Two of Australia’s major renewable energy transmission projects have been given the green light despite not going through a mandatory scrutiny process, a move that could put $9 billion (US$5.9 billion) of taxpayer money at stake and allow cost blowouts to go under the radar.
New South Wales (NSW) grid operator Transgrid is building three massive transmission projects under a simultaneous program.
This includes HumeLink, which will connect the new Snowy Mountains Hydroelectric Scheme and the renewable energy sources in the South West NSW to Sydney, Wollongong, and Newcastle via the Bannaby substation.
Other projects are VNI West, which will connect the grids in NSW and Victoria, and EnergyConnect, which will move energy through South Australia, Victoria, and NSW.
However, the think tank Centre for Independent Studies (CIS) said that the Humelink and VNI West projects did not have to go through a mandatory consultation process.
The independent think tank said this occurred after the Australian Energy Regulator (AER) issued a waiver to the Australian Energy Market Operator (AEMO).
The AEMO then gave Transgrid feedback loop notices, which confirmed that the projects remained aligned with the latest integrated system plan.
CIS Energy Program Director Aidan Morrison warned that the move would add $9 billion to consumers’ bills, as the consultation process might reveal the hidden costs of the projects.
“With $9 billion at stake, it’s very important to be transparent and follow the process,” he said in a media release.
“However AER has done the opposite. They have allowed AEMO to skip the consultation process that might expose unrealistic estimates of the benefits of these projects.”
Mr. Morrison noted that there had been “substantial cost increases in these projects—more than $1.5 billion—yet AEMO keeps revising the net benefits of these projects upwards to justify continuing with them.”
“These figures don’t add up,” he said.
Humelink is estimated to cost $4.88 billion, while VNI West is estimated to cost $3.96 billion.
The expert added that Energy Minister Chis Bowen has “advanced a rule change request that would enable AEMO to routinely avoid consultation over Feedback Loop notices.”
“There appears to be a coordinated push between AEMO, AER, and the Energy Minister Chris Bowen to avoid scrutiny over the energy transition,” Mr. Morrison said.
Project Timelines Questioned
According to the AEMO Integrated System Plan, HumeLink is due to be operational by 2026, VNI West by 2031, and EnergyConnect by 2024-2025.However, Mr. Morrison argued that Transgrid was rushing its projects forward “contrary to good public sector processes,” urging for their delay or cancellation.
“They are rushing through approvals for Humelink so it can be built by 2026, but their own modelling has it being built three years later,” he noted.
“This is because, to make the numbers work, they have cherry-picked a date that brings Humelink completion into perfect alignment with Snowy 2.0, Central West Orana REZ, VNI West, and even a La Nina event.”
“But the analysis done by AEMO and the AER doesn’t require these projects be rushed at all. They should at least be delayed and maybe even cancelled instead.”
While the chair of the AER claimed that the regulator had the right to issue a waiver to skip the consultation process, barrister James Glissan questioned the legal basis for the AER waiver.
“That discretion does not appear to exist other than in the mind of the regulator. It is not to be found in the legislative instruments,” he told the CIS.
