Beatrice Lang
Victoria and New South Wales (NSW) have historically shared energy resources. In the early years, Victoria imported black coal from NSW for its fuel needs. In the 1920s, Victoria began exploiting its Latrobe Valley coalfields for power generation, and the State Electricity Commission of Victoria (SECV) used German technology to produce hard briquettes from brown coal. Victoria also has a history of hydroelectric power generation, with the Kiewa Hydroelectric Scheme and the Snowy Mountains Scheme contributing to the state's electricity grid. In December 2019, AEMO and TransGrid initiated a joint Regulatory Investment Test for Transmission (RIT-T) to assess the potential for increasing interconnector capacity between the two states. The proposed VNI-West interconnector is expected to increase Victoria's energy security risk by making the state heavily dependent on NSW for electricity.
| Characteristics | Values |
|---|---|
| Name of the interconnector | VNI West (Victoria to New South Wales Interconnector West) |
| Purpose | To improve security and reliability in the electricity network as coal-fired power stations retire |
| Capacity | 1.93 GW of electricity export capacity from Victoria to New South Wales, and 1.67 GW of electricity import capacity from New South Wales to Victoria |
| Current status | AEMO and TransGrid commenced a joint Regulatory Investment Test for Transmission (RIT-T) in December 2019 to assess the viability of increasing interconnector capacity |
| Potential risks | A study found that the proposed new interconnector would greatly increase Victoria's energy security risk as it would make the state heavily dependent on NSW for its electricity supply |
| Alternative energy sources | Victoria has been expanding its use of solar energy, with the majority being small-scale grid-connected rooftop solar generation |
| Historical context | In the early years, Victoria was dependent on black coal imports from New South Wales due to the low energy value of its own brown coal reserves |
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What You'll Learn
Victoria's energy security risk
Victoria has enacted Australia's most ambitious energy transition policy, aiming to cut emissions by 75-80% by 2035 and bringing forward its net-zero target to 2045. To achieve this, Victoria plans to prohibit coal power generation by 2035. However, this ambitious transition plan has raised concerns about Victoria's energy security.
Historically, Victoria has relied on black coal imports from New South Wales, and the state's major coalfields contain brown coal with high water content, making it less suitable for combustion without specialized technology. The State Electricity Commission of Victoria (SECV) promoted the use of briquettes, produced from Latrobe Valley brown coal using German technology, as a replacement for imported black coal. However, briquette usage declined with the introduction of natural gas to the state.
Currently, Victoria faces risks in its energy sector. A report by an independent agency engaged by the state government identified eight "likely" risks, which could have severe" impacts on emissions and affordability. These risks include the potential need to burn coal for longer, endure gas shortages, and face delays in developing renewable energy projects, resulting in economic harm and hindered emissions reduction efforts. Additionally, the Bass Strait fields' declining production may lead to gas shortages in Victoria, New South Wales, and Tasmania during the 2020s.
To address these challenges, Victoria is focusing on the growth of the renewable energy sector and supporting initiatives like Offshore Wind Energy Victoria (OWEV) and VicGrid. The state government has also announced a roadmap to phase out natural gas due to supply, cost, and environmental issues, transitioning to electrification, biogas, and hydrogen from clean sources. However, the energy sector remains concerned about Victoria's ability to execute its transition plan successfully, and there are speculations about the potential extension of the lifespan of coal power stations.
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VNI-West interconnector
The VNI-West interconnector is a proposed high-capacity 500 kV double-circuit transmission line between Victoria and New South Wales (NSW). The project is being jointly developed by Transgrid and Transmission Company Victoria (TCV) to connect major projects EnergyConnect in NSW and Western Renewables Link in Victoria. The interconnector will enable the transfer of clean, low-cost renewable power from renewable energy zones (REZs) in both states, particularly the wind and solar-rich regions of the Murray River REZ and the Western Victorian REZ.
