A project to upgrade the power transmission link between Queensland and New South Wales has been waved through by the Australian Energy Regulator, as a key measure to overcome crippling grid constraint problems and unlock and share cheap renewables more efficiently between the two states.
NSW network operator Transgrid said on Monday that the AER had approved the Regulatory Investment Test for Transmission, or RIT-T, for the upgrade, allowing the project to proceed to the next stage of development.
The project, which is being jointly backed by the NSW and federal governments, will upgrade the 20 year old transmission lines and three substations at Tamworth, Dumaresq and Armidale.
It was chosen ahead of alternative options, such as the siting of several big batteries. See: Battery storage nearly there as smarter, cheaper choice for grid upgrades. The regulator said that because these were “first of their kind” proposals for Australia’s grid, it would likely require another 12 months of modelling to assess. But it could be used for the next upgrade.
Transgrid said the upgrade would allow 460MW more power to transfer into Queensland and 190MW more into New South Wales and the ACT.
In its determination, the AER said its cost benefit assessment of the project had found it would deliver $170 million in net benefits to consumers and market players and bolster the transition of the National Electricity Market.
“We’re saying that the assessment by TransGrid and Powerlink stacks up and that consumers will get value for money from this investment,” said AER chair Clare Savage.
“The proposed interconnector will help to address potential system security problems and alleviate upward pressure on wholesale electricity prices.”
The need to pave the way for more renewable energy capacity to be safely connected to the grid in all NEM states is particularly urgent, as has been documented by RenewEconomy and underscored by a recent Clean Energy Council analysis.
The CEC study, published in late January, found new investment commitments for large-scale renewable energy projects had more than halved in 2019, slashing billions in investments from Australia’s clean energy sector.
The findings prompted the CEC to issue renewed calls for action on a range of grid connection issues that have halted investment in projects in large parts of the electricity market, with the need for reforms to energy market regulations becoming even more urgent.
Victoria has asked AEMO to conduct a tender for proposals that could lift the capacity of the link between NSW and Victoria in a move that is likely to attract more battery storage proposals, and could be the first in the country to upgrade a link with such technology.
The lack of investment in key parts of the network has been identified in AEMO’s Integrated System Plan, which has identified a series urgent, mid term and long term projects that need to be done.
The impacts are being felt across the country, and creating logjams in new connections. Earlier this month, two solar farms and one wind farm in north Queensland were facing major constraints due to newly discovered “system strength” issues and their output could be curtailed to zero under certain conditions.
The system strength issues are similar to those that have seen the output of five solar farms in Victoria and NSW cut in half, and many other projects in that area warned of significant delays to connections and commissioning.
“The QNI upgrade is important because it will increase the capacity to share electricity between Queensland and New South Wales and reduce current and forecast network constraints,” said Transgrid’s executive manager of works delivery, Michael Gatt, in a statement on Monday.
“It will ensure greater reliability of lowest cost electricity, as we enable more efficient sharing on the NEM and introduce more innovative technology to the system.”
Gatt says early works have commenced on the upgrade project which is expected to be delivered in September, 2021.
“TransGrid is already working to deliver the upgrade, conducting environmental, geotechnical and site surveys and engaging with communities along the existing transmission line corridor.”