The Australian Energy Regulator (AER) has approved funding for the Victoria-New South Wales Interconnector (VNI Minor), which will be essential in securing electricity supply following the closure of Liddell Power Station in August 2023.
The Australian Energy Market Operator’s (AEMO) 2020 Integrated System Plan (ISP) identified VNI Minor as a project required to address cost, security and reliability issues in the National Electricity Market.
AER Chair, Clare Savage, said, “VNI Minor was proposed by AEMO in their role as the national planner responsible for identifying new transmission needs to support the energy system’s transition.
“In our role, we’ve assessed TransGrid’s proposed costs and determined that they are reasonable. The AER has approved $45 million that is needed to deliver the project.
“The project will increase transmission capacity between New South Wales and Victoria and provide consumers with secure and reliable energy supplies.”
VNI Minor is the first ‘actionable project’ to progress under new rules governing the ISP and the AER’s decision is the final stage in the regulatory process.
The new rules require the AER to assess the prudency and efficiency of the costs of delivering the option found to offer the highest net market benefits in AEMO’s ISP.
The AER’s decision amends TransGrid’s existing 2018-23 revenue determination to account for the costs of delivering the project.
Average residential customers in New South Wales will pay an estimated extra $1 on their bills in 2022-23 as a result of this decision.
TransGrid Project Director, Dany Gittani, said, “The VNI Minor project will allow more energy to flow between the two states and help lower the cost of wholesale electricity across the National Electricity Market.
“The VNI Minor project involves TransGrid installing ‘smart wires’ power flow controller technology within our Stockdill substation in the ACT.
‘Smart wires’ technology enables the real-time control of electricity flows along powerlines. The system detects areas of congestion in the network and automatically redirects flows to less congested lines, under certain network scenarios. It will allow more energy to be transferred between Victoria and NSW.
“The AER decision enables us to deliver the project to fruition this year.”