Victoria plans to break free of national energy network

The Victorian Government has announced plans to introduce amendments to the National Electricity (Victoria) Act 2005 that will override the national regulatory regime in order to enable fast-tracking of renewable projects and improve the reliability of the state's electricity supply.

As a first step, the government will ask Australian Energy Market Operator (AEMO) to call for expressions of interest to increase the capacity of the Victoria-New South Wales Interconnector.

A statement from the Minister for Energy, Environment and Climate Change, Lily D’Ambrosio, said the move was necessitated by the vulnerability of the national energy network.

'Extreme heat has created unprecedented demand for electricity while ageing, coal-fired generators repeatedly let Victoria down. The transmission system is also vulnerable to bushfires and severe weather events, like the mini-tornado that brought down the Heywood interconnector this summer.'

Since the 2014 election, the Labor government has brought more than 1200MW of renewable energy online with 2600MW under construction. The Solar Homes program will see solar panels, solar hot water or solar batteries rolled out to 770,000 Victorian households over the next 10 years.

The Australian Energy Council has criticised the government for 'going-it-alone' on transmission developments.

AEC Chief Executive, Sarah McNamara, said that no industry consultation had been undertaken on the proposed Bill, nor had it been sighted.

“There is already a robust investment test for transmission in the energy sector, run by the Australian Energy Regulator (AER), which serves energy customers well. Bypassing that rigorous process is fraught. Every transmission and network investment will unavoidably affect market investments, so careful and individual assessments carried out at arm’s length from politics are necessary.

“This is critical to ensure not just the timing, but also the cost-effectiveness for customers who have to pay for new links, as well as providing a predictable framework for generation investors,” Ms McNamara said.

“The Australian Energy Market Operator’s (AEMO) 20-year integrated system plan released late last year highlighted a sensible, phased implementation approach for transmission infrastructure, which the industry broadly supports.

“Major investments like interconnectors can play an important role in maintaining security of supply, but commitments to them should only occur as a result of a rigorous cost-benefit analysis overseen by the AER under a national planning approach.

"The kind of state-based intervention proposed by the Victorian Government will likely create instability for would-be investors in the energy market,” Ms McNamara said.

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