Victorian Renewable Energy Zones Development Plan - Directions Paper February 2021
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Victorian Renewable Energy Zones Development Plan Directions Paper February 2021
Contents
1. Purpose of this Directions Paper 2
2. Context 3
2.1 Victoria’s renewable energy transformation 3
2.2 Barriers to the transition 4
2.3 Victorian Government actions to date to support the transformation 5
2.4 New initiatives 6
3. Initial REZ Development Plan 7
3.1 Stage 1: Immediate priority projects to support REZs 8
3.2 Stage 2: Future projects to support REZs 11
4. REZ Governance and Funding 15
4.1 Establishing VicGrid 15
4.2 Funding pathways for RDP projects and REZ Fund 16
5. Next Steps 17
5.1 How to provide feedback 17
Appendix: Detailed Project Overviews 18
© The State of Victoria Department of Environment, Land, Water and Planning 2021 Accessibility
If you would like to receive
this publication in an
This work is licensed under a Creative Commons Attribution 4.0 International licence.
You are free to re-use the work under that licence, on the condition that you credit alternative format, please
the State of Victoria as owner. The licence does not apply to any images, photographs telephone the DELWP
or branding, including the Victorian Coat of Arms, the Victorian Government logo and Customer Service Centre on
the Department of Environment, Land, Water and Planning (DELWP) logo. To view a
copy of this licence, visit creativecommons.org/licenses/by/4.0/ 136 186, or email customer.
ISBN 978-1-76105-439-6 (pdf/online/MS word) service@delwp.vic.gov.au,
or via the National Relay
Disclaimer
Service on 133 677,
This publication may be of assistance to you but the State of Victoria and its
employees do not guarantee that the publication is without flaw of any kind or is wholly www.relayservice.com.au.
appropriate for your particular purposes and therefore disclaims all liability for any This document is also
error, loss or other consequence which may arise from you relying on any information available on the internet at
in this publication.
www.delwp.vic.gov.au
1
1. Purpose of this Directions Paper
The Victorian Government is committed to the 2. The Government will establish VicGrid to actively
development of its Renewable Energy Zones (REZs). plan and develop Victoria’s REZs.
The purposeful development of REZs will allow new
The Government is establishing VicGrid to
renewable energy projects to be connected in a
actively plan and develop Victoria’s REZs,
timely manner, reducing risk premiums for investors,
including planning and investing in REZ
achieving better energy affordability and reliability
network infrastructure, identifying and applying
outcomes for consumers, helping to achieve our
appropriate procurement, cost recovery and co-
climate change goals and furthering regional
funding approaches, facilitating renewable energy
economic development goals.
generation projects in Victorian REZs, and working
The plan outlined in this Directions Paper will with communities to plan REZs and ensure local
unlock 10 GW of new renewable energy capacity in benefits from REZ development.
Victoria, taking the total capacity across Victorian This Directions Paper invites feedback from
REZs to 16 GW. This will be enabled by the Victorian stakeholders on the structure and functions of
Government's $540 million REZ Fund to invest VicGrid needed to achieve its objectives.
in needed REZ network infrastructure and the
establishment of a new body, VicGrid, to actively 3. The Government will release an Implementation
plan and develop Victorian REZs. Plan that will outline how Victoria will plan,
develop and invest in Victorian REZs
As part of this development the Government seeks
to deliver better outcomes for local communities by Following feedback from stakeholders on this
supporting locally appropriate network investment initial RDP, the Government will undertake further
and renewable energy development, and will build assessment of identified priorities for investment
consultation with local residents, industry and and release details of projects for immediate
farming communities into its REZ planning. funding under the REZ Fund in May 2021,
including the procurement and cost recovery
This Directions Paper outlines three key actions models for such investment, including local
that the Victorian Government intends to undertake content requirements.
to fully develop REZs in Victoria, as well as seeking
feedback from key stakeholders on certain issues: This will be followed by a broader REZ
Implementation Plan that will be released in July
1. The Government has prepared an initial REZ 2021 which will update the RDP, establish and
Development Plan that includes network outline the work agenda of VicGrid, set out the
investments that could be delivered immediately. framework for determining future investment
and government funding in RDP projects, outline
The Government has worked with the Victorian the ongoing process for delivering and updating
transmission network planner, the Australian the RDP, establish how VicGrid will engage and
Energy Market Operator (AEMO), to produce an work with local governments, communities
initial REZ Development Plan (RDP) which outlines and businesses, and lay out the Government’s
network investments that enable the full broader approach to planning and developing
development of Victorian REZs. Victorian REZs.
Included in this initial RDP are key network Through this Directions Paper, the Victorian
investments that the Victorian Government Government is seeking the views of renewable
could progress immediately, as well as medium energy development proponents and energy
term projects that VicGrid will continue to plan businesses on the network projects and
and develop. financing options identified in the initial RDP. The
Stakeholder views are sought on the potential Government is also interested in hearing from
network investments outlined in the RDP and a wide range of stakeholders including energy
the Victorian Government’s identification of market participants, as well as local governments
key projects for immediate investment, as well and consumer, environmental and local
as procurement and cost recovery options for community groups on VicGrid’s establishment and
priority projects. broader REZ development matters.
Victorian Renewable Energy Zones - Development Plan Directions Paper 2
2. Context
2.1 Victoria’s renewable energy The development of REZs across the state is a key
transformation initiative in Victoria’s energy transformation. REZs
are areas of abundant renewable energy resources
Victoria’s coal-fired power stations are increasingly such as solar and wind, the full development of which
aged and unreliable. The future reliability of Victoria’s can ensure the timely and cost-effective delivery of
energy supply, and the economic and social benefits secure and clean energy for Victoria. Figure 1 shows
that this provides, is contingent on the development a map of the six REZs that have been identified in
of a diverse, secure and affordable state-wide Victoria through the AEMO Integrated System Plan
generation portfolio, delivered in a timely fashion. (ISP): South West Victoria, Western Victoria, Murray
River, Central North, Ovens Murray and Gippsland.
