AEMO responds to VNI West ‘alternative plan’

3 min

AEMO’s initial review of Victoria Energy Policy Centre PLAN B report shows it would result in lower levels of renewable generation entering the grid, will likely require the acquisition of people’s homes on the outskirts of Ballarat and Bendigo, and would result in long periods of power system disruption.

PLAN B would not sufficiently support renewable generation development in north-west Victoria – meaning less renewable generation would be built, and that less energy from renewable sources will end up powering Victorian homes and businesses.

PLAN B projects will not deliver the capacity needed in western and north-western Victoria. This means that generation from the sunniest and some of the windiest parts of the state would not be serviced by enough transmission. Renewable energy in the area would find it hard to reach concentrations of homes and businesses.

The PLAN B projects also fail to deliver the improved access to the Snowy Mountains Scheme – including the upgraded capacity from Snowy 2.0. This will limit the potential for Victorian electricity customers to access hydroelectricity from the Snowy during periods of low sunshine and wind.

PLAN B’s failure to provide stronger connection to the NSW grid also strikes a blow to the investment case for renewable projects in Victoria. This is because a central part of any investment case is the ability to export energy to other states when Victoria is generating more electricity than it needs.

Due to proximity of existing transmission to homes on the outskirts of Ballarat and Bendigo, the implementation of the PLAN B alternative would likely require the demolition of homes, while its construction would threaten power supply to major regional and rural towns.

The PLAN B assumption that only an extra 10m of easement will be required to construct 1,040km of 220 kV double-circuit line in western and north-western Victoria, is overly optimistic. The consequences to both the supply reliability to regional communities during construction, and the outage impacts on the existing renewable generators would be significant.

If existing lines need to be taken out of service before new lines are built and commissioned, reliability of supply to major regions will be compromised. Also, existing renewable generators in western and north-western Victoria will lose their route to market – leading to significant reductions in earning opportunities.

Also, PLAN B makes the incorrect assumption that spare easements exist next to some existing 220kV lines. This is simply not correct. There are no spare easements for the Ballarat to Moorabool transmission line, nor are there spare easements for Shepparton to Glenrowan to Dederang transmission line.

Many of the renewable generation hosting capacity figures claimed by the Victoria Energy Policy Centre are unsubstantiated and well in excess of the detailed power system analysis and modelling undertaken by AEMO. Based on AEMO’s initial assessment, PLAN B will only harness half the renewable generation claimed.

Developments not involving new lines

PLAN B’s suggestions of ‘developments not involving new lines’ upgrades have all been investigated by AEMO and AusNet in the past – and either implemented or rejected on technical and commercial basis.

This includes the suggestion of weather monitors and telecommunications installed on some easements to allow dynamic ratings. This has already been implemented. In fact, the first of the projects was completed more than a decade ago.

Also, there is a suggestion that maximum conductor temperature be increased on some lines. This has also been implemented where safe to do so, while not breaching the clearance guidelines that were released following the Black Saturday bushfires and the subsequent Royal Commission.

Inaccuracies on VNI West

The report also makes a series of inaccurate statements about VNI West.

The first, is that “VNI West will not increase the renewables hosting capacity of Murray River REZ”. This is a statement that is based on the false assumption that all new renewable generators in the REZ will connect to the existing 220kV infrastructure. Construction of 500kV through VNI West will open the opportunity of higher capacity connection.

AEMO also strongly refutes the claim that “VNI West will introduce 1000 single-points-of-failure as it relies on a 500 kV dual-circuit transmission line with single towers supporting both 500 kV transmission circuits. This means that a single event of severe lightening, destructive wind gusts, bushfires, extreme flooding, and sabotage would take out the entire line, causing an instantaneous cascading tripping of any parallel 220 kV lines and the existing VNI and Heyward interconnections, plunging southern Victoria including Melbourne and the Portland smelter into an absolute blackout.”

Victoria already has more than 6,000 kilometres of existing transmission line, including double circuit lines with one set of towers supporting two transmission circuits. This approach is also used throughout Australian and international transmission networks. There are well established operational arrangements which manage the risks described, acting immediately to protect the grid following an extreme event by making automatic adjustments needed to maintain secure operation. There is no evidence the additional transmission lines for VNI West would increase risks.

AEMO also strongly refutes the claim in the report that “VNI West will more than double transmission charges, not increase them by 25% as AEMO says”.

This incorrect assertion has already been responded to in the regulatory process.

Recent repricing risk in financial markets has resulted in an increase in the discount rate, as identified in AEMO’s latest Inputs Assumptions and Scenarios report (published last Friday). Even applying the higher 7 per cent discount rate now reported by AEMO as its central estimate, VNI West is forecast to increase transmission charges by 29%, not the 75% claimed.

All up, accounting for both the cost of Western Renewables Link and VNI West, transmission charges in Victoria are estimated to increase by as much as 50%, although this will be more than offset by the lower wholesale cost of electricity than would otherwise be charged. To put this in perspective, in 2022, transmission charges accounted for 6.3% of the annual residential bill in Victoria.

Why we need VNI West

VNI West will harness clean, low-cost electricity from renewable energy zones in both Victoria and New South Wales and improve the reliability and security of electricity supply.

VNI West is needed, because Australia’s ageing coal-fired generators are exiting the market after decades of great service. And more than that, their age and the economics of the electricity market are accelerating these closures.

We know, because of rigorous research and analysis conducted by AEMO and the CSIRO, the lowest cost replacement for this coal generation is renewable energy from the sun and the wind – backed up by batteries, gas and hydro to smooth the bumps in production.

One of the challenges this presents is that we need projects like VNI West to connect these new and diverse sources of electricity with Australian homes and businesses. Existing transmission cannot be relied upon, because the geographic location of generation has changed.

Compared to the projects proposed in AEMO’s Integrated System Plan, PLAN B would have detrimental outcomes for more landholders, regional and rural communities and the renewable generation investment required to give consumers reliable and affordable power supply.


Note: Quotes can be attributed to Merryn York, AEMO Executive General Manager System Design.

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