NSW to spend $1.8bn to accelerate energy transition
Chris Minns says the investment is needed to add impetus to a transition that is delayed, so NSW can ‘produce cleaner, more affordable energy for the people of this state’.
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NSW will spend $1.8bn to accelerate the development of renewable energy as the state’s transition away from fossil fuels languishes.
The new investment marks an attempt by Australia’s most populous station to revive its plan to rapidly wean from coal by the end of the decade – a timetable that looks increasingly difficult to meet, underscored by the state government’s move to seek a deal to prolong the state’s largest coal power generator.
The Labor government said it will create the Energy Security Corporation, a state-owned investment vehicle for renewable energy projects and it will have a budget of $1bn. NSW said it will invest another $800m to accelerate development of transmission infrastructure for its Renewable Energy Zones (REZ). Early spending of the new funds will be concentrated on the Central-West Orana REZ.
State Premier Chris Minns said the investment was needed to add impetus to a transition that is delayed.
“We inherited a renewable energy road map that was off course. We’re determined to get NSW back on track when it comes to the energy transition,” said Mr Minns.
“We need to get back on track so that we can produce cleaner, more affordable energy for the people of this state.”
The ESC was an election promise by Labor, which it said would be modelled on the Clean Energy Finance Corporation – Australia’s so-called green bank that provides capital to renewable energy projects that may struggle to secure traditional investment otherwise.
Mr Minns said the ESC will primarily invest in storage projects.
Renewable energy developers can typically struggle to secure financing due to irregular revenue streams that they can have. Battery operators will earn income either through dispatching electricity during peak hours when renewable energy generation has waned or for propping up the grid stability – revenues that can be difficult for banks to model and so lending remains nascent.
The need for batteries, however, is rapidly growing. Australia is pushing ahead with renewable energy generation projects – albeit not quickly enough – but there is heightened concern about what supports the grid when the sun is not shining or the wind is not blowing.
Gas could be used as a so-called peaker, but the fossil fuel remains the subject of significant opposition and few new generators are being built.
The situation is particularly concerning to the country’s energy market operator, which last week warned that urgent investment was needed to bring new generation projects to market quickly or the National Electricity Market would face a decade when reliable electricity to homes and businesses could not be guaranteed.
NSW’s plan is to develop so-called “renewable energy zones” (REZ) that contain a mix of concentrated zero-emission sources allowing the state to minimise on building new transmission lines.
But in May, NSW energy minister Penny Sharpe said two REZs are now on course to be developed later than previously announced – stoking concern about how the state would cope with the loss of many coal power generators which are expected to retire within the decade.
Bowing to pressure, NSW this week said it seek talks with Origin Energy to prolong the lifespan of the state’s largest coal power generator – Eraring – beyond its scheduled retirement of 2025.
To minimise the threat that Eraring could be needed even longer, Ms Sharpe said the state will invest another $800m to accelerate development of transmission infrastructure. Early spending will focus on the Central-West Orana REZ near Dubbo, which is now not expected to be operational until 2027 – two years later than initially anticipated.
“These investments will reignite the first of our Renewable Energy Zones in the Central West-Orana and make sure local communities see early benefits,” Ms Sharpe said.
Originally published as NSW to spend $1.8bn to accelerate energy transition
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