NSW electricity customers to save $180 million per year from SA-NSW interconnector

8th October 2020

A proposed NSW-SA electricity interconnector that will reduce electricity bills for NSW customers by $180 million a year was announced by its proponents TransGrid and ElectraNet today.

The project will allow the free flow of electricity between NSW and SA for the first time in Australia’s history – plugging a gap in Australia’s energy system.

In addition, it will allow increased capacity for renewable generation and significantly improve reliability in both SA and regional NSW.

The 900 kilometre line will take approximately two years to complete, create 1,500 jobs during construction - most in regional NSW - and inject $4 billion into the domestic economy.

TransGrid CEO Paul Italiano said “EnergyConnect will lower NSW electricity bills by increasing competition in the wholesale electricity market and it will also create a more secure system that is resilient at times of high demand and in periods of extreme weather.

“EnergyConnect has significant benefits for the National Electricity Market (NEM) and for energy customers in both NSW and SA in particular.

“The project has already passed the Regulatory Test for new transmission projects and our modelling has shown electricity prices in both NSW and SA will fall as a result of increased competition in the wholesale electricity market.

“Recent modelling by the Australian Energy Market Operator has shown that SA faces a very serious risk of system instability as a result of high renewable penetration and low grid loads and that this risk will be substantially addressed by EnergyConnect.”

For more information go to: http://www.projectenergyconnect.com.au

Vision available here: https://youtu.be/0ovXl6QndAk

Media enquiries: Michelle Stone 0438 293917 / michelle.stone@transgrid.com.au

Background

A Contingent Project Application (NSW component) for EnergyConnect, a 900 kilometre transmission interconnector from Wagga Wagga in NSW to Robertstown in South Australia (SA), has been lodged with the AER. Subject to approval by the AER, EnergyConnect is being delivered by TransGrid and SA’s ElectraNet.

If approved, the new interconnector will:

• Provide savings of around $180 million a year for NSW’s 3.06 million household electricity customers from putting downward pressure on wholesale electricity prices through greater supply, diversity and competition
• Create 1,500 construction jobs in NSW alone
• Contribute a further $4 billion in economic activity for NSW
• Facilitate investment in and connection of more renewable, zero carbon generation in NSW and SA
• Enable sharing of energy between NSW, SA and Victoria and decrease price volatility through sharing of resources across regions

TransGrid commissioned FTI Consulting London to prepare an independent expert report on the benefits of EnergyConnect including those which are not captured by the Regulatory Investment Test for Transmission. FTI estimates:

• Additional gross benefits of $6.8 billion to $14.7 billion[1] (NPV) by considering the benefits expected to accrue to consumers from EnergyConnect beyond 2040, which is the end of the current RIT-T assessment period. The AER’s cost benefit analysis guideline recognise that in the case of very long-lived and high-cost investments, it may be necessary to adopt a modelling period of 20 years or more
• Additional ‘non-monetised’ benefits, such as renewables integration and system security, reflecting the strategic importance of the project to the future development of the National Electricity Market (NEM)

EnergyConnect will support the development of new renewable energy zones (REZ) in NSW which are expected to provide the bulk of NSW’s future electricity supply.

EnergyConnect has been identified as a priority project in both AEMO’s Integrated System Plan and the NSW Government’s Transmission Infrastructure Strategy.The Australian Energy Regulator approved the Regulatory Investment Test for Transmission (RIT-T) for the project in January, 2020.

In NSW, TransGrid is conducting environmental, geotechnical and ecological surveys and engaging with communities along the proposed corridor. More than 400 NSW and Australian businesses have registered their interest in working with TransGrid for a range of services including civil engineering, quarry products, haulage, logistics, traffic management, concreting, fencing and workforce accommodation.

The project is subject to AER approval and a final investment decision by the TransGrid Board.

If approved, construction is scheduled to commence in late-2021, and EnergyConnect would be fully commissioned in 2023.

[1] FTI, Wider Benefits Report, September 2020, p. 37. This is estimates using a discount rate of 5.9 per cent