Construction to begin within weeks on transmission line needed for Snowy Hydro 2.0

Works on HumeLink will ease concerns about Australia’s energy transition, but carry a price tag of nearly $5bn.

Construction of the near $5bn high-voltage transmission line, HumeLink, will begin early next year after that Transgrid board gave the development the go-ahead in the wake of federal and state approvals.

The infrastructure project is needed to connect Snowy Hydro 2.0 and a plethora of other renewable energy projects.

The Australian Energy Market Operator has said work on HumeLink and five other transmission lines must be completed urgently or the National Electricity Market will face a decade of unreliable supplies as the country transitions away from coal.

A lack of transmission lines has held back new renewable energy projects, as developers will not push ahead with developments until they have certainty that they will be able to connect into the grid.

Transgrid chief executive Brett Redman. Picture: John Feder

HumeLink is expected to cost $4.89bn, a sum that will do little to quell criticism about the cost of Australia’s energy transition.

However, Transgrid chief executive Brett Redman said the development would bring widespread benefits.

“The Australian government’s commitment to provide concessional finance for these mega-projects is critical as they would not be possible otherwise, and I want to acknowledge minister Bowen and the CEFC for their support,” said Mr Redman, a former CEO of AGL Energy.

“Transgrid and our delivery partners are ready to get on with delivering HumeLink, to reinforce the southern NSW electricity grid and enable the integration of new renewable generation,” Mr Redman said.

Nearly half of the funds will come from the Clean Energy Finance Corporation, Australia’s green bank, which has commited up to $1.92bn in a combination of concessional senior debt and subordinated notes, designed to attract additional private sector capital to the landmark project. It includes $140m in CEFC debt finance previously provided to VNI West in NSW.

CEFC CEO Ian Learmonth said the funds would come from the federal government’s $19bn Rewiring the Nation fund – part of Labor’s off-budget measures that are expected to drive sustained budget deficits.

“HumeLink and VNI West (NSW) are vital parts of the clean energy solution. These nationally significant projects will help bring low-cost and low-emissions clean energy to energy users in NSW and Victoria, with CEFC finance helping reduce the level of project costs that may be passed on to consumers,” Mr Learmonth said.

“In making this very substantial investment commitment, we have drawn on the considerable scale and specialist expertise developed in our first decade of investment across the economy.”