Regulator approves spend on stage one of massive HumeLink project

The Australian Energy Regulator has approved costs for the first stage of HumeLink, Transgrid’s massive multi-billion dollar transmission upgrade that will connect Snowy Hydro 2.0 to the grid in southern New South Wales.

The AER said on Thursday that it had approved Transgrid’s proposed cost of $321.9 million for Stage 1 of the project, to undertake early works for the 330km 500kV transmission line proposed to connect Wagga Wagga, Bannaby and Maragle.

The regulator says the range of early works to be delivered by 2024 include project design, stakeholder engagement, land-use planning and approvals and acquisition, procurement activities, and project management – all vital tasks that will be key to HumeLink’s final approvals.

For Transgrid, HumeLink is one of a number of major transmission infrastructure upgrades it is either leading or collaborating on, including the $2.3 billion Project EnergyConnect linking NSW and Victoria, and the VNI West link between NSW and Victoria.

HumeLink will lift overall capacity in NSW, alleviate congestion and pave the way for new wind and solar projects, but most of all will be used to connect and distribute power from the huge new Snowy 2.0 pumped hydro project.

And while it has the green light for the first stages, Transgrid has some of the toughest work ahead, including locking in a route for the transmission line that all parties – including local landowners – can agree on.

The project has attracted criticism from environmental groups for its path through the Kosciuszko National Park, and other parts of the preferred route, like Tumut, pose their own problems, with high property density and locals protective of scenic outlooks.

HumeLink has also faced criticisms over the overall cost of the project, which as RenewEconomy has reported has blown out to an estimated $3.3 billion, from an initial estimate of $1.3 billion.

A recent analysis by the Victorian Energy Policy Centre warned that the trebling of the bill for the project could result in a substantial increase in transmission fees to consumers and a $60 a year rise in their electricity bills.

The approval of the stage 1 costs means they will be added to Transgrid’s total maximum allowed revenue for the 2023-28 regulatory control period and gradually recouped through customer bills from 2024-25 onwards, at an added cost of around $3 a year.

For its part, Transgrid welcomes the approval for the first tranche of spending on the project, which it describes as crucial to a more affordable, reliable and renewable grid.

“Australia’s energy transition is happening right now,” said Transgrid CEO Brett Redman in a statement on Thursday.

“The electricity system is transitioning away from coal and towards renewables at a rapid rate, even faster than expected and we are responding to that reality.

“This funding agreement is an indicator of the confidence the Regulator has in the HumeLink Project, which will reinforce the backbone of the transmission network for the eastern seaboard and unlock the full capacity of the Snowy Hydro 2.0 project,” Redman said.

Transgrid says stage 1 funding will be used to conduct early works to reduce project risks and ensure Transgrid maximises efficiencies, to drive down costs passed on to the consumer.

“Transgrid will continue to consult and collaborate with First Nations groups, communities and landowners on HumeLink to refine the project scope and identify investments which can return meaningful benefits to the families and communities living and working near the major project,” the company says.

“These include training and employment opportunities, housing initiatives and the funding of community projects.”

Transgrid also said on Thursday that it had issued an Expression of Interest for key delivery partners to design, install and commission the infrastructure.