Victoria is delivering on an ambitious agenda to
increase the share of electricity produced from The benefits of developing Victoria’s REZs extend
renewable sources. The Victorian Government has beyond direct increases to renewable energy
legislated renewable energy targets (VRET) of 25 per generation, to include supporting investment
cent of electricity generation by 2020, 40 per cent by in local economies, creating local jobs, and
2025, and 50 per cent by 2030. The 2020 target has strengthening local supply chains. Victoria currently
been achieved and we are on track to achieve the leads other states in renewable energy jobs,
2025 and 2030 targets. accounting for 7,800 jobs in 2020, or 30 per cent
of total jobs in the renewables sector in Australia.
Significant investments have been made to The development of the Renewable Energy Zones
support the achievement of the VRET, including will generate thousands of construction jobs right
the Victorian Renewable Energy Auction Scheme across regional Victoria, as workers build our next
which has contracted for 928MW installed generation of solar and wind farms, energy storage
generation capacity. This year, the Government and connecting transmission infrastructure.
will be holding its second VRET auction, to deliver
at least 600MW of new renewable generation. Developing the renewable energy opportunities
The Government has also partnered with industry presented in all regions will necessitate
to implement large scale battery projects in key transformation from a power system that has
areas of the state, including the 300MW Victorian traditionally supplied electricity from a small
Big Battery near Geelong. number of very large electricity generators
to a new system that connects the many new
The benefits of this energy transformation are generation projects geographically dispersed
clear. As well as being vital to Victoria’s need to across REZs. This will involve significant investment
decarbonise its economy to reduce the risks of in transmission network infrastructure in areas that
climate change, the transition to renewable energy currently have limited capacity to carry energy
provides a key economic development opportunity from these new projects.
for the state, and in particular regional Victoria. The
steady increase in renewable energy projects in
Victoria is contributing to lower prices and greater
reliability for consumers. The REZ Development Plan
will be designed to ensure this trend can continue.
Victorian Renewable Energy Zones - Development Plan Directions Paper 3
Figure 1 Victoria’s Renewable Energy Zones
Red Cliffs
Wemen Western Victoria Transmission Network Project
Murray River currently under development
V2
Central North
Kerang
Western Victoria
Shepparton
Glenrowan
V6 Dederang
Bendigo
Horsham V3
V1
Bulgana Ovens Murray
Eildon
Waubra North Ballarat
South West Ballarat
Sydenham
V4 Mortlake
Loy Yang
Heywood Terang
Portland
Hazelwood V5 Gippsland
2.2 Barriers to the transition Internationally, jurisdictions are recognising
the need for the anticipatory development of
Many renewable energy projects in Victoria are efficient transmission infrastructure to support the
experiencing long and costly connection processes development of renewable energy zones. However,
and/or restrictions due to a lack of thermal capacity the current national regulatory framework for
and/or low network system strength in some REZs. investment in transmission network infrastructure in
Australia is designed for incremental transmission
AEMO’s 2020 Victorian Annual Planning Report augmentation in response to generation-led
(VAPR) includes network projects that will deliver investment.
system requirements and legislated policy targets, as
prescribed under the current regulatory framework. This framework does not encourage centrally
However, AEMO notes that there continues to be coordinated scale efficient solutions and anticipatory
strong developer interest beyond this expansion investments that pave the way for the transformation
plan, often in locations with excellent renewable required in Victoria by 2030, and results in complex
resources such as REZs. connection processes, increased investor risk and
therefore reduced incentives for renewable energy
AEMO notes that the current regulatory framework investment.
can result in extended generator constraints
when imbalance between network and generation A coordinated approach, beyond the constraints
investment emerge, which could lead to less efficient of traditional network planning, will help enable
utilisation of the state’s renewable resources and Victoria’s strong pipeline of new power supply to be
higher project risk premiums that could be passed built and to be operating in time to provide reliable
through into electricity market prices. power when large ageing generators retire.
Victorian Renewable Energy Zones - Development Plan Directions Paper 4
2.3 Victorian Government actions to • MOU with the Commonwealth Government
to support the development of VNI West via
date to support the transformation
KerangLink
In response to barriers to timely delivery of On 22 November 2020 a memorandum
transmission network hosting capacity and REZ of understanding (MOU) was announced
development in Victoria, the Victorian Government between the Victorian and the Commonwealth
has actively pursued several strategies: Governments to support the development of
VNI West via KerangLink. VNI West is a proposed
• Driven changes to national reform processes
new 500 kilovolt (kV) electricity transmission
The Victorian Government has already taken interconnector between Victoria and NSW. It
significant foundational steps to achieve better will increase power export capacity to NSW by
coordination of network investments and 1930MW and capacity to Victoria by 1800MW as
generation. It has driven changes to national well as unlocking investment in over 2000MW of
reform processes to bring forward Energy Security renewable energy projects.
Board (ESB) reforms for transmission including the
Actionable ISP rule change which streamlines and The two governments have agreed to jointly
adjusts the RIT-T (Regulatory Investment Test for underwrite up to $200 million to enable
Transmission) to improve delivery timeframes for immediate progress on early works including
ISP projects, and a Renewable Energy Zone rules detailed design and specifications, field,
package which requires jurisdictional planning geotechnical and environmental assessments,
bodies (AEMO for Victoria) to prepare REZ negotiation of easement and land acquisitions
development plans for priority REZs. Victoria has and equipment ordering.
also taken a lead role in advocating for the ESB’s KerangLink will facilitate the development of
Post 2025 National Electricity Market Review. Victorian Renewable Energy Zones and this
agreement will help to bring forward significant
• Introduced NEVA legislation to ensure necessary
network capacity to connect renewable energy
network development
projects in Victoria and support regional jobs.
