MELBOURNE (Reuters) – Australia’s most populous state of New South Wales outlined plans on Monday to speed development of A$2.6 billion ($1.9 billion) worth of transmission capacity to hook up more wind and solar power.
FILE PHOTO: A solar array, a linked collection of solar panels, can be seen in front of a residential apartment block in the Sydney suburb of Chatswood in Australia, July 28, 2017. REUTERS/David Gray/File Photo
The move comes as renewable energy developers have run into problems lining up agreements to hook up new solar and wind farms due to congestion on transmission networks, making it hard to secure customers and slowing financing for new projects.
New South Wales alone has A$27 billion worth of solar and wind projects with 20 gigawatts of capacity on the drawing board.
“For every 20 projects looking to connect only one can. So we’re going to change that,” New South Wales Energy Minister Don Harwin said.
The state is working with transmission operator Transgrid to speed up planning and feasibility work on four projects needed between 2022 and 2024 to boost connections between New South Wales and its neighboring states — Queensland, Victoria and South Australia.
Renewable energy makes up about 19 percent of power generation in Australia, which still relies mainly on coal, but this is forecast to jump to 74 percent by 2040.
The existing grid is much more geared to transmitting power from coal-fired power plants, while new solar and wind farms are generally being built in outlying areas with limited transmission capacity.
Federal and state governments facing elections over the next six months are also desperate to drive down politically sensitive power prices and avert blackouts due to the rise of of wind and solar power and closures of older coal-fired plants.
Improved grid connections giving power retailers better access to regions where there is surplus power from wind and solar could lead to A$2.4 billion of savings on energy bills out to 2040, New South Wales estimated.
“Australia needs this investment to reflect our changing electricity market,” Harwin told Reuters in an interview.
Transgrid, owned by a consortium led by Spark Infrastructure Group, said the state had agreed to provide a funding guarantee for early planning work for the four transmission projects while the company seeks regulatory approval for its plans.
“Although these projects have a construction cost, the benefits they deliver through increased competition and reduced wholesale prices will deliver greater benefits, and therefore savings, to New South Wales consumers,” Transgrid said in an emailed comment.
Reporting by Sonali Paul; editing by Richard Pullin