Project EnergyConnect from SA to NSW excites renewable energy investments worth billions

The chance to sell SA energy to NSW has sparked major buzz in renewables investors around the world. See their list of projects

Billions of dollars of investment and thousands of jobs constructing nearly 100 renewable energy projects in South Australia are being pushed forward in expectation of an electricity sales route to NSW opening up.

Companies from around the world including France, Singapore and Spain as well as Australia – are lining up to use the $2.3 billion SA-NSW electricity interconnector.

The 900km transmission line, called Project EnergyConnect, passed a major milestone this week, achieving approval on costs from the Australian Energy Regulator and a formal commitment on funding from the NSW side of a joint venture with SA’s ElectraNet.

The biggest investor is Neoen, which already operates the big battery and wind farm at Hornsdale near Jamestown and has approval for a $500 million project at Crystal Brook and a $3 billion Goyder South project near Burra.

“Project EnergyConnect is vital to unlocking the full potential of Neon’s multi-gigawatt Goyder Renewables Zone and the significant jobs and investment it represents for SA,” Neoen managing director Louis de Sambucy said.

Neoen Australia managing director Louis de Sambucy. Picture: Kelly Barnes

Site works have yet to begin on the projects but the interconnector will be a major factor in the French-listed company making its final investment decisions.

Neoen said two thirds – or $2 billion – of the Goyder South project would rely on being able to export electricity to NSW. A further project, Goyder North, is also in planning.

The Australian Energy Regulator’s costing on the 800 megawatt transmission line would result in SA household bills rising $6 a year in 2022-23, then $17 a year in subsequent years.

The increased availability of generation from NSW and improved reliability would decrease wholesale prices, delivering a $100 a year net benefit to SA households, modelling by Acil Allen for ElectraNet estimates.

“EnergyConnect will unlock $5 billion to $10 billion of investment in renewable energy projects and create thousands of jobs in SA,” Energy Minister Dan van Holst Pellekaan said.

“This $2.3 billion investment will create a freeway for exporting green power from South Australia and is central to achieving our ambition for net-100 per cent renewables in the 2030s.”

Opposition energy spokesman Tom Koutsantonis remains sceptical about the investments.

“Given the NSW government will directly subsidise the development of renewables in NSW to achieve the construction of $32 billion of renewables I see all the development on the NSW side of the border,” he said.

“If you build a renewable development in NSW you can access a $50 million fund, in SA you can access the warm wishes of the Premier.”

A spokeswoman for NSW transmission company TransGrid said projects around Broken Hill and Balranald would benefit from the line from Robertstown to Wagga Wagga but that “consumers in both states will have access to low-cost sources of energy generation across the border”.

SA company ElectraNet’s board is due to announce within days a decision on its $457.4 million part of the project, which also must meet environmental and technical approvals.

The Clean Energy Council has welcomed the project reaching a milestone.

“This is a really exciting and necessary project that will help build a 21st century electricity network,” council chief executive Kane Thornton said.

“It supports significant investment and jobs in renewable energy projects that are at the heart of Australia’s energy transition.”

SA’s high level of renewable generation has already cut wholesale prices and the state has the lowest priced futures contracts, displacing Queensland, according to the Australian Energy Market Operator’s latest quarterly report.

Nexif Energy, which is now constructing the $172 million stage 2 of its wind farm at Lincoln Gap, between Port Augusta and Whyalla, said Project EnergyConnect would help consideration of a stage 3.

“The interconnector will assist with our further investment in SA and support the export of renewable energy interstate,” managing director Charles Rattray said.

“By assisting in realisation of our expansion plans in SA, Project EnergyConnect will help create more construction jobs on top of those workers building stage 2 of our Lincoln Gap wind farm and building our new Snapper Point power station gas peaking plant.”

Snapper Point, at Outer Harbor, will house the aero-derivative generators leased from the state government which help Nexif offer firm power supply contracts – that is, power will come from wind but gas will fill gaps when the wind isn’t blowing.

Nexif Energy Australia managing director Charles Rattray.

Solar River partners Jason May and Richard Winter.

Singapore headquartered Vena Energy, which operates a solar farm at Tailem Bend, said the interconnector would help all renewable projects because back-up power from NSW would enable more “firm” power sales contracts.

“Project EnergyConnect certainly has the potential to switch on additional renewable generators and Vena Energy hope to leverage this opportunity into progressing Australia’s transition to renewable energy through stage 2 of our Tailem Bend Solar Project,” Vena Energy planning manager Kori Law said.

Solar River has approval for a $465 million project at Robertstown where construction on stage 1 is targeted to begin later this year.

“Project EnergyConnect will trigger the investigation of additional stages of the project,” managing director Jason May said.

Projects now under construction include the $650 million wind and solar Port Augusta Renewable Energy Park by Ireland’s DP Energy and Spanish company Iberdrola.

Iberdrola bought out the assets of Infigen, in one of many corporate moves in the sector.

Some of the biggest projects in SA were approved when proposed by companies which have subsequently run into financial trouble – but the project plans and approvals retain value.

These include approvals held by Senvion and Lyon Solar.

Meanwhile, businessman Sanjeev Gupta has put SIMEC Energy’s projects up for sale and Tilt Renewables is subject to a takeover offer.

EPS Energy recently sold its projects to Canada’s Amp Energy, which aims to tap into SA’s potential for hydrogen manufacturing.

Projects which have been approved would be worth more than $13 billion of investment.

Billions more investment is at stake in projects in planning but not yet approved.

The collective capacity of projects would far exceed SA’s demand.

Renewable energy projects currently under construction in SA will contribute 416MW of electricity generation capacity to the grid.

If all approved projects waiting in the pipeline are built, it will add a further 10,400MW of capacity. Further planned, but not yet approved, projects would contribute another 5571MW, taking the total to 16,387MW of generation capacity added to the grid if all were built.

By way of comparison, South Australia’s consumption typically hovers around 1500MW and the average demand for the entire National Electricity Market in the first quarter of 2021 was 21,192MW.

Reliant on sun and wind, renewable energy plants operate at about a third of their capacity on average.

The intermittent nature of renewables, the NSW export option and plans to manufacture hydrogen from excess power form a complex jigsaw which investors will need to consider.