The Queensland NSW Interconnector (QNI) upgrade project will advance to the next stage after clearing a major review from the Australian Energy Regulator (AER).
The AER announced it had approved the Regulatory investment Test for Transmission (RIT-T) on 30 March 2020. This determination supports the options assessment, costs and net benefits of the QNI project.
The $230 million QNI upgrade project, proposed by TransGrid and Powerlink, aims to increase transmission capacity between Queensland and NSW.
The AER has fast tracked its consideration to support the timely completion of the project. TransGrid expects that construction of the project will start immediately in March 2020, with delivery and completion of inter-network testing expected by June 2022.
The project is expected to add an extra 60 cents to the transmission component of annual customer bills in New South Wales.
AER chair, Clare Savage, said the Liddell power station was scheduled to close in 2023, which would reduce the generation capacity in NSW.
“The proposed interconnector upgrade will allow more electricity to be exported from Queensland to New South Wales avoiding the need for costly new generation,” Ms Savage said.
The RIT-T is a cost benefit assessment of the proposed interconnector. AER tested the reasonableness of TransGrid and Powerlink’s inputs and assumptions across a range of scenarios.
It found that the project was robust and would deliver a net economic benefit to Australian energy consumers.
“The investment is expected to deliver $170 million in net benefits to consumers and producers of electricity and to support the ongoing energy market transition. The cumulative benefits are expected to exceed the investment cost within seven years,” Ms Savage said.
“We’re saying that the assessment by TransGrid and Powerlink stacks up and that consumers will get value for money from this investment.
“The proposed interconnector will help to address potential system security problems and alleviate upward pressure on wholesale electricity prices.”
TransGrid has separately applied to the AER to amend its existing revenue determination to recover the efficient costs of delivering the project. The AER will make a separate determination on this element in April 2020.
TransGrid’s Executive Manager of Works Delivery, Michael Gatt, said the company welcomed the AER’s determination.
“The QNI upgrade is important because it will increase the capacity to share electricity between Queensland and New South Wales and reduce current and forecast network constraints,” Mr Gatt said.
“It will ensure greater reliability of lowest cost electricity, as we enable more efficient sharing on the NEM and introduce more innovative technology to the system. The project is expected to provide net benefits of $170 million to electricity customers and producers.”
TransGrid is upgrading the 20 year old transmission lines and three substations at Tamworth, Dumaresq and Armidale.
“It will allow 460MW more power to transfer into Queensland and 190MW more into New South Wales and the ACT when it’s needed and it will link customers to the National Energy Market.
TransGrid began working with Queensland transmission business Powerlink to initiate the RIT T process in November 2018 and a number of network and non-network options were considered.
The project has been supported by the Australian and NSW Governments which have provided joint-underwriting to enable TransGrid to accelerate the delivery of the upgrade.
Mr Gatt says early works have commenced on the upgrade project which is expected to be delivered in September, 2021.
“TransGrid is already working to deliver the upgrade, conducting environmental, geotechnical and site surveys and engaging with communities along the existing transmission line corridor.”