy can seize the opportunity of more affordable and reliable renewable energy over the long term – creating jobs in the regions that have always powered Australia, and insulating ourselves from global fossil fuel shocks at the same time.”
NSW Treasurer and energy minister Matt Kean says the funding deal is a “huge win” for NSW that will create new jobs and unlock cleaner, cheaper energy.
“This investment will support the delivery of our Electricity Infrastructure Roadmap through fast-tracking the development of REZs and transmission infrastructure.
“These projects are expected to support more than 3,900 jobs during the construction of this critical transmission infrastructure,” Kean said.
“Today’s announcement helps make that a reality by supporting the projects to plug Snowy 2.0 into the grid and linking REZs to ensure the energy can be supplied from wherever the wind is blowing and the sun is shining, to where it’s used by households and industry,” said federal energy minister Chris Bowen.
“Together, the Sydney Ring, VNI West and the HumeLink projects will increase network resilience and energy reliability for consumers and help put downward pressure on electricity bills in years to come.”
The deal between the Albanese and Perrottet governments follows the multi-billion dollar joint funding package between the Commonwealth, Tasmanian and Victorian governments in October.
That deal, which marked the first dip into federal Labor’s $20 billion Rewiring the Nation program, aims to support offshore wind in Victoria, pumped hydro in Tasmania, two major new transmission links and new renewable energy zones.
The big ticket items from the deals negotiated with the Tasmania Liberal and Victoria Labor governments include $1 billion in low cost finance to support the Marinus Link undersea cable between the two states, along with pumped hydro developments and local network upgrades.
Transgrid CEO Brett Redman says the funding for NSW will help the network company to to bundle the transmission projects into a single continuous construction program, saving on costs and time.
He says bundling EnergyConnect, VNI West, and HumeLink will achieve capex savings of up to $500 million, through savings in procurement, labour and avoided inflation costs.
“This is the best example of the Team Australia approach to securing cheap, reliable, clean energy for Australians as efficiently as possible,” Redman says.
“The sooner we build these transmission projects the sooner we can put downward pressure on the cost-of-living pressures every day Australians are facing.”
