NSW, Canberra finally wake up to grid needs ahead of Liddell coal closure | RenewEconomy

NSW, Canberra finally wake up to grid needs ahead of Liddell coal closure

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NSW and federal governments finally move to support more grid upgrades, which will help bring in more renewables and clear the path for more coal retirements.

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The NSW and Commonwealth governments have finally woken up to the need for more transmission in Australia’s main grid, announcing a joint contribution of $102 million to ensure that an upgrade to the link between NSW and Queensland is completed before the planned closure of the Liddell coal generator in 2023.

The joint announcement by the Morrison and Berejiklian governments – who have been working on a joint task force to study the Liddell closure – will support and effectively fast-track the planned $175 million upgrade of the link between the two states, rather than waiting for the laborious process of regulatory approval.

The case for new transmission links has been made repeatedly by the Australian Energy Market Operator in its Integrated System Plan that provides a 20-year blueprint for the main grid.

The NSW-Queensland upgrade is just one of a number of projects that AEMO considered most urgent to support the grid as more coal generators retire and more renewables enter the system, the others being a link from South Australia to NSW, an upgrade between Victoria and NSW, and new capacity to reduce congestion in western Victoria.

The proposed upgrade favoured by Transgrid – “up-rating” three lines and installing several capacitor banks – will increase capacity between the two states by 190MW in peak periods, in turn ensuring cheaper supplies can be imported from Queensland, and less gas and storage is needed in NSW to make up for the loss of capacity from Liddell, which will be fully closed by early 2023.

The Morrison government says the decision is all about lowering prices. “This is about putting downward pressure on wholesale prices to make sure businesses and households have access to reliable and affordable power,” Morrison said in his statement.

That is questionable, at least in the short term. According to Transgrid’s own modelling, the “net benefits” of the upgrade will total around $220 million over 20 years in terms of “net present value”. That equates to $11 million a year, or – in the Coalition government’s favoured “per capita” metrics – about $1.50 (one dollar, fifty cents) per person per year in NSW.

However, the upgrade to this link to Queensland, and the proposed new 800MW link to South Australia, will provide more capacity, particularly from renewables, and more competition. Queensland, like NSW, currently sources only 13 per cent of its electricity from renewables now, but this will grow quickly and it has a 50 per cent renewable energy target by 2030.

Over time, the increased competition from Queensland and South Australia – already at 50 per cent wind and solar and aiming for 100 per cent – will result in a lowering of prices in NSW, which have been amongst the highest in the country this year due to its depending on costly black coal generation.

“The QNI upgrade will facilitate greater competition between generators in the electricity market, helping to reduce wholesale prices,” energy minister Angus Taylor says in the joint government statement.

“This is great news for the energy-intensive industries, and the jobs and regional economies that rely on them. With wholesale prices making up around a third of an average retail electricity bill, this will also deliver price relief for households and small businesses.”

At least that is a change from Taylor’s reaction to the recommendation from AEMO that $370 million be spent on upgrades in Victoria, to allow for some $10 billion of new wind and solar capacity and which would deliver twice that amount in market benefits.

“We remain concerned that reckless Victorian state government actions are hurting Victorian, Tasmanian and South Australian energy consumers,” Taylor was quoted as saying in July.

The new approach comes as Taylor comes under increased scrutiny over claims about the Sydney City Council’s travel budget which he now admits to being false. Labor has called for a policy inquiry to see if any documents given to the Daily Telegraph which published Taylor’s claims were forged.

It should be noted that Transgrid was quite specific about where the market benefits would come from – more wind and solar from Queensland – and lower fuel costs from fossil fuel generators, and less chance of “load shedding”.

“The new link will trigger “further reductions in total dispatch costs, by enabling low cost renewable generation to displace higher cost conventional generation…,”  it said.

“…. And reduced generation investment costs, resulting from more efficient diversified investment and retirement decisions, due to high quality wind, solar and pumped-hydro generation being able to locate at optimal locations rather than inferior locations limited by congestion on the existing transmission system.”

The new link – which is now targeting a completion date of late 2021, a year earlier than previously planned – means there should now be no impediment to the closure of Liddell, which will see one unit closed in 2022 and the remaining in early 2023 after staying online for one more summer.

This and the other new links will likely also make it easier to close Vales Point (2028/29) and Eraring (2032) over the medium term.

According to a presentation made by Transgrid to stakeholders just last Friday, the benefits from the new link – favoured narrowly from a rival proposal to install two big batteries at either end of the line – will mean less investment will be needed in new gas generators, pumped hydro and battery storage.

The biggest change is in the amount of peaking gas plants needed. Under Transgrid’s neutral scenario, 513MW of new gas capacity would have been needed, and less under the “low emissions” and “fast change scenarios”. The amount of gas capacity is reduced in all three scenarios, and for solar and  pumped hydro in the low emissions scenario, although “fast change” sees more solar being built.

It was ironic, however, that Morrison should be using the announcement to plug the case for “investment certainty”, given that every decision his government has taken, or not taken, has had the opposite effect in the market.

