Generation Investment Bottlenecks Risk to State’s Decarbonisation Plans
Australia’s peak body for energy operators and retailers has warned that bottlenecks are affecting generation investment in WA, threatening to derail the State’s ambitious plans to decarbonise.
Citing a report it commissioned, the Australia Energy Council said generation investment in WA was beset by a lack of new electricity transmission planning and investment, along with a lengthy, costly and opaque grid connection process.
The report, by Oakley Greenwood, said an energy transition is underway in Western Australia, led by State Government commitments and proposed policies that will shift the electricity sector towards more intermittent and low-emission capacity.
These include:
- The State Government’s economy-wide goal of net zero by 2050.
- Synergy’s plans to close coal-fired power plants by 2030 and not build any new natural gas fired power plants after 2030, while investing in 800 MW of new wind generation and 4400 MWh of storage.
- Western Power’s rollout of network-connected batteries and standalone power systems.
- and Policies such as the Renewable Hydrogen Target that will require significant near-term investment in renewable projects.
The policies combined to create an urgent requirement for new generation in the SWIS by the end of the decade, but this pressing need has created a problem.
“Investors who have been motivated by these policies to bring new intermittent and dispatchable projects onto the grid have encountered several significant challenges, including a lack of transmission planning and investment creating uncertainty and grid congestion, rigid interpretation of certification obligations by AEMO, and a grid connection process that is lengthy, costly and opaque,” the report said.
The Council’s Chief Executive, Sarah McNamara, said a quicker more efficient grid connection process was required along with a credible transmission plan that will not be changed over overridden.
Oakley Greenwood identified that the current connection process for new projects can take up to five years and uses a “first-in, first-served” approach, which can create issues.
“The current ‘first-in, first-served’ approach means that the best new projects could be left waiting in the connection queue for years behind other projects that may not be funded or are in areas where new transmission is not planned,” it said.
“Western Power is not obligated to process connection enquiries within defined time frames, with the current arrangement only talking of reasonable timeframes and best endeavours. Ensuring more definitive timeframes can only help.”
The report highlights that “concerningly” only 5 per cent of applications make it through to the end of the process.
Reasons for this could include some proponents being “tyre kickers”, while genuine applicants give up because they find the process too frustrating, or the lengthy timeframes leading to applicants missing out on the ‘market opportunity’ that once existed.
Key recommendations include:
- The grid connection process needs to be shortened dramatically to increase investor certainty and ensure projects are brought onto the grid in time to meet the forecast capacity shortfall of approximately 4,000MW by 2032-33.
- There should always only be one authoritative source of network planning. In Oakley Greenwood’s opinion, Western Power, the asset owner, is the logical body to continue in this role.
- A credible transmission plan needs to be produced and maintained.
- Charging and cost-recovery mechanisms for transmission investments should be clarified and equitable across all investors.