The surprise delay in the construction of Australia’s biggest transmission project may have impacts on more than the transition from coal in NSW – it could also make it difficult for South Australia to reach its newly fast-tracked target of 100 per cent net renewable energy by 2027.
South Australia already has the world’s highest share of wind and solar in a gigawatt-scale grid, with a 75 per cent share in the last 12 months. Its target of reaching 100 per cent net renewables – net meaning it will still import and export power with other states – by 2030 was recently accelerated to 2027.
But that target could be in doubt after news from the Australian Energy Market Operator that Project Energy Connect, the new $2.3 billion link from South Australia to NSW will now not be complete until mid 2027, a year later than planned, and there also appears to be delays in the ambitious plans to build the world’s biggest hydrogen power plant.
The PEC transmission project is a joint effort of the South Australia-based ElectraNet, which has largely completed work on its side of the border, and the NSW-based Transgrid, whose CEO Brett Redman revealed the delays – although not quite the extent – in the most recent episode of Renew Economy’s Energy Insiders podcast.
The new link will double South Australia’s connection with other states – it is so far limited to links with Victoria – providing more export opportunities for its pipeline of wind and solar projects, and making it more able to shed its already reduced dependence on gas generators for system strength and other services.
State energy minister Tom Koutsantonis, who did not support the idea of a new link when energy minister in a previous Labor government, used the delay on Tuesday to attack the recent Liberal government’s decision to go ahead with it, and to sell two state-owned peaking plants built as a buffer after the state-wide blackout in 2016.
“When that connector was proposed in 2016, a target build date was set at 2021 with costs estimated at $500 million to $1.5 billion,” Koutsantonis said in his statement.
“Costs and schedule grew in stages until the project was approved by the Australian Energy Regulator in May 2021 at a cost of $2.3 billion and a completion date of June 2023.
“The South Australian part of the connector from Robertstown to the border was finished late last year but the NSW side has faced ongoing delays, with the latest announced in April. In today’s report, AEMO now expects the full 800-megawatt capacity to only be available by July 2027 because of the NSW delays.”
AEMO, and Koutsantonis, are concerned that the delays put into question decisions by Engie to mothball to its its peaking plants – a 75 MW facility in Port Lincoln and a 63 MW plant at Snuggery from July this year.
There is a suggestion that the mothballing could be delayed, particularly given that AGL intends to close the remaining three 200 MW units at the Torrens Island gas power station near Adelaide in mid 2026.
Koutsantonis has bet heavily on Labor’s hydrogen jobs plan, which includes a planned $600 million spend on another world-first, a 200 MW hydrogen gas generator near Whyalla, supported by a 250 MW green hydrogen electrolyser.
The power plant is now expected by AEMO to come into service in 2026/27, which also suggests a delay from recent forecasts of early 2026, and previous forecasts of late 2025.
That is important because the state is currently predicted by AEMO to be around 35 MW short of the reliability standard at that time – meaning that emergency reserves or demand management may have to be bought in and paid for.
“In the privatised electricity market, operators have flirted with the edge of reliability to minimise their capital investment in new generation and maximise their profits,” Koutsantonis said in his statement.
“When Labor was last in Government, we fixed the problem by buying back-up generators – but the Marshall Liberal government sold them off.
“Now, new risks have emerged which show that the State Government’s investment in the Hydrogen Jobs Plan is absolutely essential.
“This is an independent assessment that proves the Hydrogen Jobs Plan is good for jobs, good for the environment and good for all households in this state.
See also: Delays in massive transmission and battery projects give NSW wriggle room to delay Eraring closure
