Go slow: Is offshore winding being wound back to justify VNI West?

The $3.2 billion VNI West transmission line project looks like a white elephant, writes Peter Hunt.

At least 25,000MW of publicly announced offshore wind projects have been announced, which would undermine the need for VNI West.

ANALYSIS
Serious questions on the rollout of the VNI West project remain unanswered, which is alarming given Victorian and NSW electricity customers will be paying off the $3.282 billion cost of the 500kV transmission line and substations for years to come.

Energy Minister Lily D’Ambrosio is rushing to rollout the project, issuing a May 27 order giving the Australian Energy Market Operator a monopoly over early work on VNI West.

AEMO, which is 60 per cent owned by the federal and state governments, has already set up a subsidiary – Transmission Company Victoria – to undertake early works.

At the same time Minister D’Ambrosio has pulled AusNet off building new transmission infrastructure to develop the Gippsland Renewable Energy Zone, putting planning of the project’s transmission corridor into government-owned entity VicGrid’s hands.

The Weekly Times asked AusNet if it was “originally proposing to develop the new transmission infrastructure in Gippsland on its own, as an unregulated investment, until VicGrid took over?”

AusNet Services spokeswoman Karen Winsbury said “Yes, but we welcome VicGrid’s co-ordination role in Gippsland.”

So, what’s happening? Is there a connection between what’s occurring in the state’s east and west?

We already know the development of the Gippsland REZ and offshore wind threaten to undermine the need for VNI West.

AEMO’s own analysis shows that if Victoria developed just 9000MW of offshore wind by 2040-41, the net benefits of its preferred Bulgana-Dinawan VNI West option would slump from $1.827 billion to $913 million.

Yet the Clean Energy Council says it has “companies that are actively developing more than 25,000MW of publicly announced offshore wind projects” in Gippsland and Portland waters.

What’s worrying is that VicGrid has already hit the go-slow button on planning the roll out of transmission corridors and connections for these offshore wind developments.

CEC’s May submission to VicGrid’s offshore wind road map states “we have concern that VicGrid is not adequately planning for transmission build in line with the opportunity for offshore wind developments in the Gippsland and Portland regions”.

As for the Gippsland REZ, Professor Bartlett’s analysis shows AEMO’s national integrated transmission plan placed a 2000MW limit on onshore wind and solar development and imposed a “transmission expansion cost” on the region of $570,000 per megawatt.

Professor Bartlett and Victoria Energy Policy Centre director Professor Bruce Mountain say the Latrobe Valley’s transmission capacity could almost be doubled along existing powerline easements, allowing GREZ and up to 10,000MW in Gippsland offshore windfarm developments to feed directly into Melbourne.

All this begs the question are AEMO and Minister D’Ambrosio trying to slow down the rollout of the Gippsland REZ and transmission infrastructure for offshore wind, given they will undermine the need for VNI West?

All eyes should be on VicGrid and how it develops GREZ and responds to CEC concerns that “any delays to transmission will ultimately be delays on connecting Victoria’s offshore wind capacity to the grid”.