The Australian Energy Market Operator (AEMO) will receive a further $120 million for the Victorian component of the VNI West transmission project, which aims to improve the reliability and security of electricity supply in Victoria and New South Wales.
The Clean Energy Finance Corporation (CEFC) has committed the funding via the Rewiring the Nation (RTN) program as AEMO continues the development of VNI West – an actionable integrated systems plan (ISP) project that is critical to Australia’s clean energy transition and net zero ambitions.
VNI West is a new transmission link connecting the Victorian and New South Wales energy grids with clean energy generated in renewable energy zones and will increase the transfer of clean energy between the states.
AEMO identified it as critical to helping secure Australia’s energy supply as it contends with the rapid retirement of coal-fired power stations and the increasing use of lower cost renewable energy.
The $3.6 billion infrastructure project will help unlock 3.4GW of additional renewable generation in Victoria and facilitate an estimated additional 1.9GW of transfer capacity between Victoria and New South Wales. The project is also expected to enhance the energy reliability of Victoria by enabling access to Snowy 2.0.
AEMO will use the CEFC finance to undertake early works in Victoria, including community, landholder and Traditional Owner consultations and ongoing investigations into the corridor and ultimate route.
CEFC CEO, Ian Learmonth, said that Australia’s future low emissions economy depends on secure and reliable energy and to achieve net zero emissions by 2050, that energy must be renewable.
“As coal retires and our emissions target deadlines draw nearer, CEFC finance is key to enabling the RTN projects that will transform our energy grid.
“AEMO’s ISP tells us that to deliver the lowest cost pathway for secure and reliable energy in the National Electricity Market (NEM), we need to add some 10,000km of new and upgraded transmission by 2050, with about a quarter underway and half to be delivered in the next decade.
“With this investment the CEFC is supporting the delivery of an actionable ISP project, which will have flow on benefits across the network, for Australia’s clean energy transition and for energy users,” Mr Learmonth said.
The CEFC has made four investments worth some $850 million through the RTN Fund since it was formally established in July 2023, including $490 million to the Central West Orana REZ, $100 million to deliver infrastructure critical to the NSW Electricity Infrastructure Roadmap, and $140 million to progress early works for the New South Wales section of VNI West.
AEMO’s 2024 ISP, the main blueprint for the NEM, forecasts that 90 per cent of Australia’s ageing coal fleet is likely to retire by 2035.
According to the lowest cost pathway for secure and reliable energy identified in the ISP for the NEM, Australia needs to increase grid-scale variable renewable generation six-fold (127GW), and add almost four times the firming capacity from dispatchable storage, such as pumped hydro, grid-scale batteries and virtual power plants, hydro and gas-powered generation, in addition to the 10,000km of new and upgraded transmission by 2050.
The RTN Fund was created to play a key role in Australia’s efforts to reach 82 per cent renewables by 2030. The Federal Government has appointed the CEFC as the financing arm of the broader RTN program, allocating an additional $19 billion to the CEFC to finance RTN-related projects Australia-wide, including in the NEM and the Western Australian and Northern Territory energy grids.
The CEFC said that CEFC RTN investment priorities include transmission (including ISP projects), distribution network (including distributed energy resources) and long duration storage Australia-wide. Other opportunities may include projects which reduce emissions and support or strengthen the security, reliability and affordability of Australia’s electricity grids, including demand management projects.
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