Cost of flagship Net Zero project Central West Orana Renewable Energy Zone tipped to rise again

The new price tag of a giant renewable energy zone in the NSW Central West will be released in weeks. Announced in 2020, the cost has already spiralled from $650 million to $5.4 billion.

The state’s flagship Net Zero project has already blown out by billions of dollars and is bracing for fresh cost increases when a final revenue determination is made within weeks.

However, a veil of secrecy surrounds the total amount required to build the Central West Orana Renewable Energy Zone (REZ), covering a giant 20,000sq km area around Dubbo and Dunedoo.

First announced in 2020 by the former Coalition overnment, the project’s initial price tag of $650 million had risen to an estimated $5.45 billion in February 2024.

But with shovels already in the ground, the Australian Energy Regulator (AER) has reported the REZ is facing “an increase in capital costs of $372 million and an increase in operating and maintenance costs of around $130 million over the project term”.

Other details are unavailable due to “commercial sensitivity and public interest”, with the final development, construction, operating and maintenance fees blacked out in official public documents.

A map showing part of the Central-West Orana Renewable Energy Zone, which has increased in price from $650 million in 2020 to $5.4 billion Picture: Supplied

According to the state’s bureaucracy, EnergyCo, the $5.45 billion figure would cover construction of network infrastructure, property acquisition, biodiversity offsets, road upgrades and local community commitments.

The cost will be covered by the people of NSW.

Private partnership ACEREZ has been engaged to deliver the hundreds of kilometres of new transmission lines and energy hubs required.

Six separate companies have signed up to deliver 10 wind, solar and battery farms, including mining magnate Andrew “Twiggy” Forrest’s Squadron Energy, and Lightsource, a subsidiary of oil giant BP.

When asked to justify the staggering blowout, a spokesperson for EnergyCo told The Daily Telegraph “the original $650 million estimate… was for a very early-stage project with a different scope, route and capacity to what’s now being delivered”.

“The AER is expected to publish an updated revenue determination shortly, including the final costs. We won’t pre-empt the determination” EnergyCo said.

Paul Broad, the former CEO of Snowy Hydro 2.0 and a long-time infrastructure expert said it was “pure fantasy” that the REZ could replace baseload power.

Nationals Leader Dugald Saunders, who is the MP for the local Dubbo area, said it was “disappointing Labor has allowed the Central West Orana REZ to blow out its costs so much, while keeping the public in the dark”.

“The ongoing cumulative impact and lack of proper community consultation continues to cause major dissatisfaction across the region” Mr Saunders said.

The Minns government has boldly claimed the REZ will be capable of producing “4.5 gigawatts of network capacity … to power 2.7 million homes by the end of the decade”, which it says is critical to replace the state’s ageing fleet of coal-fired power plants.

However infrastructure expert Paul Broad, the former boss of Snowy Hydro 2.0, told this masthead that claims the new REZ could replace coal were “pure fantasy.”

“It cannot happen. No way in the world. It cannot replace base load power. Have a look at what is happening all over the globe” Mr Broad said.

“These zones will sometimes only work 30 per cent of the time. It can’t be done.

“You have to have at least another three or four additional gas-fired power stations when there is no sun or no wind.”

A state government spokesperson said: “This is a critical piece of energy infrastructure that is being delivered to keep the lights on and prevent price spikes when ageing coal-fired power stations retire.

“It will power more than 2.7 million homes and businesses.”

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Originally published as Cost of flagship Net Zero project Central West Orana Renewable Energy Zone tipped to rise again