Victoria will put a ceiling on the amount of new solar and wind energy generation capacity that can be built in each of the state’s Renewable Energy Zones, and assess connections outside the zones on a case-by-case basis, according to a suite of network access reforms announced on Tuesday.
The Victorian Access Regime aims to “substantially reduce” the risk that new Renewable Energy Zone (REZ) projects will be subject to curtailment of their output and thereby boost investor confidence in the state’s renewables build out.
The new regime will be overseen by VicGrid, a state government body that last year took over transmission planning from the Australian Energy Market Operator, to smooth the path the state’s renewable energy targets of 65 per cent by 2030 and 95 per cent by 2035.
The Allan government says the new planning regime will manage access to the state’s grid by placing a cap on new generation capacity permitted to connect within each REZ. Each REZ will have an access limit that will be set out in accordance with the Victorian Transmission Plan.
Access fees will apply to recover administration costs and contributions to REZ Community Energy Funds and dedicated benefits for Traditional Owners. A fee will also apply to projects seeking to connect outside of REZs to cover costs of undertaking a grid impact assessment.
The government says the main goal of the reforms is to improve investment certainty for renewables developers and investors by reducing the risk and uncertainty under the National Electricity Market’s (NEM) open access regime.
The new state scheme will override the NEM’s existing open access rule, putting VicGrid more deeply in charge of what is allowed to connect, where.
“We know that having secure access to the network is crucial for generators and battery developers when they are making investment decisions,” says VicGrid CEO Alistair Parker.
“The Victorian Access Regime will give industry the certainty it needs to invest with confidence in Victoria and will encourage a more coordinated approach to network connections that reduces impacts.”
it is also expected that the new approach will to help promote community acceptance, as people who live within REZs will know the maximum wind, solar or battery capacity that is allowed to be built in their area.
But the rules will only apply to newcomers – existing projects won’t be subject to location generation caps – and the limits won’t apply to grid-firming battery energy storage systems (BESS), although they will have to work within the new framework.
Any new project outside a REZ will need to prove it won’t impact on projects inside, and may need to agree to build out its own transmission lines or add battery storage to convince VicGrid to approve them.
They’ll also need to meet new Grid Impact Assessment Guidelines, which VicGrid will start consulting on in the second half of this year while it also figures out a method to calculate the network hosting capacity of REZs.
Learning from mistakes
But if the New South Wale experience with REZs is an indication, Victoria will need to manage the process carefully.
NSW has been slow to build out transmission infrastructure for its REZs which slowed development within the zones and saw projects outside of them deprioritised, and has only just opened tenders for “access rights” to the new REZs≥
This has contributed to the state’s mammoth renewables slowdown, says Clean Energy Finance director Tim Buckley.
“The devil will be in the detail,” he told Renew Economy.
“If the Victoria scheme provides greater clarity on where firmed renewable projects can be located, and rewards hybrid renewable projects, that is an overall benefit.
“We see that in China, where they actively develop renewable energy zones to maximise grid access by building wind and solar and battery storage and coal fired power plant projects together.
“Start with the major constraint, which is grid transmission, and give investors confidence they won’t be constrained.
“Investors need clarity and reduced risks from opaque approval structures and lack of visibility of where it’s best to put a renewable energy project. We need to deploy at speed and scale.”
REZ process a two-hander with transmission rollout
The new access scheme has come out of the Victorian Transmission Investment Framework (VTIF), which the state government plans to enshrine through legislation this year, to ensure environmental, land-use, cultural and social factors are considered early in the process to inform locations for new transmission projects.
The VTIF will guide how REZs are set up in the state from 2025 onwards.
State energy minister Lily D’Ambrosio will declare each REZ access scheme including its limits and fees, based on the recommendations of VicGrid and following a public consultation process.
Among other things, the REZ access scheme will specify a set of access conditions that a generator must meet to be entitled to connect within the REZ.
VicGrid will then be responsible for allocating access within each REZ and applying the grid impact assessment.
The new rules come mere months after the state ruffled feathers by saying its Development Facilitation Program will be applied to solar, wind and storage projects, a process that fast-tracks planning decisions.
A series of media articles and concerned press releases from interest groups suggested the process would “steam roll” local communities, but the government argues it will reduce the time period that developers need to wait after lodging a planning application to about four months.
