Lawrence Smith, NSW Regional and National Markets Manager, unpacks the disparate and sometimes inconsistent dialogue around energy transition, highlighting six key aspects of the initiatives, investments and actions underway.
A lot has been said recently about the state of Australia’s energy generation transition. Plans are being announced at all levels of State and Federal government. Private industries are announcing new MOUs and investments based upon new or revised ESG governance positions – and so it goes on.
The transition to renewables is happening!
Collectively, Australia has made a good start. However, we are at the beginning, and there is plenty yet to achieve on the journey to replace fossil fuel energy generation with 100% renewables.
Fortunately, thanks to the coordinated efforts of Australian east coast state and territory governments, the transition is happening and it’s virtually unstoppable!
Let’s talk about your project…
At Niche, we can certainly attest to the fact that government and private industry are moving to take advantage of incentives and opportunities. And – in line with our values – we are committed to doing our part to help sustain our environment, as we continue to be involved in the transition to renewable energy by supporting our clients and their projects through delivering good environmental and community outcomes as key components of our work.
Our multidisciplinary team of consultants has considerable experience in providing biodiversity, environmental and heritage advice to support projects in energy transmission. Recent project collaborations position Niche across a wide range of renewable projects, supporting our clients in wind, solar, and pumped hydro, and with upgrades to new medium and high voltage transmission lines across eastern Australia.
If you would like to open a discussion about energy transition in general, or the aspects summarised below, or about how Niche can support your project, contact us.
NSW Regional & National Markets Manager
0407 996 027
Australia’s East Coast Energy Transition: Six key points highlighting where we are now, and what the future looks like …
1) Yes. There is tangible energy transition action on the ground now
The Clean Energy Council’s ‘Clean Energy Australia Report 2021’, issued in March 2021, reported that “in 2020, renewable energy was responsible for 27.7 per cent of Australia’s total electricity generation, the first time that more than a quarter of the country’s energy came from renewable sources. This was an increase of 3.7 percentage points compared to 2019.”
2) Roadmaps do convert into actions and outcomes
The Australian Energy Market Operator (AEMO) provided its first Integrated System Plan (ISP) in 2018. This ISP integrated the 2017 National Transmission Network Development Plan within the ISP.
The pace of development in renewable and distributed energy generation has been faster than anticipated in the 2018 ISP and this has resulted in AEMO, in the 2020 ISP, developing – through extensive consultation – plausible energy generation transition futures for eastern Australia. These futures include:
- Five scenarios spanning differing rates of change in technology development, renewable and distributed generation, decarbonisation policies, and the electrification of other sectors such as transport.
- Four sensitivities representing risks that TNSPs (Transmission network service providers) may need to consider in their RIT-T (Regulatory Investment Test for Transmission) process.
- Two key policy and demand assumptions that have potential to change in the near term and may materially influence outcomes.
ISP modelling conclusions:
The ISP modelling confirms that the least-cost, least-regret transition of the national energy market (NEM) is from a centralised coal-fired generation system to a highly diverse portfolio dominated by distributed energy resources (DER) and variable renewable energy (VRE), supported by dispatchable resources and enhanced grid and service capabilities, to ensure the power system can reliably meet demand at all times.
3) Renewable Energy Zones
The 2020 ISP considered 35 possible ‘Candidate Renewable Energy Zones’, based on initial assessments of their resource, technical and economic parameters. The 2020 ISP has become the foundation of the actionable roadmaps for eastern Australia’s power system.
4) Major transmission projects
In the 2020 ISP, major network investments beyond those currently committed were identified as required by 2040, to strengthen the NEM and to deliver significant resources and market benefits. As such, AEMO identified six major projects and one minor transmission network project as having the most merit:
- Project EnergyConnect: a new 330 kV double-circuit interconnector to increase transfer capacity between South Australia and New South Wales by 750 MW.
- HumeLink: a 500 kV transmission upgrade to reinforce the New South Wales southern shared network to increase transfer capacity to the region’s demand centres in combination with Project EnergyConnect.
- Central-West Orana REZ Transmission Link: a 500 kV (or 330kV) loop traversing the Central-West NSW region.