In March 2020 the Government passed
amendments to the National Electricity (Victoria) • Regional Renewable Energy Roadmaps
Act 2005 (NEVA) to allow it to depart from The Victorian Government supported development
the national electricity rules where needed to of Regional Renewable Energy Roadmaps across
expedite necessary network investments. So far regional Victoria. Specific to each region, these
the Government has utilised its powers under Roadmaps were developed in consultation
the amended NEVA to fast track the AEMO’s with local communities and include analysis of
procurement of a 300MW battery to enable supply chain opportunities, skills, infrastructure,
increased import capacity of the Victoria New manufacturing and transmission opportunities.
South Wales Interconnector (VNI) by 250MW in Each Roadmap provides critical intelligence to
peak demand periods. The battery will be installed business, industry and communities seeking
at the Moorabool Terminal Station, near Geelong, to establish or expand new energy technology
ahead of the 2021-22 summer period. development, manufacturing or renewable energy
generation in Victoria.
Victorian Renewable Energy Zones - Development Plan Directions Paper 52.4 New initiatives • Establishment of VicGrid to actively plan and
develop Victoria’s REZs
The Victorian Government as part of the
The Government is establishing VicGrid to
2020-21 State Budget further announced a number
actively plan and develop Victoria’s REZs,
of initiatives to develop REZs across the state.
including planning and investing in REZ
These initiatives will actively plan, invest and network infrastructure, identifying and applying
develop Victorian REZ electricity network appropriate procurement, cost recovery and co-
infrastructure, and facilitate beneficial renewable funding approaches, facilitating renewable energy
energy generation in each REZ. Together these generation projects in Victorian REZs, and working
initiatives aim to reduce costs and complexity in with communities to plan REZs and ensure local
connecting renewable energy projects to the grid, benefits from REZ development.
ensure that the REZ network is capable of hosting
the generation required to achieve the state’s • $540m REZ Fund to assist financing of REZ
energy transformation, enable strong community network investments, including immediate
engagement, and support local economic and priority projects.
social benefits from renewable energy development As part of the 2020-21 State Budget, $540 million
across Victoria. has been made available over four years for
the Victorian Government to invest in network
This REZ development work agenda includes:
solutions in REZs. The Victorian Government
will identify funding pathways for beneficial
• Release of a REZ Development Plan
investments in network solutions, including the
The Government is determined to bring forward appropriate use of NEVA powers and government
network solutions that support the efficient funding.
development and connection of renewable
energy projects in REZs, and is creating a REZ Importantly, any project that is considered for
Development Plan (RDP) to achieve this. The RDP government support must demonstrate a net
will identify key investments or other solutions benefit. When assessing the use of the REZ Fund,
that should be made on the Victorian network, the Government will consider the benefits of public
where necessary extending beyond the initiatives funding in REZ infrastructure including: network
in current planning documents such as the and consumer benefits; support for achieving
national ISP and the VAPR produced by AEMO. government VRET targets; economic and industry
The RDP will provide appropriate solutions to: development objectives; the priorities of local
communities; local content opportunities; and the
a. improve system strength and alleviate ability to provide value for taxpayer funding.
immediate connection and curtailment
constraints in the short-term; and Cost recovery options will be actively considered
b. facilitate scale efficient and anticipatory where government financing is provided for
investment in preparation for more renewables projects. The Government will explore options that
in the electricity system in the medium-term. can leverage its investment, and complementarity
with other government initiatives such as the
This Directions Paper includes an initial RDP that Energy Innovation Fund and possible Clean
includes potential short-term priority network Energy Finance Corporation or Australian
improvements that could be made. Following Renewable Energy Agency support will also be
stakeholder feedback a final RDP will be investigated.
released as part of the REZ Implementation Plan
in July 2021.
63. Initial REZ Development Plan
The Victorian Government has worked with AEMO to This initial plan will be developed further following
identify potential network investments that support consultation and further detailed analysis, and
more timely and efficient development of Victoria’s a final RDP will be released along with a broader
REZs. Together these investments could enable an REZ Implementation Plan in July 2021. The RDP
additional 10GW of renewable energy generation will be maintained and updated by VicGrid
capacity in Victorian REZs, taking total REZ capacity when it is established as part of new institutional
to 16GW. These are potential network solutions that arrangements.
have been identified in addition to those in current
Victorian transmission planning documents such There are also significant opportunities for the
as the AEMO VAPR and ISP, and options to bring development of renewable generation and storage
those planned projects forward, to assist efficient projects in REZs that have good hosting capacity
renewable energy transition. such as in Ovens Murray and Gippsland. From a
network perspective the Ovens Murray REZ is not
The potential solutions identified reflect both experiencing immediate system strength issues and
anticipatory medium-term transmission has adequate network capacity to accommodate
developments to enable future REZ development, as expected generation development. VicGrid will
well as technical solutions that could be progressed play an active role in planning and facilitating
in the near term to support the efficient connection significant renewable energy development in all six
of Victoria’s existing pipeline of renewable energy REZs including the need for continued monitoring of
projects. This initial RDP exclusively focuses on emerging required network investments.
transmission network development within Victorian
REZs and is divided into two stages:
• Stage 1 projects are investments that the
Victorian Government could immediately
progress to deliver shorter-term grid remediation
solutions in areas where network limitations are
impeding renewable energy projects.
• Stage 2 projects are potential medium-term
investments in REZ infrastructure that will
involve further assessment and community and
stakeholder consultation.
73.1 Stage 1: Immediate priority projects By supporting these investments sooner than
the long timeframes of regulatory investments,
to support REZs
such as the RIT-T, means more lower cost
The Victorian Government and AEMO have worked renewable generation can enter the market for
together to develop a list of potential immediate the benefit of consumers, as well as providing
priority transmission network upgrade projects non-market benefits such as local economic
to support existing and future renewable energy activity and jobs. Such scale efficient investments
generation development in Victoria’s REZs. These can also reduce connection costs and improve
investments aim to strengthen the Victorian connection certainty for generators, reducing
transmission network and resolve the network project development costs which flow down to
connection issues that are causing significant lower energy costs for consumers, overcoming
project delays and acting as an impediment to the barriers that exist in the current national
timely development in REZs. regulatory framework.
