NSW Coalition proposes to dump biggest REZ, and create city zones instead, ending bipartisan support

The New South Wales Coalition has announced a new energy plan that effectively ends the longstanding bipartisan consensus on the energy transition, scaling back regional renewable energy zones in favour of new ones that would be centred in the state’s major cities of Sydney, Newcastle, and Wollongong.

The centrepiece of the state Coalition’s new energy plan is to effectively scrap the New England Renewable Energy Zone (REZ) – which they describe as “over-budget and delayed” – and create “city REZs” including the Sydney City Renewable Energy Zone, and the acceleration of additional zones in Newcastle and Wollongong.

The Coalition would also prioritise upgrades to existing transmission infrastructure, and dump the proposed 500kV transmission line corridor between Walcha and current Bayswater Power Station near Muswellbrook.

The move is significant as it was the former Coalition government, under the drive of former energy minister and then state treasurer Matt Kean, that designed the renewable infrastructure roadmap, which plotted a path to replace the state’s ageing coal fired power generators with a mix of wind, solar and storage.

That plan was implemented with the support of Labor, which has continued with the policy plan since winning government in 2023, albeit with some changes including the near four-year delay to the closure of the Eraring coal generator, the biggest in the country.

But the Coalition shift follows a similar pattern in other states. The new LNP government in Queensland has ripped up that state’s renewable targets and erected barriers to new projects, and the Victoria Coalition has promised to scrap that state’s zones and new transmission lines should it win government later this year.

On the federal scene, the Coalition has now aligned itself with the surging One Nation party led by Pauline Hanson and Barnaby Joyce (the MP for New England). All three right wing federal parties – the Liberals, the Nationals and One Nation – vow to repeal Australia’s net zero targets.

And it also amplifies the far-right talking points, often promoted by One Nation, that if renewables are to be built then it should be done in the city, and not in rural areas.

“Instead of relying solely on energy generated hundreds of kilometres away, we will unlock the enormous potential of industrial precincts, commercial buildings, and apartment complexes across Sydney, Newcastle, and Wollongong,” said James Griffin, shadow minister for energy and climate change.

He said these precincts would be used to generate power with solar on rooftops and stored in batteries.

“This is about making better use of the assets we already have … thousands of warehouses, industrial sites, commercial buildings, and apartment developments have the potential to become part of our energy network, generating power where it is needed most, and reducing reliance on expensive new transmission infrastructure.”

It is not totally opposed to wind and solar. It indicates support for the Outback Renewable Energy Zone – similar to that proposed by the likes of Tilt Renewables and Squadron Energy earlier this year. Transmission giant Transgrid also proposed a similar idea in 2024.

The Far West of NSW, according to the Coalition, has some of the state’s strongest solar resources and therefore significant potential for renewable energy generation and storage. In particular, the Coalition claims there is 10 gigawatts (GW) of opportunity around Broken Hill.

It is unclear, however, why a 1,000+ kilometre transmission line from Broken Hill to, for example, Muswellbrook, would be less problematic than the New England transmission project already proposed between Walcha and Muswellbrook, which will measure only 250 kilometres in length.

All the more so after EnergyCo, which is leading the delivery of NSW’s renewable energy zones, recently modified the route and narrowed the transmission corridor from 3km to 1km, ensuring that the project would only affect around 150 landholders.

Jackie Trad, CEO of the Clean Energy Council, Australia’s peak renewable energy body, said that NSW’s renewable energy zones were “fundamental” to maintaining both the affordability and reliability of electricity as the state’s coal-fired power stations continue to be retired.

“Renewable Energy Zones are how NSW keeps the lights on as coal comes offline,” said Trad.  

“This is a framework the Coalition itself built. Unwinding it now would mean walking away from one of its own nation-leading achievements. 

“At a time of increased concern about energy sovereignty, reliability and affordability, creating more uncertainty is not in the best interest of NSW, or Australians.”

Separately, while acknowledging that “engagement around the New England REZ has not been good enough,” director of independent non-profit RE-Alliance Andrew Bray also raised concerns.

“The New England REZ has been part of NSW’s bipartisan energy roadmap since it was created under the former Coalition government. Walking away from major parts of that plan now could increase uncertainty for regional communities and threaten the reliability of the NSW energy system.”

NSW premier Chris Minns said Labor would not support the plan which he said would strand billions worth of dollars in capital investment and only result “in complete turmoil and chaos”.

“If we junk that renewable energy zone halfway through it being built, there’s only one way energy prices will go and that is up, because supply will be taken out of the marketplace,” said Minns.

“I think this is the first real-world example of One Nation having a massive impact on the Liberals and Nationals policy agenda and they’re not even in Coalition with each other yet.”

Federal minister for climate change and energy Chris Bowen, while touting the fifteen big battery projects just awarded through the latest Capacity Investment Scheme (CIS) tender, pointed to the earlier bipartisanship in the state.

He expressed surprise that “a prospective Coalition government would go back on” renewable energy zones.

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