The Australian Energy Market Operator (AEMO) has published for consultation, its proposed preferred option to improve transmission capacity in Western Victoria and reduce network congestion in the region.

Reducing network congestion will allow generators in the region to participate more fully in the energy market, expanding the energy supply mix and increasing competition to the benefit of consumers.

The preferred option is detailed in the Project Assessment Draft Report (PADR) which marks step two of the Regulatory Investment Test for Transmission (RIT-T) consultation process AEMO is undertaking to assess the technical feasibility and economic benefits of improving transmission capacity in Western Victoria.

Executive General Manager - Planning & Forecasting David Swift says Western Victoria has become an attractive location for new generation projects due to solar and wind resources available in the area.

“Around 2,000 megawatts (MW) of new generation has been committed in the region by 2020 and, based on proposed future generation projects in the region and the Victorian Government’s current Victorian Renewable Energy Target (VRET) policy, AEMO projects that a further 3,000 MW of new generation is likely to be constructed in the region by 2025,” said Mr Swift. “However, without adequate capacity on the 220 kilovolt (kV) transmission network, generators connecting to this part of the network will need to be heavily constrained to maintain power flows within safe limits, which could impact electricity prices over the long term.” Without proper planning and timely investment in the network, these limitations would be expected to raise electricity prices over the long term, by increasing both the cost of generation dispatch, and the cost of future investment in generation capacity.

Mr Swift says this project in Western Victoria is the first step in what is a much larger, strategic transmission infrastructure development plan underway to assess and coordinate future investment and development in transmission and generation around the National Electricity Market (NEM).

“Strategic planning and coordination of our power system is critical to making smart, informed decisions in the long-term interests of Australian energy consumers. Through this RIT-T process, AEMO is working with industry, governments and interested parties to make sure we have the best transmission infrastructure in place to efficiently accommodate increasing levels of generation in Western Victoria, so that we can continue to deliver affordable, reliable and secure energy to consumers, now and in the future.”

The preferred option is consistent with AEMO’s long‑term transmission network development plan for the NEM outlined in the 2018 Integrated System Plan which has been endorsed by Council of Australian Governments. 

AEMO is the independent power system and energy market operator with primary responsibility for managing and maintaining energy system security for all Australians. AEMO is also responsible for planning and directing improvements on the shared Victorian electricity transmission network to ensure that the network continues to meet power system security needs and delivers safe and reliable electricity to consumers, at the least cost. In this role, AEMO is assessing the best option to increase transmission capacity in Western Victoria to accommodate increased generation in the region by undertaking a cost-benefit test as prescribed in the National Electricity Rules (NER).

The RIT-T is a regulated, three-step market consultation process designed to assess and rank different options to meet an identified need. The best option as identified thorough this RIT-T process is the one which will deliver the highest net economic benefit to those who produce, consume and transport electricity in the market, and ultimately protect consumers from paying more than necessary for their electricity in the long-term. 

AEMO’s proposed preferred option as outlined in the PADR will increase the capacity of the Western Victoria transmission network by around 1,200 mega volt-amperes (MVA) and enable additional generation connections in the region.

This option provides for staged development:

  • Short term: present to 2021.
    • Minor augmentations to the existing 220 kV transmission network along the Red Cliffs-Bendigo line and the Moorabool-Ballarat-Terang lines.
  • Major transmission augmentations to be delivered in two steps:
    • By 2024: New 220 kV double circuit transmission lines from Ballarat to Bulgana.
    • By 2025: New 500 kV double circuit transmission lines from Sydenham to Ballarat, which may include a new terminal station close to Ballarat and connections back to the existing Ballarat Terminal Station.
The preferred option is estimated to deliver net market benefits of $80 million (in present value terms) through significant reductions in the capital cost and dispatch cost of generation over the longer term. The total capital cost, through the staged implementation process outlined above, is estimated at $370 million (in present value terms).

Mr Swift said the project will provide a range of benefits to consumers, industry and the power system itself. These include:

  • Promoting new investment and increased competition in energy generation in the long-term economic interests of consumers.
  • Facilitating the establishment of major renewable hubs for wind and solar energy in the region, by strengthening transmission corridors to cost-effectively transport large quantities of renewable energy to Victorian consumers.
  • Diversifying and expanding the energy supply mix to the market.
  • Facilitating energy projects that support Victoria’s renewable energy targets.

AEMO is now seeking community, industry and government feedback on this preferred option and invites written submissions on this PADR before 28 February 2019 via WestVicRITT@aemo.com.au. The full PADR is available online to view or download in addition to a brief explainer fact sheet

The final step of the RIT-T process will consider this feedback and recommend the most suitable option to increase the transmission network in Western Victoria in a report to be published in the second half of 2019. While AEMO is responsible for planning the transmission network in Victoria, it does not own or operate transmission infrastructure in the NEM. Should major transmission works be justified through the RIT-T process, AEMO will conduct a tender process for a preferred party or parties to be responsible for the ownership, construction and operation of new transmission infrastructure.

These transmission works will involve a range of stakeholders including government, industry and local communities. Once AEMO has concluded the RIT-T process, our project partners will work closely with these stakeholders to understand the issues and opportunities of designing, planning and delivering the transmission infrastructure. There will be lots of opportunities for stakeholders to get involved, stay informed and better understand the project. For more information, visit our dedicated webpage.