Stage 1 candidate projects have been identified Stage 1 projects have been further divided into
using the following criteria: two categories. The first category includes
projects aimed at immediate grid operation,
• able to be delivered by 2025; system strength and curtailment issues which the
• address a present or projected need due Government is considering financing via the $540
to progression of generator projects in the million REZ Fund. Following stakeholder feedback
connections pipeline (e.g. system strength, on these projects, further technical analysis and
hosting capacity shortfall etc); detailed assessment of their costs and benefits,
the Government intends to release details of
• provide standalone benefits to the network and/ approved projects for immediate financing from
or connecting parties which are not dependent the REZ Fund in May 2021, including procurement
on future long-lead time network upgrade plans and cost recovery models for each investment,
from either AEMO’s 2020 VAPR or ISP; and including local content requirements.
• can efficiently meet planning and
Table 1 details the seven candidate Stage 1 projects
environmental requirements as well as
that are being considered for immediate REZ Fund
community expectations (for example, they
financing. These are grouped by REZ with several
have existing site or land available to deliver,
key metrics associated with each project - capital
and likely do not require complex planning or
costs, expected benefits, delivery timeframe and
environmental assessments).
delivery risk. Delivery risk is generally determined
Projects that could be delivered by the market or by assessing the project against environmental,
where the commercial model is more complex, for planning and community criteria. These projects
example battery storage projects, are not included are expected to be developed at established sites
in Stage 1. and not require new land or easements and should
generate minimal community concern.
A coordinated approach, beyond the constraints
of traditional network planning, will help enable Individual project overviews, which contain more
Victoria’s strong pipeline of new power supply to detailed project information, are available at the
be built and operating in time to provide reliable Appendix.
power when large ageing generators retire.
8Table 1 Stage 1 Projects – REZ Fund immediate network investments
Capital Delivery Delivery risk
Cost timeframe (low, medium,
Project ($M) Expected network benefit (years) high)
Murray River: V2
125MVAr $42-$98 Scale efficient solution to address 2-3
synchronous system strength and connection
condenser at Red issues.
Cliffs This is estimated to benefit up Medium
to 761MW of renewable energy
generation and save $38M* on capital
costs through scale efficiency.
Minor augmentation $1-$3 43-67MW of added network 2-3
capacity, thereby avoiding generator
curtailment due to network thermal Low
limitations.
Western: V3
250MVAr $32-$761 Scale efficient solution to address 2.5-4
synchronous system strength and connection
condenser at issues.
Horsham This is estimated to benefit up Low
to 1818MW of renewable energy
generation and save $29M* on capital
costs through scale efficiency.
South West: V4
Minor augmentation $10-$24 25-40MW of added network 3-4
capacity, thereby avoiding generator
curtailment due to network thermal Low
limitations.
South West $3-$8 Enable connecting generators to 3-4
communications meet their GPS obligations relating to
upgrade remote control, protection. Low
250MVAr $40-$140 Scale efficient solution to address 2.5-4
synchronous system strength and connection
condenser at issues.
Haunted Gully This is estimated to benefit up Medium
to 3202MW of renewable energy
generation and save $54M* on capital
costs through scale efficiency.
Central North: V6
Minor $1-$3 18MW of added network capacity, 2-3
augmentations thereby avoiding generator
curtailment due to network thermal Low
limitations.
1
This cost assumes coordination with a planned AusNet network augmentation
*
Calculated as 35% reduction in capital costs from individual system strength investments based on AEMO advice.
Victorian Renewable Energy Zones - Development Plan Directions Paper 9The second category of Stage 1 projects includes The Government will undertake further detailed
priority line upgrades that enable the connection of analysis and provide an update on its assessment of
additional renewable energy capacity in the West these projects in May 2021 when REZ Fund
and South West REZs. These REZs currently have announcements are made for the other Stage 1
thermal constraints that are preventing connection projects. The Government will announce a decision
of immediate and future renewable energy projects. on funding for these projects in the REZ
Implementation Plan to be released in mid 2021.
The Government will consider how current regulatory
arrangements can progress these projects. If it Table 2 below details the two proposed Stage 1
is evident that these projects are not able to be network augmentation projects. These are grouped
delivered effectively under the current national by REZ with several key metrics associated with each
regulatory framework to enable significant new project - capital costs, expected benefits, delivery
renewable energy capacity to connect, and that the timeframe and delivery risk (environmental, planning
projects are assessed to provide net benefits, the and community). Individual project overviews, which
Government will consider further options to deliver contain more detailed project information, are
them, including the use of NEVA powers. available at the Appendix.
Table 2 Stage 1 Projects – larger network augmentations with alternative delivery options
Capital Delivery Delivery risk
Cost timeframe (low, medium,
Project ($M) Expected benefit (years) high)
Western: V3
Increase the rating of $132-$308 Enable the connection of up to 53
the Western Victoria 1200MW of renewable energy
Transmission Network projects above the existing
Project (WVTNP) from WVTNP. High
220kV to 500kV from North
Ballarat to Bulgana2
South West: V4
Turn in existing Haunted $15-$35 2500MW of additional network 2-3
Gully to Tarrone 500kV line capacity thereby reducing
at Mortlake generator curtailment due to Medium
network stability limitations.
2
This project is subject to the existing WVTNP and will only progress if it does not delay the delivery of the existing WVTNP, and will be the subject to EES processes.
3
Ausnet estimate of project delivery.