This includes the lack of a coherent energy policy, the lack of an emissions reduction policy, and the other interventions into the market, including its own underwriting scheme. Until now, it has paid little attention to AEMO’s Integrated System Plan.

“Industry needs certainty,” Morrison said in his statement. “They need to know their electricity won’t cut out, and their power bill won’t suddenly double. You can’t run a business like that, and you can’t employ people.

“That’s why we are underwriting this interconnector. It’s a practical step to make sure it happens, and it happens quickly.”

Given that, it should be hoped that the federal government now turns its attention to the South Australia link, and the much-needed upgrades from NSW to Victoria, with or without the government’s pet project, the Snowy 2.0 pumped hydro scheme.

The South Australia interconnector in particular will result in a huge influx of renewable energy capacity as that state’s Liberal government pursues its aim of “net 100 per cent renewables” by the end of the decade, and to become a significant exporter of cheap and clean renewable electricity.

At least half a dozen major solar, wind and storage projects are queuing up to join the grid on the South Australia end of the proposed link, and more solar and storage projects are expected to jump on the NSW end of the link once the investment gets the go-ahead.



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  1. John Smith 7 months ago

    Hey Dufus, The electricity in Queensland comes from coal. Qld may develop solar too but wind doesn’t blow consistently linear between the 40th latitudes.

  2. JackD 7 months ago

    Our Spin Doctor-in-Chief is just engaging in his usual diatribe. Old Anxious could be in a little trouble so his boss chimes in with a tasty morsel drip feed for them to all salivate over.

    Nothing substantial mind you, just a little bread and dripping.

  3. Michael 7 months ago

    “prices in NSW, which have been amongst the highest in the country this year due to its depending on costly black coal generation”

    What a strange and easily disprovable thing to say…

    Wholesale prices YTD (per MWh):
    QLD: $74.30
    NSW: $89.15
    SA: $105.47
    Vic: $118.37

  4. Rod 7 months ago

    I certainly hope the COALition underwrite transmission for other States. If not, this smacks of bias in a supposedly “competitive” NEM

  5. Gyrogordini 7 months ago

    I’d still like to see a second Bass link on the books. It works both ways: backup to Tassie in the event of drought, and clean, green energy flowing into Victoria/rest when available.

    • Peter Farley 7 months ago

      For about $300 m Tasmania can build enough extra wind and solar that it never needs to worry about drought again. That is less than 1/3rd of the cost of the new link. For $600 m Victoria could build more renewables/storage than the link would provide

  6. Craig Fryer 7 months ago

    Not sure what happened to my previous detailed post. The preferred option, Option 1A, appears to only provide 50MW additional capacity QLD > NSW, but some 200MW additional capacity NSW > QLD. Surely the majority of the increase should be QLD > NSW. What am I missing here?

  7. Seriously...? 7 months ago

    This seems like a bad idea when QLD is going to secede from the NEM anyway. 🙂

    On a serious note, 200MW or so doesn’t seem like much. Maybe 2 or 3 percent of NSW demand. Why exactly, if they are going to that effort, aren’t they trying to boost capacity more? I know there’ll be a technical explanation.

  8. Hettie 7 months ago

    Surely the most salient point to remember is this: in this vast land mass we call home, the wind is always blowing somewhere, and within the well known limits imposed by global rotation, the sun is always shining, somewhere. There are also periods of calm, in some places, and of heavy cloud, in some places.
    Therefore, building substantially oversized transmission lines, to ensure that enough electrons can reach all the places they are needed, from all the places that VRE is being generated, makes perfect sense. As does building far more VRE than we are presently using from all sources. The capital cost is low, and falling, efficiency is rising, and ongoing cost of fuel is zero. There is a burgeoning potential for export as H2, NH4, and fully processed minerals, with high embodied energy such as aluminium and steel.
    So let’s get on with it!
    BTW, who amongst you, dear readers, wanted to throw bricks at your TVs on Sunday morning, when Pinnochio Taylor was stoutly maintaining that you can’t possibly smelt aluminium or steel using anything but coal? The man is not only a congenital liar, he is as dumb as a bag of hammers. That is to say, he makes a lot of noise when rattled, but makes no sense at all.

    • Peter Farley 7 months ago

      Hettie, in spite of what you read we already have a vastly oversized transmission system. Most countries in the EU cannot trade more than 10% of peak demand, every state on the East cost except Queensland can import/export about 30% of demand. As further evidence, as renewables have increased interstate trade has fallen. For example NSW which has been a net importer since the NEM was started has halved its total imports over the last five years. SA imported 23% of its power at its peak. It now exports a net 7%

  9. Aluap 7 months ago

    Can anyone trust any explanation given by Morrison?

  10. Maddogeco 7 months ago

    The debate here in the comments seems to be local generation and storage vs distributed generation and transmission line.
    I think I lean towards the distributed generation to take advantage of how big and varied Australias weather can be.

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