Renewable transition happening, despite lack of federal policy

One of Australia’s biggest electricity network owners and operators says Australia’s renewable market transition is “happening now”, even without any clear goals on the federal level.

“We are moving forward,” says Rick Francis, the CEO of Spark Infrastructure, which owns distributed networks in South Australia and Victoria, is a part owner of transmission company Transgrid, and is developing a new business that has direct ownership in large scale renewable energy projects and possibly batteries.

Francis noted that even without any clear federal policy, the state governments are acting – mostly because they have to. Over the next 12 years, another 8GW of coal capacity will retire due to old age, much of this in NSW which will be left with just 13 per cent of its current fleet.

The obvious replacement is renewable energy and storage, built well before the coal generators actually close, which is turn means more transmission links between state grids, line upgrades and the creation of renewable energy zones. And Spark is well placed to benefit from that.

“Existing coal generation is becoming less reliable and more costly to operate,” the company says. And it said that batteries are expected to play a significant role in the transition of the energy market. Not only can they create a demand source for renewables, they can also capture arbitrage opportunities, provide network ancillary services, and firm the output of wind and solar.

Transgrid, which has just completed its first large scale solar farm – the 100MW Bomen project near Wagga Wagga – said it was clear from current grid issues that site-specific characteristics were now more important than overall project economics.

The definition of a high quality utility-scale wind or solar project was one that had “good energy resources, good grid access and access to attractive regions of the NEM,” it said.

Spark is looking at a range of opportunities to expand its regulatory asset base, mostly through its 15 per cent stake in Transgrid, in which it also has a pre-emptive right for a further 19.9 per cent stake.

Transgrid is currently involved in $5.1 billion of likely grid investments, inlcudes upgrades to existing links from NSW to Queensland and Victoria, the new Humelink to connect Snowy 2.0, and Project Connect, the $1.5 billion new line from South Australia to NSW.

There is also a potential new link from NSW and Victoria which could unlock some of the major grid restraints on wind and solar farms in north-west Victoria and south-west NSW, and around $3 billion from the pilot renewable energy zone in NSW.

“The growth outlook is substantial,” Francis said. “These projects are designed to deliver grid strength, reliability and renewable energy connectivity in the NEM.”