06 March, 2017
Courtesy of the AFR
State and federal governments should fast-track regulatory approvals of new interconnectors between states to help alleviate power supply issues and to help fix the problems caused by the high uptake of renewables like wind and solar, says NSW transmission company TransGrid.
While others claim interconnectors are too expensive and may be obsolete by the time they are built, TransGrid chief executive Paul Italiano said interconnectors were the best way to resolve power supply issues in SA.
He said state and federal governments needed to cut red tape over regulatory approval for interconnectors to ensure they did not take five or seven years to get built.
“It takes a very long time to get approval and it’s very complex to run and it’s often subject to challenge in the courts,” Mr Italiano said in an interview with The Australian Financial Review.
“When people say it will take five to seven years, that’s not construction time. Once we have approvals we can build in 18 months.”
New reports by Deloitte and FTI Consulting, commissioned by TransGrid, showed a new interconnector between SA and NSW would boost competition and provide significant economic benefits including reducing power costs.
Economic modelling by FTI Consulting showed a new interconnector – which is expected to cost between $500 million to $700 million – would deliver benefits to SA of at least $405 million between 2021 and 2035.
It found importing lower cost electricity from other parts of the NEM would help lower SA’s energy prices which would then be passed onto retailers to consumers.
The FTI Consulting modelling also found a new interconnector between SA and NSW would also open up development opportunities in the south-west of NSW which is hoping to set itself up as a hub for new wind and solar projects.
SA network company Electranet has submitted a proposal to the Australian Energy Regulator for a new interconnector to help ease supply issues following three major blackouts in the past six months. TransGrid is one of the front-runners to build the new interconnector if given the green light by the regulator.
The new interconnector would be a regulated asset, meaning the costs of construction would be passed onto retailers and then consumers.
There are currently six interconnectors in the NEM, including two between SA and Victoria, two between NSW and Victoria and two between Queensland and NSW.
But not all of those in the energy sector are a big fan of interconnectors. EnergyAustralia managing director Catherine Tanna said there was a risk with interconnectors of simply moving problems from one jurisdiction to another.
“It comes down to affordability – who is going to pay for it?” she said. “There is a risk you are shifting the problem from one geography to another geography. What are you solving when you’re building that new interconnector.”
No silver bullet
The Energy Users Association of Australia also warned that interconnectors should not be seen as the silver bullet for current problems in the energy sector.
“There are good reasons to believe that greater interconnection between states will improve energy security. For example, there are many cases where generation sits idle in one jurisdiction while another is suffering from a supply shortage,” it said in its submission to the Finkel review.
“While we do not disagree with this sentiment, greater interconnection must not be seen as a panacea and pursued without careful consideration of all available energy security options and their impacts, both negative and positive.”
Meanwhile, the Australian Energy Market Operator said there would be a planned outage on a transmission line in Victoria for routine maintenance on Wednesday and Thursday. The work was due to be carried out last weekend but was delayed after a fire at Torrens Island power station in SA.