A suite of options that consider the timeliness and efficiency of the delivery of major transmission projects have been put forward in a draft report published by the Australian Energy Market Commission (AEMC) today.
The AEMC’s draft recommendations are designed to help manage uncertainty in the delivery of large-scale energy transmission infrastructure in the longer term, by looking at potential reform around the economic assessment process of major projects.
Chair of the AEMC, Anna Collyer said the third stage of the Transmission Planning and Investment Review examines whether there is an opportunity to simplify the regulatory framework to support the fundamental transformation of the energy market toward net zero.
“Transmission infrastructure is critical to enable Australia’s transition to renewable energy, while ensuring secure, reliable, affordable, and sustainable energy for consumers.
“We need to ensure the National Energy Market’s transmission network is fit for purpose and ready for the renewables and storage investment needed for the decarbonisation task ahead,” Ms Collyer said.
The draft report calls for stakeholder feedback on three options which set out a spectrum of alternatives to the current economic assessment process for actionable ISP projects. Actionable ISP projects are network investments that have been identified by AEMO as being critical to addressing cost, security, and reliability issues in the grid.
The three areas of potential reform to the economic assessment process for major projects are as follows:
- Option 1 – enabling early works to start sooner and to commence before the Regulatory Investment Test for Transmission (RIT-T).
- Option 2 – the RIT-T is simplified to choose the preferred option through a least cost assessment
- Option 3 – the RIT-T is removed in favour of an improved ISP assessment.
AEMC Chair Anna Collyer said the economic assessment process should provide both investors and consumers with confidence and allow for the timely delivery of projects to support the transition to net zero.
“When it comes to transmission, it is critical we strike a balance between getting the right investment to achieve net zero, with delivering projects at the right time and as cost-effectively as possible to ensure the best outcomes for consumers,” Ms Collyer said.
Recent significant changes, including the introduction of the Climate Change Bill 2022 and the agreement for an emissions objective to be incorporated into the National Energy Objective, indicate an increase in emissions abatement ambitions and highlight the increasing role of the energy sector in realising these ambitions.
Ms Collyer said emissions abatement is currently factored into transmission planning.
“In saying that, the AEMC will continue to monitor developments so that the rules can be kept up to date, delivering evolving policy and statutory abatement obligations in the most appropriate and efficient manner,” she said.
The report also recognises the crucial role the federal government has in providing funding and coordination for transmission projects that help drive the energy transition, particularly in the context of its Rewiring the Nation policy.
Further guidance around concessional financing would provide TNSP’s, investors, consumers and market bodies with more clarity on how this will be treated in the regulatory framework.
A public forum will be held on 04 October 2022 to provide an overview of the key findings and positions in the draft report. Stakeholders who are interested in participating can register here.
Stakeholders have until 03 November 2022 to make submissions on the Stage 3 draft report.
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