The VNI-West project is designed to add 1.93 GW of electricity export capacity from Victoria to NSW and 1.67 GW of electricity import capacity from NSW to Victoria. It will improve the security and reliability of the electricity network as coal-fired power stations retire. The preferred option for the interconnector runs from Transgrid's Dinawan substation north of Jerilderie in NSW to new substations proposed near Kerang and Bulgana in Victoria, crossing the Murray River north of Kerang.
The Australian Energy Market Operator (AEMO) and Transgrid have been working on a joint Regulatory Investment Test for Transmission (RIT-T) since December 2019 to assess the viability of increasing interconnector capacity between the two states. AEMO and Transgrid released the Project Assessment Conclusions Report (PACR) on the VNI West project on 27 May 2023, which identifies the preferred network option. The PACR charts a broad corridor that connects the interconnector to the Western Renewables Link (WRL) at a new terminal station at Bulgana and then continues on to EnergyConnect in NSW at the new Dinawan substation, known as Option 5A.
The VNI-West project has faced some challenges and concerns from local communities and councils. There have been concerns about the impacts of the project on regional communities and the environment. On 20 June 2023, the NSW Minister for Energy Penny Sharpe announced a parliamentary inquiry into the feasibility of undergrounding transmission infrastructure for renewable energy projects. The project timeline has been revised, with an expected completion date of November 2030.
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Snowy 2.0 pumped storage scheme
The Snowy 2.0 Pumped Storage Power Station, also known as Snowy Hydro 2.0 or Snowy 2.0, is a pumped-hydro battery megaproject in New South Wales, Australia. It is the largest renewable energy project under construction in Australia and is expected to have a significant impact on the country's energy landscape. The project is a joint effort between Italy's tunnelling expert Webuild (formerly Salini Impregilo), Australian construction company Clough, and US-based Lane.
Snowy 2.0 is an expansion of the original Snowy Mountains Scheme, connecting two existing dams (Talbingo Reservoir and Tantangara Reservoir) through a 27-kilometre underground tunnel and a new underground pumped-hydro power station. The power station will be located 800 metres underground in the Kosciuszko National Park, minimising its environmental impact within the park. The project includes the construction of the world's largest Inclined Pressure Shaft (IPS), which will facilitate the return of water to the upper reservoir when the pump-turbines operate in reverse.
The Snowy 2.0 scheme will function as a giant battery, absorbing, storing, and dispatching energy. During periods of low demand, the system will pump water using electricity and store it in the upper reservoir. When energy demand is high, the stored water will be used to generate and dispatch electricity within minutes. This flexibility will allow for the maximisation of renewable energy sources, such as solar and wind power, by storing excess energy for later use.
Snowy 2.0 is expected to provide 2,200 megawatts of dispatchable, on-demand generating capacity and approximately 350,000 megawatt-hours of large-scale storage to the National Electricity Market. This additional storage capacity will be crucial in supporting the transition to a low-carbon emissions future and ensuring a stable and reliable energy supply for Australia. The project is currently facing delays due to various factors, including the COVID-19 pandemic, supply chain issues, and complex design and geological challenges. The project is now expected to be generating power by late 2027 and fully operational by the end of 2028.
In terms of electricity transfer between Victoria and New South Wales, the VNI West (Victoria to New South Wales Interconnector West) project aims to increase interconnector capacity between the two states. AEMO Victoria Planning (AVP) and Transgrid have been working together to assess the viability of enhancing electricity export and import capabilities. The project is expected to add 1.93 GW of electricity export capacity from Victoria to New South Wales and 1.67 GW of electricity import capacity in the opposite direction. This initiative will improve the security and reliability of the electricity network as coal-fired power stations retire.
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Solar energy usage
Solar energy is created by the heat and light of the sun. There are two main types of solar power technology: solar photovoltaic (PV) and solar thermal. Solar PV converts sunlight directly into electricity using semiconductor cells, while solar thermal technologies use the wave-like nature of sunlight to create heat. Concentrated solar thermal (CST) power systems focus sunlight on a single point, and the captured heat energy can be stored in water, air, or molten salts and then converted to electricity as required.