Victorian Renewable Energy Zones - Development Plan Directions Paper 10Figure 2 Victoria’s REZs overlaid with immediate network solutions
Legend
Red Cliffs
New synchronous condensor
Minor augmentation / turn in 500kV line at Mortlake
Wemen New 500kV line
Communication upgrade
500kV line from North Ballarat to Sydenham
V2 currently under development
Kerang
Shepparton
Glenrowan
V6 Dederang
Horsham V3 Bendigo
V1
Bulgana
Eildon
Waubra North Ballarat
Ballarat
Sydenham
V4
Mortlake
Loy Yang
Heywood Terang
Hazelwood
Portland V5
3.2 Stage 2: Future projects to VicGrid will be responsible for the future
development and possible delivery of projects
support REZs
identified in Stage 2 of the RDP. This will involve
Stage 2 of the RDP focuses on potential identifying priorities for next stage development
medium-term REZ network projects that could be and determining appropriate funding and delivery
implemented to fully develop Victorian REZs. models for identified projects, including through the
use of public funds. VicGrid will also actively consider
These Stage 2 projects require further technical cost recovery and ownership models for these assets.
analysis, assessment of costs and benefits, as well
as analysis of appropriate funding and business Table 3 details the candidate projects for Stage 2
models and significant stakeholder and community development under the RDP. These are grouped by
consultation. These projects include: REZ with several key metrics associated with each
project - capital costs, expected benefits, delivery
• significant anticipatory augmentations to timeframe and delivery risk (environmental, planning
Victorian REZ transmission infrastructure and community). Individual project overviews, which
which require complex planning and financial contain more detailed project information, are
considerations or are subject to the outcome of available at the Appendix.
other RIT-T projects (Victoria New South Wales
interconnector (VNI) West, WVTNP, etc.); The Stage 2 project list is not exhaustive or limiting
and more projects may be included either through
• battery energy storage system (BESS) projects
this consultation process or through further detailed
that may be funded by the private sector or may
analysis conducted by VicGrid over time.
require innovative business models and tailored
funding mechanisms to attract private sector
investment; and
• smaller scale efficient system strengthening
projects that require further analysis.
Victorian Renewable Energy Zones - Development Plan Directions Paper 11Table 3 Stage 2 Projects - potential medium-term investments4
Capital Delivery Delivery risk
Cost timeframe (low, medium,
Project ($M) Expected benefit (years) high)
Murray River: V2
450MW × 3h $354-$826 Increase utilisation of renewable energy by enabling 2.5-4
of storage the absorption of excess energy from renewable
capacity generation during periods of negative demand.
(assuming This is expected to increase utilised renewable Low
BESS) energy by 493GWh annually and provide benefit of
2015MW to renewable energy generation.
New 220kV
**
$308-$720 Provide up to 800MW of anticipatory network 5.5-7
OH line from capacity for future renewable energy generation
Kerang to Red projects.
High
Cliffs via Wemen This is expected to increase utilised renewable
(~230km) energy by 2365GWh annually.
125MVAr $42-$98 Scale efficient solution to address system strength 2-3
synchronous and connection issues.
condenser at This is estimated to benefit up to 1000MW of Low
Kerang renewable energy generation and save $38M* on
capital costs through scale efficiency.
Second 350MW $194-$454 Increase utilisation of renewable energy by enabling 2.5-4
× 3h of storage the absorption of excess energy from renewable
capacity generation during periods of negative demand.
(assuming This is expected to increase utilised renewable Low
BESS) energy by 383GWh annually and provide benefit of
a further 2698MW to renewable energy generation.
Western: V3
125MVAr $40-$105 Scale efficient solution to address system strength 2-5-4
synchronous and connection issues.
condenser at This is estimated to benefit up to 2344MW of Low
Murra Warra renewable energy generation and save $40M* on
capital costs through scale efficiency.
350MW × 3h $275-$643 Increase utilisation of renewable energy by enabling 2.5-4
of storage the absorption of excess energy from renewable
capacity generation during periods of negative demand.
(assuming This is expected to increase utilised renewable Low
BESS) energy by 383GWh annually and provide benefit to
1765MW of renewable energy generation.
New 220kV OH
**
$170-$396 Provide up to 1000MW of anticipatory network 5-6
DCCT line from capacity for future renewable energy generation
Murra Warra projects.
to Bulgana This is expected to increase utilised renewable High
via Horsham energy by 3835GWh annually.
(~125km)
Second 350MW $194-$454 Increase utilisation of renewable energy by enabling 2.5-4
× 3h of storage the absorption of excess energy from renewable
capacity generation during periods of negative demand.
(assuming This is expected to increase utilised renewable Low
BESS) energy by 383GWh annually and provide benefit to
a further 1765MW of renewable energy generation.
4
Key acronyms in project names include the following: DCCT = Double circuit, SCCT = Single circuit, OH = Overhead
*
Calculated as 35% reduction in capital costs from individual system strength investments based on AEMO advice
**
Subject to outcome of other RIT-T projects (VNI West, WVTNP, etc.)
Victorian Renewable Energy Zones - Development Plan Directions Paper 12Capital Delivery Delivery risk
Cost timeframe (low, medium,
Project ($M) Expected benefit (years) high)
South West: V4
250MVAr $60-$140 Scale efficient solution to address system strength 2.5-4
synchronous and connection issues.
condenser at This is expected to provide benefit to 1906MW of Low
South Morang renewable energy generation and save $54M* on
capital costs through scale efficiency.
Second 300MW $167-$389 Increase utilisation of renewable energy by 2.5-4
× 3h of storage enabling the absorption of excess energy from
capacity renewable generation during periods of negative
(assuming demand.
Low
BESS) This is expected to increase utilised renewable
energy by 329GWh annually and provide benefit to
a further 2587MW of renewable energy generation.
350MW × 3h $275- $643 Increase utilisation of renewable energy by 2.4-4
of storage enabling the absorption of excess energy from
capacity renewable generation during periods of negative
(assuming demand.
Low
BESS) This is expected to increase utilised renewable
energy by 383GWh annually and provide benefit to
2587MW of renewable energy generation.
Additional $54-$126 Provide up to 600MW of anticipatory network 5-6
220kV SCCT capacity for future renewable energy generation
from Elaine projects.
Medium
to Moorabool This is expected to increase utilised renewable
(~43km) energy by 630GWh annually.
New 500kV OH
**
$318-$742 Provide up to 3000MW of anticipatory network 5-6.5
SCCT line from capacity for future renewable energy generation
Mortlake to projects.
High
North Ballarat This is expected to increase utilised renewable
(~130km) energy by 4920GWh annually.
