“Two very different types of people:” Australia’s split energy personality and what it means for grid connections

It turns out there are two distinct personalities in Australia’s rapidly evolving grid transition – one that finds its home in the country’s monopoly networks, and the other in the fast-moving developers looking to build, and connect, large scale wind and solar projects.

And the contrast sometimes makes it difficult to connect, according to one of the country’s most successful renewable energy developers.

“I can tell you, hand on heart, it is often difficult for both sides to really reconcile the difference of opinion and approach,” Westwind managing director Tobias Geiger told an Australian Energy Week audience in Melbourne this week.

“You have two very different types of people that now need to collaborate to deliver this energy transition in these transmission assets.”

He says network companies attract the type of person who knows “how to navigate and excel in an environment of well-defined and fairly rigid processes and procedures”, whereas developers bring in personalities who thrive in an environment “where new challenges and tasks emerge every day” in businesses with highly volatile returns. 

It’s in this context that Geiger is relieved that networks are building commercial arms outside their regulated businesses, naming Powercor’s Beon, Ausnet’s Mondo, and Transgrid’s Lumea as “growth-focused”.

“The growth focused non-regulated entities of the network operators are often better equipped to work with developers, enabling clearer communication and strong alignment between the developer ecosystems and the network businesses,” Geiger says. 

There is a quid pro quo however, as developers need to understand that reliability, not connecting their project to the grid quickly, is a network’s number one KPI.

REZs are changing project risk profiles

Connection, however, is no longer the key risk to projects, as the new era of renewable energy zones (REZs) has changed the risk profile of a project away from connection and onto developers. 

“In the past, you developed a good project, and you worked with your TNSP [transmission network service provider] on your grid connection, and you typically got your project away that way,” Geiger said. 

“Now you have to often compete in competitive auction processes [for space inside a REZ] with others that may not have as good a project as you do, but they might have financing behind them already.”

Westwind has multiple projects in Victoria’s new Western REZ and one just outside New South Wales’ (NSW) South-West REZ, Lake Victoria, which is going ahead anyway despite the lack of local grid capacity and its proximity to the REZ after winning an endorsement from the NSW Investment Delivery Authority.

The South-West REZ has been hampered by backwards-looking planning which massively underestimated the amount of wind generation the area could take, and resulted in the newly energised Project Energy Connect transmission line being built too small – 330 kilovolts (kV) instead of 500 kV.

Geiger is clearly cross about this.

“If we had built Project Energy Connect 10 times as big, we would have a lot less issues with building more renewables more quickly in order to service new data centers, new customers, and retire coal in line with the time frames that we had aspired to,” he said.

“PEC effectively is a victim of this outdated [Regulatory Investment Test (RIT)] process. But it’s fair to say that both government and industry have learned from that.

“Responses… so far have mostly been state based, and they are the introduction of renewable energy zones, including transmission planning within those renewable energy zones to cater for development projects rather than just committed projects.”

Other responses include new government-owned entities Vicgrid, and EnergyCo in NSW to speed up transmission delivery. 

But these can also come with unintended consequences, such as stranded assets inside and outside REZs, because there isn’t enough capacity to take the volume of projects proposed for the area, Geiger says.

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