- VNI West: connecting Victoria with New South Wales and Snowy 2.0.
- Marinus Link: connecting Victoria with Tasmania. Marinus Link is a second and potentially third HVDC cable interconnection across Bass Strait.
- Medium and Large QNI: Queensland – New South Wales Interconnection. QNI Medium is a single 500 kV circuit strung on a double circuit tower in the western part of the existing QNI. The proposed route goes through the Northwest New South Wales and Darling Downs REZs.
- An additional recommendation is the VNI Minor, an upgrade to the existing Victoria ‒ New South Wales interconnector.
5) NSW and QLD have developed their own policies and roadmaps to support energy generation transition
NSW Electricity Infrastructure Roadmap:
In November 2020, the NSW Government released their Electricity Infrastructure Roadmap, outlining the steps required to support the transition of the electricity system to higher levels of renewable generation.
The roadmap’s stated objective is to achieve up to 12 GW new energy generation capacity, and $32 billion in investment by 2030.
- In the 2021-22 NSW budget $380M was allocated to deliver the roadmap, including $164M over four years for capital works.
- February 2021 saw the NSW Government-controlled statutory authority ‘The Energy Corporation of NSW’ established. EnergyCo NSW will coordinate REZ transmission, generation, firming and storage projects to deliver efficient, timely and coordinated investment.
Industry is displaying a willingness to invest in NSW REZs:
- EnergyCo NSW: Overwhelming response to New England Renewable Energy Zone. ROIs for Australia’s largest REZ received 80 registrations, totalling 34 GW of capacity and $48 billion of investment from potential renewable energy, storage and network projects. Four times the level of interest needed to fully build the 8 GW REZ.
- NSW DPIE opened a $50M Pumped Hydro Recoverable Grants program. Applications closed on 3 September 2021. Program target capacity up to 3 GW. Projects to be operational by 31 December 2029.
- EnergyCo NSW has opened a registration of interest (ROI) until 4 February 2022 for the Hunter-Central Coast Renewable Energy Zone. The ROI is the first step in engaging with industry on the design of the Hunter-Central Coast REZ. EnergyCo NSW is seeking information from energy project developers and businesses with new large electrical loads.
- EnergyCo NSW will next be addressing the New England and the Illawarra Renewable Energy Zones (REZs).
Queensland Government has committed to a target of 50 percent renewable energy by 2030:
CleanCo Queensland has set a target to support 1,400 MW of new renewable generation by 2025, contributing to Queensland’s 50% renewable energy target by 2030. Additional initiatives and substantive funding include:
- $2B for the Queensland Renewable Energy and Hydrogen Jobs Fund.
- A $145M commitment to establish three QREZ (Queensland Renewable Energy Zones) – northern, central and southern.
- Fast tracking development, production, domestic use and export of hydrogen through the Queensland Hydrogen Industry Strategy and Hydrogen Taskforce.
- Deliver up to 400MW of new renewable energy and storage projects through the Renewables 400 program.
6) Looking ahead to 2030 and beyond
James Ha, writing on behalf of the Grattan Institute, hypothesises that a possible outcome is ‘Net 100% Renewals’ — the energy transition journey becomes harder near the end, with each percentage point between 90% and 100% renewable more expensive to achieve than the previous.
There is certainly tangible energy transition action on the ground, right now.
It’s possible — and potentially more economical — that we would meet almost all additional future energy generation demand with renewable energy, but keep some fossil fuel capacity as a low-cost backstop.
Purchasing carbon credits to offset the small amount of emissions produced in a 90% renewable NEM is likely to be cheaper in the medium term than building enough energy storage — such as batteries or pumped hydro dams — to backup wind and solar at all times.
AEMO’s 2022 Integrated System Plan (ISP): Upon consultations on input, assumptions, scenarios and ISP Methodology being completed, the AEMO draft 2022 ISP final reports have now been published for review. The final 2022 ISP is due for issue on 30 June 2022.
So with all rhetoric aside: There is certainly tangible energy transition action on the ground, right now. We literally do not have long to wait until ‘Net 100% Renewals’ in 2030/2035 or for ‘100% Renewables’ to be achieved.