By Kieran Rooney and Rachel Eddie
The Allan government was urged to fast-track major electricity transmission line projects or risk years of substantial increases to household bills if the state’s coal-fired power stations closed before the projects were completed.
A Department of Energy, Environment and Climate Action report warned that current trends of delays to the high-voltage projects along with early closures of coal power exposed Victorians to significant bill shock.
A protest against the KerangLink transmission project was mowed into a field last year.Credit: Glenden Watts
It made the case for accelerating Marinus Link, a new connection to Tasmania due for completion in 2030, and KerangLink, which provides a new connection between Victoria and NSW that is due to be finished in 2032.
KerangLink will mean power stored by the Snowy 2.0 hydropower project can be siphoned to Victoria and power generated by Victoria’s new wind farms can be sent north, improving the reliability of the grid.
The 2022 report, obtained by the state opposition under freedom-of-information laws and provided to The Age, found if the projects were completed even one year later, the increase to household energy bills would be $48 annually, or $717 over 15 years between 2026 and 2040.
A four-year delay would add $321 annually to power bills or $4816 over 15 years, according to the Endgame Economics modelling.
Since the report was written, Marinus Link is now expected to be delivered by 2032 — two years later than modelled. KerangLink is still forecast to be finalised by the end of this decade but has been beset by community and political opposition.
The extra costs for consumers would largely be driven by the cost of having to import more energy from interstate.
The department said this showed “the importance of accelerating against KerangLink to protect against unexpected project delays and provide the best chance of delivery before all coal is closed in Victoria”.
Although at least one generator in Victoria has indicated it will stay open until 2035, the Australian Energy Market Operator expects coal to exit the grid sooner and has warned that premature closures pose a serious danger.
The Victorian department’s report noted many transmission projects in Australia were running behind schedule, with delays of at least a year since they were included in AEMO’s 2018 reports.
Accelerating KerangLink, also known as Victoria to NSW Interconnector West, could provide a buffer for any project delays or the earlier exit of coal, it said.
Because Victoria is home to the nation’s largest and oldest brown coal stations, the bill impacts of this “shock scenario” were more than double compared with those in other states in the National Electricity Market — NSW, Queensland, Tasmania and South Australia – and in the ACT.
The report noted that bringing the project forward would also reduce the time available for early community engagement and warned that those consequences should be minimised.
State opposition energy spokesman David Davis said the Allan government should have better planned for the risks, including allowing time for consultation.
“Instead, Labor has botched energy policy in Victoria and now, in a rush, is seeking to cover its own tracks by shortcuts on consultation and bulldozing landowners,” Davis said.
“By dithering and through their incompetence, Labor have got themselves in a corner and Victorian families are being asked to pay the price.”
The Coalition has not formally said it would scrap the KerangLink project, but it has previously tried to block planning laws that paved the way for it.
Last year Nationals leader Peter Walsh called for it to be abandoned as his party argued it was unnecessary and expensive. The Nationals recently urged landholders to hold out when negotiating deals for compensation.
Stephanie Bashir, chief executive of energy advisory firm Nexa Advisory, said the high-voltage transmission line projects started off on the wrong foot with communities through a false assumption they would accept them.
“That was a very wrong assumption, and it’s been basically paddling ever since to try and get communities and the broader public on board with the transition,” she said.
Bashir said planning and approvals now needed to be urgently expedited so the transmission lines could be shovel-ready within 12 months to ensure renewables could be built and connected before coal power plant closures.
“The key thing to manage the impact on consumer bills is to get the transition done on time,” Bashir said. “Unplanned outages and sudden closures of coal mean high prices.”
She said it was not viable to keep extending the life of ageing coal-powered stations and that delays would mean importing expensive gas as a back-up.
Victoria is expected to contribute $1.6 billion towards KerangLink, which would add $9 a year to household bills.
Energy Minister Lily D’Ambrosio said Victoria’s coal-fired power stations were increasingly unreliable.
“That’s why we’re building renewable energy projects for our future and the transmission needed to deliver cheaper, more reliable power to all Victorians.
“The Liberal-Nationals energy policy is the same anti-renewables plan they implemented when they were last in government.”
Through VicGrid, the government is creating funds for landowners and communities that host new renewable energy infrastructure such as KerangLink.
The Australian Energy Market Operator received more than 500 submissions while consulting on KerangLink options for six weeks.
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