Update on VNI West regulated economic cost-benefits assessment: Project Assessment Draft Report extension granted to 31 August 2022

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AEMO and Transgrid are jointly progressing the Victoria to New South Wales Interconnector West (VNI West) Regulatory Investment Test for Transmission (RIT-T) under the Actionable Integrated System Plan (ISP) framework to assess the technical and economic viability of delivering additional transfer capacity between Victoria and New South Wales.

Targeted interconnector expansion between these regions would help to address transmission network limitations, and improve supply reliability as ageing coal-fired plants retire, and access to competitively priced electricity from renewable generators and energy storage becomes critical.

The RIT-T is a three-step technical and economic impacts assessment required under the National Electricity Rules for significant projects proposed for the NEM. The RIT-T framework seeks to ensure network planners make prudent investments on behalf of electricity consumers who ultimately fund such projects. In effect, this means evaluating and ranking credible options to meet an identified need, and selecting the option that maximises the net economic benefit in the long term interest of consumers.

The VNI West RIT-T Project Consultation Specification Report (PSCR) scoping report was published in December 2019. The PSCR details the identified project need and proposes a range of options to address this need, to realise net market benefits in the long term interest of energy consumers by:

  • Efficiently maintaining supply reliability in Victoria following the closure of further coal fired generation and the decline in ageing generator reliability – including mitigation of the risk that existing plant closes earlier than expected.
  • Facilitating efficient development and dispatch of generation in areas with high quality renewable resources in Victoria and southern New South Wales through improved network capacity and access to demand centres.
  • Enabling more efficient sharing of resources between National Electricity Market (NEM) regions.

Public submissions on the PSCR closed on 13 March 2020 and will be addressed in the follow-up VNI West RIT-T Project Assessment Draft Report (PADR).

The 2020 Integrated System Plan (ISP) published in July last year identified VNI West as an Actionable ISP Project with decision rules, and confirmed the identified need presented in the VNI West RIT-T PSCR.

In March 2021, the Australian Energy Regulator (AER) granted an extension to the publication date of the VNI West RIT-T PADR with a revised date for publication in December 2021.

The AER has granted a further extension to the PADR publication date from 10 December 2021 to 31 August 2022.

This extension will enable Transgrid and AEMO to update market modelling to reflect:

  • Transgrid’s commitment to the ‘Project Energy Connect enhanced’ 500kV investment between Dinawan and Wagga, which is supported by the Federal Government.
  • Key industry changes such as the earlier closure date of Energy Australia’s Yallourn Power Station in Victoria.
  • EnergyAustralia’s announced Jeeralang Battery in Victoria.
  • The NSW Government’s Electricity Infrastructure Roadmap.

AEMO has also published today an Update to the 2020 ISP, and the Draft 2022 ISP.

The Draft 2022 ISP optimal development path identifies VNI West (via Kerang) as an Actionable ISP Project with staging and decision rules, and the Update to the 2020 ISP requires that the VNI West RIT-T use the ISP scenarios and scenario weightings set out in the Draft 2022 ISP.
This means that under the Actionable ISP framework, the VNI West RIT-T assessment will focus on the VNI West (via Kerang) ISP candidate option identified in the Draft 2022 ISP, along with credible non-network options. The VNI West PADR will be published for consultation by the end of August 2022.

The extended PADR publication date will allow the alignment of the VNI West RIT-T with the latest ISP optimal development path.

We value stakeholder feedback and advice on this project. Formal consultation on the PADR will occur next year after the report has been published, but feedback is welcome anytime.

For information including the latest Progress Update, visit AEMO’s VNI West RIT-T webpage.

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