The share of solar and wind in NSW's energy mix has more than doubled from 5% in 2015 to 12% in 2019. Solar PV generated approximately 10% of Australia's electricity in 2020-21, and is the fastest-growing generation type in the country. More than 30% of Australian households now have rooftop solar PV, with a combined capacity exceeding 11 GW. Large-scale solar farms are also on the rise in Australia, with almost 7 GW of generation connected to the country's electricity grid.
The Australian Renewable Energy Agency (ARENA) has provided more than $230 million to around 130 solar research and development projects since 2012. This includes $80 million to the Australian Centre of Advanced Photovoltaics (ACAP). ARENA's purpose is to support the global transition to net-zero emissions by accelerating the pace of pre-commercial innovation, benefiting Australian consumers, businesses, and workers.
In December 2019, the Australian Energy Market Operator (AEMO) and TransGrid commenced a joint Regulatory Investment Test for Transmission (RIT-T) to assess the viability of increasing interconnector capacity between Victoria and New South Wales. AEMO manages the day-to-day operations of electricity and gas markets and information services, as well as providing strategic forecasting and planning advice. AEMO has strategic partnerships with institutions and energy brands across Australia and globally, including the Bureau of Meteorology (BOM) and CSIRO.
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Gas shortages in Victoria, NSW, and Tasmania during the 2020s due to extreme weather
Victoria, New South Wales, and Tasmania may face gas shortages during the 2020s due to extreme weather events and declining production from the Bass Strait gas fields. The Australian Energy Market Operator (AEMO) has warned that gas demand is expected to peak during winter, when there is less solar power and "wind droughts," impacting renewable energy generation.
In March 2023, AEMO forecasted that gas output in NSW, South Australia, Victoria, the Australian Capital Territory, and Tasmania would meet demand until 2027. However, they cautioned that customers could face shortfalls, especially during cold weather combined with low renewable energy production. AEMO's chief executive, Daniel Westerman, stated that the risk of gas shortfalls is expected annually from winter 2023 to 2026 in the southern jurisdictions under extreme weather conditions.
The situation is more critical in Victoria, which has a relatively high dependence on gas space heating. AEMO projected that Victoria's total available supply from the Gippsland region would drop by 13% in 2023 compared to 2022, and further decrease to half of its output by 2027. As a result, Victoria is forecast to become a net importer of gas from winter 2027, according to AEMO.
The Victorian state government has recognized the challenges posed by supply gaps and has announced a roadmap to phase out natural gas due to supply, cost, and environmental concerns. The plan includes a transition to electrification, biogas, and hydrogen from clean sources. However, the timeline for large-scale hydrogen adoption is expected to be around 2040, leaving a potential gap in the energy mix during the 2020s.
To address the risk of gas shortfalls, AEMO and TransGrid initiated a joint Regulatory Investment Test for Transmission (RIT-T) in December 2019 to assess the feasibility of enhancing interconnector capacity between Victoria and NSW. This project, known as VNI West, aims to increase electricity export capacity from Victoria to NSW by 1.93 GW and improve import capacity from NSW to Victoria by 1.67 GW. The final report in the RIT-T process, the Project Assessment Conclusions Report (PACR), outlines the preferred network option for VNI West, connecting it to the Western Renewables Link (WRL).
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Frequently asked questions
VNI-West is a proposed massive new Victoria-New South Wales interconnector that will add 1.93 GW of electricity export capacity from Victoria to New South Wales, and 1.67 GW of electricity import capacity from New South Wales to Victoria.
The VNI-West will improve security and reliability in the electricity network as coal-fired power stations retire.
In December 2019, AEMO and TransGrid commenced a joint Regulatory Investment Test for Transmission (RIT-T) to assess the viability of increasing interconnector capacity between Victoria and New South Wales.
AEMO (Australian Energy Market Operator) manages the day-to-day operations of a number of electricity and gas markets and information services, as well as providing strategic forecasting and planning advice.
