The regulatory process for new transmission projects must be improved to strengthen social licence and speed up the multi-billion-dollar expansion of the grid that is critical to the transformation to cleaner energy, an Australian Energy Market Commission (AEMC) review says.

In its final stage of a review of the transmission planning and investment framework, the AEMC has recommended transmission businesses carry out more extensive planning for major projects earlier in the development cycle.

AEMC Chair Anna Collyer says the reform will enable transmission businesses to obtain more certainty around cost recovery to then identify potential issues in the project earlier. This will help to safeguard the long-term interests of consumers during the transition to renewable energy. 

“Enabling them to complete planning work earlier, means they can further engage and build social licence with communities, which is vitally important to enabling the energy transformation,” Ms Collyer said.

“Social licence activities that may be carried out sooner as a result of these recommendations include stakeholder engagement, land use mapping, social, cultural environmental and economic risk assessments and engineering design.”

The AEMC also considers there may be opportunities to further improve how AEMO’s Integrated System Plan (ISP) and the regulatory investment test for transmission (RIT-T) work side by side with regard to transmission projects. The AEMC will continue to work with stakeholders, to deliver a review of the ISP framework next year.

All of the final recommendations in the review are designed to support efficient investment in and timely delivery of large transmission infrastructure, that will be required to unlock gigawatts of renewable energy as the sector transforms.

In addition, the report proposes rule changes that will more explicitly consider emissions reduction in transmission planning.

Last August, Energy Ministers agreed to fast-track the introduction of an emissions reduction objective in the national energy objectives, providing greater clarity to Australia’s three energy market bodies to consider emissions reduction when they carry out their respective powers and functions.

Ms Collyer says transmission plays a crucial role in enabling the transition to a low-carbon economy.

“The inclusion of emissions reduction targets within national energy objectives lays the foundation for the transformation towards a carbon-neutral energy sector,” Ms Collyer said.

“Through the timely development of a more interconnected transmission system, we can facilitate the integration of renewable energy and reduce emissions at the lowest cost, while keeping power supplies secure for Australians.”

The AEMC is recommending a ‘harmonising’ rule change process to align the national energy rules with the energy objectives once they have been revised. 

A harmonising rule change would help to ensure that transmission investment decisions transparently balance emissions, price, quality, safety, reliability and security, thereby supporting the energy transition to net zero.

The Stage 3 report concludes the AEMC’s Transmission planning and investment review. Work is now underway on three rule change requests submitted by the Minister for Climate Change and Energy, Chris Bowen, to begin the process of implementing our recommendations on social licence, financeability and concessional finance. 

The AEMC will hold a public forum on 16 May. This will provide an overview of the final recommendations of the Stage 3 report. Interested stakeholders can register for the forum.

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