500kV OH line
**
$398-$930 Provide up to 2500MW of anticipatory network 5-6.5
from Bulgana to capacity for future renewable energy generation
Mortlake projects.
High
This is expected to increase utilised renewable
energy by 4290GWh annually.
Gippsland: V5
New 500kV $300-$700 Provide up to 2100MW of anticipatory network 4-5
OH DDCT from capacity for future renewable energy generation
Hazelwood projects.
or Loy Yang This is expected to increase utilised renewable High
to Gippsland energy by 7270GWh.
(-65km)
Victorian Renewable Energy Zones - Development Plan Directions Paper 13Capital Delivery Delivery risk
Cost timeframe (low, medium,
Project ($M) Expected benefit (years) high)
Central North: V6
200MW × 3h $157-$367 Increase utilisation of renewable energy by enabling 2.5-4
of storage the absorption of excess energy from renewable
capacity generation during periods of negative demand.
(Assuming This is expected to increase utilised renewable Low
BESS) energy by 219GWh annually and provide benefit to
778MW of renewable energy generation.
Second 300MW $167-$390 Increase utilisation of renewable energy by enabling 2.5-4
× 3h of storage the absorption of excess energy from renewable
capacity generation during periods of negative demand.
(Assuming This is expected to increase utilised renewable Low
BESS) energy by 329GWh annually and provide benefit to
a further 1580MW of renewable energy generation.
New 220kV
**
$260-$608 Provide up to 800MW of anticipatory network 5.5-7
SCCT from capacity for future renewable energy generation
Shepparton to projects.
High
Dederang via This is expected to increase utilised renewable
Glenrowan energy by 1708GWh annually.
New 220kV
**
$205-$480 Provide up to 800MW of anticipatory network 5.5-7
DCCT from capacity for future renewable energy generation
Bendigo to projects.
High
Shepparton This is expected to increase utilised renewable
(~120km) energy by 1576GWh annually.
125MVAr $42-$98 Scale efficient solution to address system strength 2.5-4
synchronous and connection issues.
condenser at This is estimated to benefit up to 863MW of Low
Shepparton renewable energy generation and save $38M* on
capital costs through scale efficiency
Second 125MVAr $42-$98 Scale efficient solution to address system strength 2.5-4
syncon at and connection issues
Shepparton This is estimated to benefit up to a further 1506MW Low
of renewable energy generation and save $38M* on
capital costs through scale efficiency
Questions:
• What are stakeholder views on the Stage 1 projects prioritised for immediate investment for
example type, location and feasibility?
• What are stakeholder views on the appropriate procurement, and cost recovery and asset
ownership mechanisms for these prioritised projects?
• Are there alternative medium-term investments to the above that should be considered in the RDP?
Victorian Renewable Energy Zones - Development Plan Directions Paper 144. REZ Governance and Funding
As part of the 2020-21 Budget, the Victorian VicGrid will build on the Victorian Government’s
Government announced two major new initiatives existing leadership to address barriers to the timely
that will deliver faster and better coordinated delivery of transmission network hosting capacity
development of REZs. These two measures are: and REZ development in Victoria. VicGrid will seek
to leverage and complement initiatives such as
• The creation of a REZ development body the Energy Security Board’s REZ framework and
responsible for actively delivering Victorian REZs the proposed ‘efficient management of system
(VicGrid); and strength’ rule change currently being assessed by
• The $540 million REZ Fund, to invest in REZ the Australian Energy Market Commission to enable
network infrastructure solutions. timely and efficient development of Victoria’s REZs.
4.1 Establishing VicGrid
The Victorian Government will establish VicGrid Questions:
in mid 2021, tasked with the overarching planning
and development of Victorian REZs. VicGrid will • What functions would stakeholders
actively engage with regional communities to like VicGrid to perform and what
ensure appropriate and beneficial development governance model would be
in each REZ. appropriate?
• Are there effective features of
The Government is currently considering the
REZ development bodies in other
precise form, functions and powers of VicGrid,
jurisdictions in Australia and
and will look to other jurisdictions in Australia and
internationally which stakeholders
internationally for key insights and learnings. The
consider would be most effective for
Government is seeking further feedback through
Victoria’s VicGrid?
this consultation process on options for VicGrid
to effectively achieve its objectives, including • How best should VicGrid engage
consideration of VicGrid’s role in the Victorian with local communities, businesses
Transmission Planning Framework. and local governments to ensure
appropriate and beneficial REZ
The role and powers of VicGrid could include: development?
• broadly planning, developing and delivering • Victoria is contributing to national
timely and coordinated transmission, market and regulatory reforms
generation, storage and network firming in REZ development and careful
projects in REZ areas; consideration will be given to these
arrangements. What features are
• facilitating delivery of renewable energy
important for consideration in the
projects in REZ areas;
establishment of VicGrid to support
• leading community engagement and benefit complementarity of these reforms
sharing from REZ development; and effective outcomes in Victorian
renewable energy development?
• supporting state and regional economic
development opportunities through REZ
development;
• identifying and applying appropriate
procurement, cost recovery and co-funding
approaches; and
• financial support for REZ development projects.
Victorian Renewable Energy Zones - Development Plan Directions Paper 154.2 Funding pathways for RDP The Government’s $540m REZ Fund can be used
in a variety of different ways to facilitate RDP
projects and REZ Fund
solutions including:
The Government intends to release details of the
• funding investment gaps to bring forward
Stage 1 RDP projects for immediate financing from
network projects under RIT-T processes where
the REZ Fund in May 2021, including procurement
appropriate;
and cost recovery models for each investment,
including local content requirements. Projects • direct grant funding or co-funding of projects;
outlined in Stage 2 of the RDP could be financed and
through several pathways, including the use of • financing of investments with cost recovery from
regulatory powers (e.g. use of Victorian NEVA beneficiaries.
powers to modify or disapply the RIT-T process),
public funding (including the REZ fund), private Importantly, any project that is considered for
investment or a combination of these pathways. government support must demonstrate a net
benefit. When assessing the use of the REZ Fund,
Future development and financing of network the Government will consider the benefits of public
projects in the RDP will be guided by an assessment funding in REZ infrastructure including network
of net beneficial investment for Victoria, aligned and consumer benefits, support for achieving
with supporting efficient and sustainable renewable government VRET targets, economic and industry
energy development in the REZs, and achieving development objectives, the priorities of local
value for money for taxpayers and electricity communities, local content opportunities, and
consumers. Funding pathways for projects identified the ability to provide value for taxpayer funding,
in the RDP will be case-specific in order to achieve including cost recovery of investment.
the above objectives.
