Australia has been making efforts to rebuild and upgrade its transmission infrastructure. Most of this was built decades ago with the primary goal of transmitting the output of its now ageing coal-fired power stations. New transmission lines are required to connect new, geographically dispersed generation, renewable energy zones and strategic storage projects throughout Australia’s National Electricity Market, owing to the gradual retirement of thermal assets. As the country races to meet the target of net zero by 2050, it plans to drive emissions reduction through rapid deployment of existing technologies, and investing in the technologies and industries of the future.
In recognition of the fact that there will be no transition to a net zero future without a concerted investment in transmission infrastructure, the new Australian government, in October 2022, launched the Rewiring the Nation initiative to modernise the power system to speed up the deployment of renewables. With a budget of AUD 20 billion, the initiative will be implemented through a new Rewiring the Nation Office (RTNO) under the Department of Climate Change, Energy, the Environment and Water. The Australian Energy Market Operator (AEMO), which is responsible for forecasting and planning national transmission system requirements, will act as the technical adviser, while the Clean Energy Finance Corporation (CEFC) will serve as the financing arm of the programme.
The RTNO, with a sizeable amount of cash allocated to it for start-up and operating costs, will utilise the bulk of the AUD 20 billion investment to provide concessional loans and equity in order to encourage investment in transmission infrastructure projects. The Rewiring the Nation budget also includes:
- AUD 50.4 million from 2022-23 to 2025-26 to support the operating costs for the CEFC to deliver concessional financing through the initiative.
- AUD 18.1 million from 2022-23 to 2025-26 to set up the RTNO to manage coordination, community engagement and negotiation with the states and territories for the delivery of Rewiring the Nation projects.
- AUD 9.4 million from 2022-23 to 2025-26 to deliver reforms to transmission regulation, including the regulatory investment test for transmission (RIT-T), and designate projects as “Nationally Significant Transmission Projects” to ensure their timely completion.
- AUD 5.8 million from 2022-23 to 2024-25 to conduct a review of AEMO’s Integrated System Plan (ISP) and transmission frameworks in other jurisdictions, to improve the effectiveness of energy system planning for the transition of the electricity market away from fossil fuels.
The Australian government has made the first landmark transmission agreements under the Rewiring the Nation initiative and the transformation of Australia’s electricity grid has begun. The first two were signed in October 2022. The first was between Victoria and the federal government or Commonwealth, ensuring concessional financing for Renewable Energy Zone (REZ) projects including offshore wind (OSW) projects and the Victoria-New South Wales Interconnector (VNI West)-Kerang Link. The second was between the Commonwealth, Victoria and Tasmania, concerning the Marinus Link interconnector connecting the two states.
More recently, in December 2022, another agreement was signed between the Commonwealth and the New South Wales (NSW) government to connect NSW’s REZs as well as Snowy 2.0, one of the country’s biggest green energy projects and the world’s largest pumped storage plant, to the grid. The joint deal will support eight critical transmission and REZ projects that are part of AEMO’s 2022 ISP, released in June 2022. The Rewiring the Nation initiative focuses on timely delivery of the 2022 ISP, which is a whole-of-system plan to efficiently achieve power system needs up to 2050.
Rewiring the Nation agreements
According to the agreement between the Commonwealth and Victoria, concessional financing of AUD 1.5 billion will be provided to fast-track the regulatory processes and support rapid development of Victoria’s OSW industry and REZs. Meanwhile, a concessional loan of AUD 750 million will be provided through CEFC to VNI West to ensure it is completed by 2028.
Under development by Transgrid, NSW’s transmission network developer, VNI West proposes the construction of a 500 kV double-circuit line to connect Western Renewables Link from a new terminal station north of Ballarat, Victoria, with the EnergyConnect project at a new Dinawan substation between Jerilderie and Coleambally, NSW. The project also involves the enhancement of the EnergyConnect transmission lines between Dinawan and Wagga Wagga to have them operate at 500 kV rather than 330 kV.
Support from Rewiring the Nation is an important impetus for the state of Victoria, which is spearheading the country’s OSW sector and has set ambitious targets of 2 GW of OSW capacity by 2032, 4 GW by 2035 and 9 GW by 2040. To support these goals, in October 2022, the state released its first Implementation Statement, outlining its plans for OSW development. VicGrid, a new body created within the Department of Environment, Land, Water and Planning, will lead a coordinated approach to transmission to ensure OSW projects have access to the grid. For the first OSW target, the transmission infrastructure will be procured in partnership with AEMO. VicGrid will find a coordinated connection point off the coasts of Gippsland and Portland, which are attractive for OSW projects, as part of the ongoing development of a Victorian strategy to support the OSW industry. Offshore wind farms will be required to connect underground to these connection points, as a condition of the Victorian government’s procurement process.
