NSW electricity strategy – will action follow the talk? | RenewEconomy

NSW electricity strategy – will action follow the talk?

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Despite a new electricity strategy and emissions reduction target, NSW persists in having no real policy or even good analysis to back them up. And no electric vehicle policy.

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The NSW electricity strategy has been to over promise and under-deliver. ITK’s view has long been that the state and its ministers have been all talk and no action.

NSW was widely regarded as the most difficult state to build a new wind farm, there was no support for rooftop solar, little transmission capability.

Sales of Transgrid, Ausgrid, and Endeavour Energy, and the stake in Snowy raised more than $27 billion of funds via cash receipts and the movement of debt off the NSW Govt balance sheet. $27 billion is a lot of money and there was another $2 billion of infrastructure funds received from the federal government, and yet NSW hasn’t reinvested even $100 million into the NSW electricity industry.

ITK always has and always will support development of Sydney metro and other public transport funded by the electricity sale proceeds, but we still think some money could have been reinvested in energy.

On November 11 the NSW electricity strategy was announced and even more recently, and presumably with the tacit backing of the Premier, the NSW Energy Minister has announced a 35% reduction in NSW emissions target by 2030. However as yet there is no policy around that target or even some good emissions analysis.

Specifically, there is no electric vehicle policy so far. ITK has pointed out on numerous occasions that low cost policies like free parking, registration relief and some modest recharging facilities could greatly facilitate the uptake of EVs in NSW.

The policies that have been so successful in Norway could easily be replicated in NSW with everything to gain and little to lose. Enough on that for now.

Regarding the electricity strategy there are three main elements.

1) The Energy Savings Scheme will have its name changed to the Energy Security Safeguard whereby certificates with a market value can be created by the installation of energy saving equipment such as LED lights, smart pool pumps, electric vehicle infrastructure. Under the revised  scheme the target is a 13% in efficiency (up from 8.5%) by 2030 relative to a 2008 target.

This is a great scheme and increasing the target will be widely supported. In addition new separate certificates can be create for batteries and EV chargers that operate outside of peak demand. Again this is great work.

2) A NSW energy security target [EST] will be set such that firm supply capacity of 15.5 GW is in place. This consists of within NSW dispatchable generation and firm transmission capability.

If it is forecast that the EST will not be met the NSW Govt plans currently include compulsorily accelerating the development of “Humelink”.

Currently Humelink is regarded by the ISP as a “stage 2” project but its RIT-T has already started. Delivery is planned for 2024/25 and Snowy 2 won’t be running before that so in ITK’s view the NSW Government can’t really  increase its energy security by trying to accelerate Humelink.

Another option is to accelerate a 378 MW upgrade of QNI, the link to Queensland. This is also a phase 2 project for the ISP and an RIT-T process is yet to start.

Another plan is to procure 200 MW of firm generation to satisfy NSW Government loads. But the NSW Govt appears to be doing this anyway by putting its retail load out to tender for the  “provision of an integrated solution for the Whole of Government Electricity Retail Services and dispatchable Power Purchase Agreement, underpinned by new, technology neutral, fast-response capacity” 

ITK tries not to be cynical but the analyst in me worries that’s code for gas plant. The expression of interest from which the above quote is lifted specifically does not mention neutral and the “fast response “ translates to dispatchable. Of course it could be firmed variable renewable energy. Many argue that’s cheaper than gas and I guess this is a test of that.

3) NSW to accelerate and formalize the a pilot 3000 MW Central-West renewable energy zone.

The NSW Government’s investment in the process to start with will be $9 million to create a new dedicated renewable energy zone body. The  Central – West REZ will also be supported by a strategic master plan. ITK fully supports having a master plan as it would seem to start putting some structure around what an REZ is.

The State policy says the NSW Govt will support transmission upgrades but there is no firm financial commitment right now. Instead the NSW Govt will “approach the market for competitive generation proposals in the Renewable Energy Zone and facilitate generator contributions to transmission costs “.

ITK isn’t too encouraged by this wording. Expecting generators to pay for transmission to compete against existing generators is silly. Does the “approach the market” translate to a tender or just an invitation to “have a go ya mug”?

What about the central west zone itself

When ITK first saw the map provided by the NSW Govt of the zone we weren’t impressed. Only one potential wind farm was shown on the map  and other than potential development of coal seam gas we couldn’t see what firming capacity could be place in the zone.

Putting firming capacity in the zone isn’t necessary but could improve the capacity factor of any transmission capacity installed as part of the REZ investment process.

Fortunately subsequent release of the draft  ISP has provided some additional info.

NSW Electricity Strategy – Historically over promised under delivered, $27 bn asset sales receipts, <$100 m reinvested

Stage 1 (improve hosting capacity by 700 MW):

– Establish a 330 kV switchgear at Wollar.

– One 500/330 kV 1,143 MVA Wollar transformer.

Stage 2 (improve hosting capacity by 1,000 MW):

– Establish a Central West Hub 330 kV substation to the north-west of Wollar.

– A new double circuit Central West – Wollar 330 kV line (160 km).

– A new single circuit Central West Hub – Wellington 330 kV line (120 km).

– One 500/330 kV 1,143 MVA Wollar transformer

At the moment the ISP has Stage 1  happening in 2036 and Stage 2 in 2040  but clearly that’s going to have to change if the NSW strategy is to have any reality.

Let’s assume these numbers are correct and that 2000 MW can be supported for a midpoint investment cost of  say $330 m. Assuming most of the VRE developed is “C” class solar with a capacity factor of say 28% that’s about 5 TWh of generation per year or about 7% of NSW annual consumption.

Assuming a 25 year life lifetime generation will be 125 TWh and the transmission capital cost amortised over that volume is $2.64 per MWh. Allowing for transmission opex and maintenance will raise the cost a bit but its still relatively modest even without any firming capacity added.

The ISP rates the Solar resource as grade C and wind as grade C (where A is the best and F is the worst). It rates the solar  generation/demand correlation as F and the wind generation/demand correlation as D.

Intriguingly, the ISP claims that the Central West zone has a good pumped hydro resource  “predominately to the North West of the Wellington-Piper 330 kV line “. This appears to be around the Ulan area on the Western side of the Goulbern River National Park.

ITK suspects that this will be news to most pumped hydro proponents in NSW and we will make a small bet that no pumped hydro is operating in the zone in the next 10 years.

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1 Comment
  1. Les Johnston 6 months ago

    Sounds a pretty fair analysis of the likely action of the NSW Government. Private toll roads have dominated NSW Government discretionary expenditure and there is much more to come. The dip in stamp duty in 2018-19 has further reduced Government capacity to spend taxpayer funds on the energy network. The air quality issues that are unlikely to subside over summer will put much pressure on the NSW Government to make some real contribution towards further repeats of the big burn in future years. Energy is likely to take second place.

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