The Government is developing a framework to guide
investment in RDP projects and to determine the
most appropriate funding pathways and government
funding options for RDP projects once approved.
This framework will be released as part of the REZ
Implementation Plan in July 2021. Initial development
suggests several factors will be considered when
determining the most appropriate funding pathway,
including whether:
1. the investment can be undertaken under the
existing regulatory framework;
2. the investment is scale efficient and enables
multiple new generators to connect to the
network, now or in the future;
3. beneficiaries can be readily identified to
contribute to the cost of the investment;
4. the investment delivers on key public policy
objectives.
Victorian Renewable Energy Zones - Development Plan Directions Paper 165. Next Steps
Following feedback from stakeholders on the
initial RDP and VicGrid governance, the Victorian
Government will undertake the following steps: 5.1 How to provide feedback
• By the end of May 2021, the Government will Thank you for taking the time to engage
release details of the priority network projects it with this process. All responses are highly
intends to immediately finance through the REZ appreciated and are welcome before
Fund, informed by stakeholder feedback, further midnight Wednesday, 31 March 2021.
detailed technical assessment and analysis of
Please email REZDevelopment@delwp.
costs and benefits and including procurement
vic.gov.au to submit responses to this
and cost recovery models for these projects.
consultation paper.
• In July 2021, the Government will establish
VicGrid to develop and deliver Renewable For any queries regarding the process, please
Energy Zones for Victoria. email REZDevelopment@delwp.vic.gov.au.
• In July 2021, the Government will release the DELWP may publicly release responses to
REZ Implementation Plan which will include the this consultation paper; respondents should
finalised RDP, the establishment of VicGrid, the indicate where any material is commercial-
Government’s framework for further investment in-confidence and should not be released.
and funding of RDP projects, the ongoing work
agenda of VicGrid in delivering and updating
the RDP and further developing Victorian REZs
in consultation with local communities.
17Appendix: Detailed Project Overviews
Stage 1 | Category 1
125MVAr synchronous condenser at Red Cliffs
REZ Benefit
Murray River (V2) Scale efficient solution to address
V2 system strength and connection
Location
issues.
Likely within existing
substation or easement within Estimated to benefit up to 761MW
Red Cliffs area of renewable energy and save
$38M on capital costs.
Delivery timeframe
2-3 years
Beneficiaries
Cost Solar (MW) 761
$42M-98M Wind (MW) 0
Total (MW) 761
Project description (overview and purpose)
Risk of delivery
Installation of a new synchronous condenser in the Red Cliffs area.
This project would support the immediate need for more
system strength in the area. Following construction of Project
Medium
EnergyConnect and the associated synchronous condensers at
Buronga, this synchronous condenser will provide additional system
strength for more renewable energy projects built in the area. This Environment
project will increase system strength and ensure sufficient available
Greenfield area – vegetation
fault level for new renewable generators to comply with their
clearing required.
system strength connection compliance obligations. This project
would avoid the need for individual syncons to be constructed Infrastructure may be close to
and represents a scale-efficient solution to system strength sensitive areas.
remediation, reducing capital expenditure overall. Environmental impacts may be
avoided due to flexibility in the
Technical specification asset location.
125MVAr nameplate rating. Planning
Project is located within an
existing transmission line
easement or substation site.
Red Cliffs
Uncertainty regarding land
availability; new terminal station
and easements required, may
Potential location Wemen
for new syncon necessitate compulsory processes
– time and cost uncertain.
Community
Potential community concerns
regarding visual impacts and
Kerang environmental impacts.
Potential concerns regarding loss
of agricultural land.
Victorian Renewable Energy Zones - Development Plan Directions Paper 18Stage 1 | Category 1
Minor augmentation projects to support additional
capacity
REZ Benefit
Murray River (V2) 43-67 MW of added network
V2 Location capacity, thereby avoiding
All upgrades within existing generator curtailment due to
substation and easement sites network thermal limitations.
Delivery timeframe
2-3 years Beneficiaries
Generators in the Murray River
Cost
REZ.
$1M-3M
Risk of delivery
Project description (overview and purpose)
Minor augmentation projects in the Murray River REZ include
automatic load and generation tripping and run back schemes for Low
generators. The purpose of these projects is to enable higher levels
of existing network capacity utilisation while maintaining system
security. These projects are effectively a method of unlocking Environment
capacity on the existing network to accommodate greater levels of Greenfield and brownfield
renewable generation at a lower cost than new network build. secondary systems upgrades only.
Planning
Technical specification
Greenfield and brownfield
Automatic load/generation tripping/runback schemes to relieve secondary systems upgrades only.
thermal constraints on:
• RCTS-KMTS-MUTS-HOTS-BGTS Community
• RCTS – WETS – KGTS – BETS Greenfield and brownfield
secondary systems upgrades only.
Red Cliffs
Wemen
Kiamal
Kerang
Murra Warra
Horsham Bendigo
Bulgana
Victorian Renewable Energy Zones - Development Plan Directions Paper 19Stage 1 | Category 1
250MVAr synchronous condenser at Horsham
REZ Benefit
Western (V3) Scale efficient solution to address
Location system strength and connection
In Horsham area, likely issues. Estimated to benefit up
within existing Horsham to 1818MW of renewable energy
V3
substation site generation and save $29M on
capital costs.
