The Victorian government has moved to fast-track development of a “vital” transmission upgrade that will link the state’s grid with New South Wales and unlock up to 5GW of new renewable generation capacity.
The Labor Andrews government said on Sunday it had issued an order under the National Electricity (Victoria) Act 2005 enabling the Australian Energy Market Operator to get cracking on preparatory and planning works for the Victoria-New South Wales Interconnector (VNI) West project, also known as KerangLink.
Victorian energy minister Lily D’Ambrosio says the order will speed up key development activities for the oftentimes controversial project, including stakeholder and community engagement, land use planning, detailed engineering design, and cost estimation.
In turn, this will mean processes such as the Environment Effects Statement (EES) can kick off later in 2023, a year earlier than originally anticipated.
New energy superhighways
The move follows the July 2022 release of a Project Assessment Draft Report (PADR), that confirmed VNI West as the preferred proposed pathway to link the two eastern NEM states and help smooth the transition to renewables, and to help link the massive, but delayed, Snowy 2.0 project to the grid.
The report estimated that the project would result in additional transfer capacity of around 1,930MW from Victoria to NSW and 1,800MW in the other direction – boosting the transmission limit at the Murray River REZ by up to 2.6GW, and by 400-800MW in the Western Victoria REZ.
On costs, the PADR said the construction of around 400km of double-circuit 500kV lines will have an estimated capital cost of around $3.2 billion: $1.6 billion in Victoria and $1.6 billion in NSW.
On the other side of the ledger, AEMO and Transgrid have said that the construction of VNI West will provide net market benefits of $687 million.
“With projects like … EnergyConnect, HumeLink and VNI West, we’re seeing the beginning of a big rollout of energy superhighways to be able to move energy around cheaper, faster, more decarbonised,” said Transgrid CEO Brett Redman at the time.
A troubled history
Greenfield transmission projects have caused significant angst in communities along the proposed routes facing the prospect of huge towers imposing on views, new easements, compulsory land acquisition and enforced land access.
VNI West has stirred controversy over its costs-to-benefits ratio and its route through regional Victoria, with not all stakeholders thrilled by the prospect of having massive transmission installed in their “back yards.”
Of 212 complaints made to the Australian Energy Infrastructure Commissioner in 2021 — originally a body set up to investigate wind farm problems but now expanded to solar and infrastructure — 111 were about major transmission projects. Some 90 of these were about Victorian projects.
Although the offending projects were not named, RenewEconomy has detailed the struggles of AusNet Services’ Western Renewables Link, where in mid-2021 communities accused the network operator of “misrepresentation, deception and lack of empathy” in its dealings.
Other issues, noted in community submissions to the VNI West, are repeated avoidable underestimation of network costs and time to build, such as the Humelink, unrealistic final assessments of benefit, and costs being lumped with consumers for projects where the main beneficiaries are entities other than consumers, as RenewEconomy has reported.
In an analysis published here last September, Ted Woodley claims the PADR’s forecast net benefit for building VNI West of $0.7bn is based on implausible assumptions far removed from what would occur in reality.
Woodley argues it is “far more likely that the cost of VNI West (latest estimate of $3.3bn) will well exceed its benefits.”
Negotiations continue
On the project’s design, community feedback prompted Transgrid and AEMO to look at other options in December of last year, including a rethink of the Western Renewables Link (WRL) connection north of Ballarat.
And alternative VNI West route proposes to take in connections in areas around Bulgana and Waubra/Lexton, to the west of Ballarat.
AEMO said this week it consideration of alternative options for VNI West were ongoing, including the WRL connection point, “responding to valuable feedback provided by local communities, Traditional Owners and regional stakeholders.
“This additional analysis and consultation will enable AEMO to assess and select a project option that can best meet local needs,” it said on the weekend.
Community engagement advocacy group RE-Alliance welcomes the Victorian government intervention as “an important step” to ensuring VNI West is progressed in the right way.
“Enabling the Australian Energy Market Operator (AEMO) to start early works on VNI West will ensure this key infrastructure is built right the first time – on the best possible route, with strong community engagement and with the least possible environmental footprint,” says RE-Alliance Victoria and Tasmania coordinator, Tony Goodfellow.
“AEMO is already assessing alternative routes for VNI West, including upgrading the Western Renewables Link connection point so that a route further west can be realised.
“This step will plan beyond the conventional ‘least cost option’ and build infrastructure that best meets local needs.”
Goodfelllow says the group is advocating for similar compensation to landholders in Victoria as have been introduced in NSW, where the government has agreed to pay transmission line hosts $200,000/km over a 20-year period.
The race is on
Progress on the community engagement and social licence front is crucial, as the Victorian government races to meet its ambitious targets for 65% renewables by 2030, and 95 per cent by 2035.
“As ageing coal-fired generators retire and become increasingly unreliable, Victoria is enabling a once-in-a-generation transformation of our clean energy grid and delivering thousands of jobs along the way,” said D’Ambrosio in comments on the weekend.
“Bringing forward VNI West means we can connect cheaper, more reliable renewable energy sooner, putting downward pressure on energy prices.”
The Andrews government says projects like VNI West are the key to delivering cheaper and more reliable renewable and storage capacity and to coping with high demand periods, such as very hot days.
It says VNI West will unlock between 1,900 and 5,000MW of new renewable projects in Victorian Renewable Energy Zones (REZs), provide an additional market for Victoria’s offshore wind and provide access to NSW projects like Snowy 2.0.
