A giant new transmission line linking Australia’s two biggest grids has taken a big leap forward after a new preferred route was revealed that is designed to allays environmental impacts and could extract more wind and solar from planned renewable energy zones.
The proposed $3.3 billion VNI West transmission link is one of the more controversial and hotly contested parts of the Australian Energy Operator 30-year planning blueprint, and is a centrepiece of the federal Labor government’s Rewiring the Nation program.
It has attracted criticism from landowners and local councils over visual impacts and the fate of endangered species, and market analysts have been divided about whether it offers best value for money and for the switch to renewables. It almost perfectly illustrates the diabolical problems facing the need to expand the grid.
On Saturday, AEMO and network company Transgrid released a significantly modified route proposal for the 500kV line as part of their Project Assessment Conclusions Report (PACR), the latest step in the complex regulatory process that governs such investments.
The biggest change in the proposed route – linking the Dinawan substation in NSW to Bulgana in Victoria, where it will join another controversial project, the Western Renewable Link – is the location of its Murray River crossing.
This has been moved about 50kms north from near Echuca to the north Kerang, to avoid wetlands and endangered bird species, and created a new “area of interest” that spans up to 50kms in width to allow consultations with landowners over access and compensation.
The new route will also be simpler because the transmission lines will be installed in broad acre farming properties rather than irrigated cropping land, and would avoid recreational and tourism areas around Moama, and avoid highly populated areas.
However, the report also notes that the new preferred option, 5A, intersects a larger number of buildings within 300 metres and and a greater number of land parcels.
AEMO argues that the big transmission projects are essential to boost the ability of state grids to share power hen needed, and it says VNI West will deliver net market benefits of $1.4 billion in present value terms because of this.
This is because the new route option, 5A, will allow greater capacity to be carried in the renewable energy zones it connects, but it also means that there will be winners and losers among renewable energy developers, with significant less investment in wind, solar, storage and gas, particularly in Victoria.
“After commissioning, both options are expected to enable increased resource sharing between Victoria and the other mainland regions that alters the distribution of investment in renewables and generally reduces the need for gas capacity for energy and reserve in the NEM,” the report says.
It says the new link will support upwards of 3.4 gigawatts (GW) of renewable generation capacity across Murray River REZ and Western Victoria REZ in Victoria by 2050. But there is a caveat.
“While there is still significant capacity investment in all regions, some investment that had been needed in Victoria is no longer required, and other, more efficient investment in solar and storage is located in New South Wales and shared with Victoria when needed.”
Indeed, it seems the big winner from this project in terms of renewable energy development will be south-west NSW, which sees an increase in capacity, while Victorian projects miss out.
Most of the changes in anticipated capacity affect wind and solar and are particularly prominent in the early 2040s. AEMO argues that the overall renewable generation will be higher because it will allow less spillage in the renewable zones.
The picture is further complicated by Figure 11, which show the difference in output, rather than capacity investment in Figure 10, from 5A rather than the base case.
Initially it results in less wind, and some less solar over its first decade, but appears to deliver increased brown coal in its initial years, presumably because it opens up more transmission capacity for the remaining brown coal generators before they close by 2035.
The report assumes 98 per cent renewables by 2050, although the Victoria government has declared a target of 95 per cent renewables by 2035.
One interesting caveat in the report is the observation that if the Victorian Government’s offshore wind policy is legislated – as is expected – than it reduces the expected net benefits of Option 5A by around half.
One of the main reasons for this is that if Victoria does reach its projected target of 9GW of offshore wind by 2040, there will be less gas generation in the system, so less savings from avoiding that investment in the case of VNI West.
“Both Option 5 and Option 5A are forecast to continue to deliver significantly positive net benefits under this sensitivity with offshore wind targets imposed, although the net benefits are smaller than the core results,” it notes.
“There remains value in harnessing wind and solar in Western Victoria REZ and Murray River REZ to provide renewable resource diversity, and the increase in interconnector transfer capability provides greater opportunities for offshore wind generation to export into the northern regions.”
The biggest challenge, however, is winning over support from local landowners and communities.
“We thank all the farmers, community groups, councils and Traditional Owners who have contributed to the consultation, which will continue as the transmission line design is finalised,” said Nicola Falcon, who heads AEMO’s planning vehicle for the project.
“The feedback received has helped us identify a preferred option for the critical transmission line – a variant of the previously proposed option – that delivers the most benefits for consumers and more electricity generation from three REZs in Victoria and NSW.
“By crossing the Murray River further north-west, the project can also avoid some sensitive cultural areas and prime irrigation land identified in feedback from local communities and avoid the habitat of the endangered Plains-wanderer.”
Landholders will be entitled to payments $8,000 per year per kilometre of transmission hosted for 25 years. These payments are in addition to existing arrangements for compensation, which cover any loss of land value.
Victoria energy minister Lily D’Ambrosio has issued a ministerial order has been implemented to progress AEMO’s preferred 5A option, but it still requires relevant planning and environmental approvals.
