Project EnergyConnect SA-NSW interconnector to cut $100 off power prices, says ElectraNet
The State Government’s long-promised power link between SA and NSW will now save households will save $100 a year, it claims. But the cost to build the connector has also risen – by nearly $1 billion.
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Benefits of the electricity interconnector planned to be built between South Australia and NSW have increased from $66 a year for households to $100.
However, the cost has increased from an estimated $1.53bn to $2.4bn, according to a new application seeking approval for the project that was a key element in the State Government pledge to cut power bills.
The project, a 900km transmission line, has been proposed by SA-based company ElectraNet and NSW counterpart TransGrid.
An updated analysis had been done on the project, ElectraNet chief executive Steve Masters said.
“It shows that Project EnergyConnect will deliver cheaper electricity, more renewable energy and is an important measure to addressing emerging security risks in the network,” he said.
“Since we completed our original analysis on this project, there has been significant changes to the energy market and the cost of transmission across the National Electricity Market.
“More renewable energy will be unlocked as result of the project, resulting in further downward pressure on prices.
“Project EnergyConnect is also expected to create hundreds of jobs during construction and during the life of the project in both SA and NSW.”
An application has been lodged with the Australian Energy Regulator, an independent agency which will decide whether the benefits outweigh the costs and, if so, give approval for the investment and recovery of costs from consumers.
Premier Steven Marshall said the regulator’s decision was expected later this year, with the project to be completed by late 2022.
“The interconnector will create hundreds of jobs, unlock billions of dollars-worth of investment and deliver cleaner, more reliable and more affordable energy for South Australians,” Mr Marshall said.
“Households are set to save $100 per year on their electricity bills, whilst small business will save from $201 per year under the project, with that saving becoming thousands of dollars for small businesses that use significant amounts of electricity, when the interconnector is energised.”
The Australian Energy Market Operator has declared the interconnector as one of the key projects to strengthen the electricity grid.
In January, the regulator agreed in principle that the project was justified, although at that stage costs were estimated at $1.53bn.
Revised modelling has taken into account lower projected energy demand, including assumed closures of the Tomago, Boyne Island and Portland smelters. Increased generation from more renewable energy projects would lift supply. Less demand and more supply would lead to lower wholesale prices.
The modelling suggests SA households would pay $10/year to fund the interconnector but receive $110/year cheaper power – delivering a net $100/year benefit.
More of the project is in NSW with TransGrid to pay $1.9bn and ElectraNet $474m of the costs.
Mr Masters said the interconnector would ease congestion on the grid.
Congestion has been acute in western Victoria, with renewable energy projects struggling to connect.
The SA Government has funded early works in NSW and SA and will contribute more to further early works under a 50:50 deal with the Federal Government which allocated funds in the Federal Budget.
SA Energy and Mining Minister Dan van Holst Pellekaan said the amount being funded was still under negotiation.
The interconnector would put SA “well on track to deliver our promised $302 savings in electricity bills”.
Opposition Energy spokesman Tom Koutsantonis said the increase in costs was “staggering”.
He was concerned the interconnector would force SA’s gas-fired generators to close, losing the state’s capability to power itself.
The Opposition was sceptical that the savings were accurate when the costs had increased so much.
An interconnector with NSW was first suggested, using a different route, by then Premier Mike Rann. However it was blocked by the courts in a commercial law case.
The Federal Government is also investing in interconnectors between NSW and Queensland, NSW and Victoria and Tasmania and Victoria.
In a Budget reply speech on Thursday night, Federal Opposition Leader Anthony Albanese said if the ALP was elected it would invest $20bn on creating a Rewiring the Nation Corporation which would build national transmission lines.
“Australia’s electricity network was designed for a different century, and transmission systems themselves are operated by monopoly providers who keep taking households and businesses for a ride,” he said.
“Australians don’t just pay for their power, but for the cost of building and operating the grid and then a hefty price on top.”
Federal Opposition Energy spokesman Mark Butler said investing in transmission was a “no-brainer” which would use Australian steel.
“As more renewable energy gets built, we need the transmission network to support it,” Mr Butler said.