Delivery timeframe
2.5-4 years
Beneficiaries
Cost
Solar (MW) 365
$32M-$76M
Wind (MW) 1453
(Estimate of the incremental
cost of replacing the end-of-life
Total (MW) 1818
Horsham SVC with a synchronous
condenser) Risk of delivery
Project description (overview and purpose)
Installation of a new synchronous condenser in the Horsham area. Low
This project will increase system strength and ensure sufficient
available fault level for new renewable generators to comply with Environment
their system strength connection compliance obligations. The
There is flexibility in the asset
existing Horsham static VAr compensator (SVC) is reaching end
location therefore, environmental
of life. Replacement with a modern equivalent SVC will cost $45M.
impacts may be avoided.
Replacement with a synchronous condenser rather than a new SVC
will would cost $100M. This project would avoid the need for individual Planning
synchronous condensers to be constructed and represents a scale Project is located within the
efficient solution to system strength remediation, reducing capital existing Horsham substation site
expenditure overall. therefore, likely to be low planning
risk and land availability risk.
Technical specification
Community
250MVAr nameplate rating.
Community concern may be low
due to co-location with existing
infrastructure at substation.
Horsham Bendigo
Potential location
for new syncon
Bulgana
Ballarat
Victorian Renewable Energy Zones - Development Plan Directions Paper 20Stage 1 | Category 1
Minor augmentation projects to support
additional capacity
REZ Benefit
South West (V4) 25-40MW of added network
Location capacity, 100MVA to 300MVA for
Upgrades within existing transformers, thereby avoiding
substations and easements generator curtailment due to
network thermal limitations.
Delivery timeframe
V4 3-4 years
Beneficiaries
Cost
Generators in the South West
$10M-$24M
zone.
Project description (overview and purpose) Risk of delivery
Minor augmentation projects in the South West REZ.
Minor augmentation projects in the South West REZ include
automatic load and generation tripping and run back schemes for Low
generators. Secondary systems bay upgrades are also included to
boost the ratings of transformers.
Environment
The purpose of these projects is to enable a higher levels of existing
Greenfield and brownfield
network capacity utilisation while maintaining system security.
secondary systems upgrades only.
These projects are effectively a method of unlocking capacity on
the existing network to accommodate greater levels of renewable Planning
generation at a lower cost than new network build.
Greenfield and brownfield
secondary systems upgrades only.
Technical specification
Community
BATS-TGTS-MLTS line; HYTS-MLTS line; MLTS-GTS-DPTS-KTS
line; SYTS-KTS line; MLTS 220kV Transformer; DDTS 330/220kV Greenfield and brownfield
Transformer. secondary systems upgrades only.
Ballarat
Sydenham
Keilor
Mortlake
Moorabool
Heywood Terang
Victorian Renewable Energy Zones - Development Plan Directions Paper 21Stage 1 | Category 1
South West communications upgrade
REZ Benefit
South West (V4) Enable connecting generators to
Location meet their GPS obligations relating
Upgrades within existing to remote control, protection.
substations and easements
Delivery timeframe Beneficiaries
V4 3-4 years New generators connecting in the
South West REZ area.
Cost
$3M-$8M
(Balance of additional $29M will Risk of delivery
be covered by TNSP RIT-T)
Project description (overview and purpose) Low
South West telecommunications network upgrade.
This project adds telecommunications network capacity in the Environment
South West area to provide the bandwidth to enable SCADA, Infrastructure will be located
signaling and protection for new generator connections in the area. underground within the road
This project helps generator connections in the area by reserve, reducing environmental
pre-building the necessary telecommunications infrastructure impacts.
required to integrate these generators into the transmission
Infrastructure may be close to
system. Unless built sooner, this investment will be triggered by a
sensitive areas e.g. Enfield State
replacement expenditure driver in 2024. The cost quoted above
Park. However, siting may avoid
is therefore the estimated advancement cost from the nominal
impacts to sensitivity areas.
replacement expenditure timing.
Planning
Technical specification Conflicting land use: Works
Replace radio redundant path from Terang (TGTS) to APD with could intercept Farming Zone,
fibre. Involves a redundant path from TGTS to APD underground Rural Activity Zones, Residential
through road networks etc. and Township Zones, Rural
Conversation Zone and Public
This is listed in the AusNet asset replacement plan (refer to page
Conservation and Resource zone.
8 of asset replacement plan – SDH/PDH replace – South West
Region Loop). Native vegetation removal
required.
Land unavailable: new easement
required, may necessitate
compulsory processes – time and
cost constraint.
Ballarat
Community
Community concern may be lower
due to co-location with existing
Mortlake
infrastructure.
Terang
Placement of network
Heywood
underground should ease
Portland community concerns.
Victorian Renewable Energy Zones - Development Plan Directions Paper 22Stage 1 | Category 1
250MVAr synchronous condenser at Haunted Gully
REZ Benefit
South West (V4) This is estimated to benefit up
Location to 3202MW of renewable energy
Likely located within existing generation and save $54M on
substation or easement in the capital costs through scale
Haunted Gully area efficiency.
V4 Delivery timeframe
2.5-4 years Beneficiaries
Solar (MW) 0
Cost
Wind (MW) 3202
$40M-$140M
Total (MW) 3202
Project description (overview and purpose) Risk of delivery
Installation of a new synchronous condenser in the Haunted Gully
area.
Medium
This project will increase system strength and ensure sufficient
available fault level for new renewable generators to comply
with their system strength connection compliance obligations.
Environment
This project would avoid the need for individual synchronous
condensers to be constructed and represents a scale efficient Project location within cleared
solution to system strength remediation, reducing capital agriculture land may minimises
expenditure overall. environmental risk.
Planning
Technical specification Conflicting land use: works could
250MVAr nameplate rating. intercept Farming Zone.
Project is not within an existing
easement therefore land
availability is not guaranteed.
Community
Ballarat Potential concerns regarding loss
of agricultural land.
Haunted Gully
Project Area
Mortlake
Terang
Victorian Renewable Energy Zones - Development Plan Directions Paper 23You can also read