In Portland, this will be enabled through a new or upgraded 500 kV switchyard, as the existing transmission network already runs close to the coast in that area. In Gippsland, this will be enabled through a 500 kV double-circuit transmission line and terminal station extending the existing network from Latrobe Valley towards Gippsland Coast. This new line is needed as the existing network does not extend past Latrobe Valley. These assets will facilitate the connection of 2 to 2.5 GW of capacity at both locations, and will ultimately form part of Victoria’s declared transmission system. The scoping process for routes will commence in 2023 with a competitive tender process expected to follow in 2024. More details about OSW access arrangements are expected to be provided by June 2023.
Notably, the Ministry of Climate Change and Energy has declared Gippsland as Australia’s first offshore wind zone. The Offshore Infrastructure Registrar, established under the country’s Offshore Electricity Infrastructure Act, 2021 (which came into effect in June 2022) for administering the licensing scheme, will be accepting feasibility licence applications for offshore renewable energy projects in Gippsland until April 27, 2023.
The Victorian government is expected to release the second implementation statement in early 2023, which will provide further information on offshore wind procurement and the support mechanism, local content requirements, and updates on policy and regulatory developments as well as transmission solutions and ports. This will be followed by a third statement, expected to be released in late 2023, providing further details of the procurement process plan and updates on local content requirements.
Victoria and Tasmania
Under the agreement with Victoria and Tasmania, the Marinus Link connecting northern Tasmania and Gippsland will have access to a concessional loan from the initiative, through the CEFC, for 80 per cent of the project costs with the remaining 20 per cent to be an equity investment shared equally between the Commonwealth, Victoria and Tasmania.
The Marinus Link or the second Bass Strait interconnector will help connect Tasmania’s Battery of the Nation projects to the mainland. Tasmania’s transmission network developer TasNetworks is developing the interconnector, which involves building a 750 MW high voltage direct current (HVDC) link between Burnie in Tasmania and Hazelwood in Victoria, with support network augmentations in Tasmania in the first stage. In the second stage, a second 750 MW HVDC cable will be installed. It will require around 250 km of undersea cables, 90 km of underground cables, and converter stations at both ends.
In addition to the Marinus Link, Rewiring the Nation is offering up to AUD 1 billion in low-cost loans for eligible Tasmanian Battery of the Nation projects. These projects are part of Hydro Tasmania’s ambition to maximise the state’s hydropower capacity, including the potential redevelopment of the Tarraleah hydropower scheme and development of a new pumped hydro storage project at Lake Cethana. Funding is also being made available to support Tasmania’s North West Transmission Developments.
New South Wales
The joint AUD 7.8 billion agreement between the Commonwealth and NSW covers eight critical transmission and REZ projects – Sydney Ring-Hunter Transmission Project (HTP) (northern part) and Southern Sydney Ring, Central-West Orana (CWO) REZs, New England REZ, HumeLink, VNI West, Hunter-Central Coast REZ, and South-West REZ. Rewiring the Nation will provide AUD 4.7 billion from the Commonwealth, which, combined with the AUD 3.1 billion from the NSW Transmission Acceleration Facility, will help NSW realise its Electricity Infrastructure Roadmap.
Rewiring the Nation will also cover the grid connection of the 2 GW Snowy 2.0 pumped hydroelectric storage project being developed by Snowy Hydro. The project involves linking two existing dams (the Tantangara and Talbingo reservoirs of the 3.8 GW Snowy Mountains Hydroelectric Scheme) through 27 km of tunnels, and the construction of a new underground power station. The AUD 5.1 billion Snowy 2.0 is just one of many new power stations that will require upgrades to the transmission network. The existing NSW transmission system will be modernised to establish a direct connection between the new power station and major load centres within the state. A new substation will be constructed in Bago State Forest to link the Upper Tumut and Lower Tumut substations. Furthermore, two new 4.5 km long double-circuit transmission lines will be built between the Snowy Hydro 2.0 generator site and the new Maragle substation. The project is expected to be completed by 2026.
Australia’s electricity grid needs to be strengthened and reconfigured to meet the demands of the transitioning electricity market, and the Rewiring the Nation plan will help achieve the transformation required to meet the country’s future energy needs.