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Helping you make sense of the Australian energy sector.

Energy Spectrum Australia

Energy Spectrum Australia | Issue 4

Welcome to the fourth edition of Energy Spectrum Australia.

The below extract has been taken from our fourth edition, and if you have enjoyed reading this article and want to read more about the latest developments in the Australian energy market, please contact Ben Cerini, b.cerini@cornwall-insight.com.au  for more information.

AEMO considers Victoria-NSW interconnector options

The Australian Energy Market Operator (AEMO) published the Regulatory Investment Test for Transmission: Project Specification Consultation Report (PSCR) on the Victoria to New South Wales (NSW) Interconnector West in December.

The PSCR addresses issues outlined in AEMO’s 2018 Integrated System Plan (ISP). This identified that investments were required to increase interconnection capacity between Victoria and NSW to enable more efficient sharing of generation between the states and deliver energy at the lowest cost to consumers. The ISP also recommended that a longer-term investment would be required to strengthen bi-directional interconnection between Victoria and NSW to deliver fuel cost savings and facilitate efficient connection of new renewable generation.

The PSCR is also the first stage of a Regulatory Investment Test for Transmission (RIT-T) process – an economic cost-benefit test used to assess and rank different options. AEMO and TransGrid are jointly undertaking the RIT-T to assess the technical and economic viability of expanding interconnector capacity between the states.

The options to meet the need for increased transfer capacity between Victoria and NSW (see Figure 1) must deliver net market benefits. These include:

  • Supply reliability in Victoria following the closure of further coal-fired generation.
  • Efficient development and dispatch of renewables generation through improved network capacity and access to demand centres.
  • More efficient resource sharing between National Electricity Market regions.

The second stage of the RIT-T process will see an analysis of options. This will be followed by the publication of a Project Assessment Draft Report. The recommended preferred option may end up being a combination of network and non-network options, as single options by themselves are unlikely to meet the identified need, implementation timeline or provide sufficient market benefits.

The third and final stage of the RIT-T process will see the publication of a Project Assessment Conclusions Report. This will make a conclusion on the preferred option.

In a world of increased renewables, baseload/coal plant closures and changing consumption dynamics, reliance on flows through interconnectors between the states is already increasing and becoming the norm. They are a key source of much-needed flexibility throughout the NEM.  

There are evidently both short and long-term investment requirements in interconnection between Victoria and NSW to ensure efficient sharing of imports and exports of power between the two states and to ensure the costs to consumers are kept low.

There are also a number of collateral benefits from the new interconnection including increased system strength, voltage support, or the ability to optimise fuel costs over time with storage devices. Credible options that result in increased interconnection may also improve the power system’s resilience.   

AEMO and TransGrid are welcoming written submissions to the PSCR until 13 March. We await much of the detail in the second stage.