The Heywood Interconnector Upgrade project has received funding approval from the Australian Energy Regulator (AER) for the South Australian component of works. The project aims to upgrade the electricity interconnector linking South Australia and Victoria.
This represents the final regulatory approval required for the project, and follows an extensive public consultation process involving initial feasibility studies, a detailed economic assessment via application of the Regulatory Investment Test for Transmission (RIT-T), and a formal ruling by the AER that the investment will deliver economic benefits to consumers and the National Electricity Market. The decision approves the funding required for the South Australian works as a contingent project under the National Electricity Rules.
The upgrade is designed to increase interconnector capability in both directions by approximately 40 per cent, and will deliver substantial benefits to the National Electricity Market by allowing increased wind energy exports from South Australia, and increased imports of lower-cost generation into South Australia, particularly at times of peak demand.
‘This decision represents the culmination of over four years of effort by ElectraNet, to push the case for an important investment that will deliver benefits for electricity consumers for many years to come,’ said Rainer Korte, ElectraNet’s Executive Manager Asset Management.
The project involves installing a third electricity transformer at Heywood in Victoria, series compensation on 275 kV transmission lines in South Australia (which has the effect of increasing the capacity of the lines) and other asset upgrading works in South Australia.
The project has been jointly developed by ElectraNet and the Australian Energy Market Operator (AEMO) as the respective transmission network service providers in South Australia and Victoria.
Detailed cost-benefit assessment found that the increase in capability will deliver net market benefits of more than $190 million by significantly reducing generation dispatch costs over the longer term. The estimated commissioning date for the upgrade is July 2016. The total capital cost of the upgrade (in real terms) is estimated at $91 million, with $46 million investment in South Australia and $45 million in Victoria.