In 2016, ElectraNet began exploring options to reduce the cost of providing secure and reliable electricity, enhance power system security in South Australia, and facilitate the long-term transition of the energy sector across the National Electricity Market (NEM) to low emission energy sources.

In November 2016, ElectraNet released a Project Specification Consultation Report (PSCR) that explored the technical and economic feasibility of a new interconnector between South Australia and the eastern states as well as other non-network solution options, through the SA Energy Transformation Regulatory Investment Test for Transmission (RIT-T).

The RIT-T is the economic cost benefit test that is overseen by the Australian Energy Regulator (AER) and applies to all major network investments in the National Electricity Market.

In June 2018, a Project Assessment Draft Report (PADR) was released identifying that the construction of a new, high-capacity interconnector between South Australia and New South Wales would deliver substantial net benefits to customers.

In February 2019, following extensive consultation with stakeholders we released the SA Energy Transformation Project Assessment Conclusions Report (PACR) as the final step in the RIT-T process.

The RIT-T PACR estimated the cost of the project to be $1.53 billion with a completion date of 2022 to 2024.

To deliver the project, ElectraNet is partnering with TransGrid, the manager and operator of the high voltage electricity transmission network in NSW. Should the project be approved, TransGrid would fund the works within its jurisdiction.

In April 2019, ElectraNet requested the AER make a determination under clause 5.16.6 of the National Electricity Rules (Rules) that the preferred option identified satisfies the requirements of the RIT-T. This step was necessary as a precondition for ElectraNet and TransGrid to seek contingent project funding from the AER.

On 24 January 2020, the AER approved the RIT-T describing the business case for project as “robust” and determining that the proposed interconnector remained the most “credible option that maximises the net economic benefit” in the NEM, ultimately benefiting electricity customers.

While the AER concluded that it is “satisfied the RIT-T has been successfully completed”, it noted that “any significant changes to the costs of the preferred option could have a material impact on the outcome of the RIT-T”.

The AER’s RIT-T determination is available on the AER website.

The project known as Project EnergyConnect has a stand-alone website with public information which can be accessed at www.projectenergyconnect.com.au      

Updated Cost Benefit Analysis

Since the RIT-T was concluded with publication of the PACR in February 2019 there have been significant changes in both project costs and benefits from what was assessed in the RIT-T.

ElectraNet has investigated whether there has been a “material change of circumstances”, considering this new information on both costs and benefits. The focus of this investigation was to see if the new information might lead to a change in the preferred option and thereby require reapplication of the RIT-T.

This involved working closely with the Australian Energy Market Operator (AEMO) to update key variables and inputs that impact on the market benefits of the project to align with its 2020 Integrated System Plan (ISP). We fully aligned our analysis to be consistent with the 2020 ISP to the extent practicable.

The updated cost benefit analysis also involved the application of thermal generator variable heat rates in the market modelling. More information on this is available here.

The AER has closely reviewed the outcomes of ElectraNet’s updated cost benefit analysis and in September 2020 endorsed ElectraNet’s conclusion that there has not been a “material change of circumstances” and that Project EnergyConnect continues to be the preferred option delivering benefits to customers.

Both ElectraNet and TransGrid have been working through competitive procurement processes with construction contractors and are committed to delivering Project EnergyConnect at the lowest possible cost to customers.

Contingent Project Application

ElectraNet submitted a Contingent Project Application (CPA) or funding application, to the Australian Energy Regulator on 30 September 2020.

To view the CPA, please see the Australian Energy Regulator’s website.

ElectraNet has subsequently reached agreement with the South Australian Government to undertake a range of early works on the project which will allow us to bring forward the completion date. ElectraNet has advised the AER of a completion date of March 2023 and is working on achieving the fastest possible delivery schedule.

This results in a change to the timing of the capital expenditure and revenue required to deliver by this earlier date, which we have provided to the AER in an update to our CPA. Importantly, there is no overall increase to the capital cost of the project.

The AER received a number of submissions on the CPA from stakeholders. We have prepared a summary of the key issues raised and our responses.

Stakeholder Engagement

ElectraNet remains committed to engaging with stakeholders on Project EnergyConnect.

On 9 October 2020, ElectraNet and TransGrid held a webinar to provide stakeholders with an update on Project EnergyConnect, including the results of updated cost benefit analysis undertaken by ElectraNet and reviewed by the Australian Energy Regulator (AER) in recent months.

The webinar also presented updated independent customer price impact analysis and overviews of Contingent Project Applications ElectraNet and TransGrid submitted to the AER on 30 September 2020 seeking the capital expenditure and revenue required to deliver the South Australian and New South Wales components of the project respectively.

The webinar slide pack is available here.

ElectraNet’s Project EnergyConnect Updated Cost Benefit Analysis Report is available here.

The summary of questions asked and our responses is available here.

The ACIL Allen customer price impact report is available here.

On 20 August 2020, ElectraNet held a webinar to provide stakeholders with an update on Project EnergyConnect and an overview of the updated cost benefit analysis being undertaken for the project.

We appreciate the high level of interest in the project and participation at the webinar.

The webinar slide pack is available here.

A record of questions raised by stakeholders at the webinar and in subsequent discussions, together with our responses, is available here.

A summary of the EnergyQuest report on long-term gas price forecasts referred to in the webinar is available here.

On 24 July 2020, we invited stakeholder submissions on the application of variable heat rates to thermal generators in the time-sequential market modelling of our updated cost benefit analysis by 7 August 2020.

Click here to see our summary of what we’ve heard in submissions and how we are responding.

See below for the submissions following our July 2020 Stakeholder Update:

• Public Interest Advocacy Centre (PIAC)
• Energy Users Association of Australia (EUAA)
• Reach Solar
• ERM Power
• Major Energy Users
• Energy Australia

Click here to see the 6 August 2020 stakeholder update.

Click here to see the 24 July 2020 stakeholder update.

How to Contact Us

If you have any comments or questions in relation to ElectraNet’s updated cost benefit analysis for PEC or any other aspect of the Project, please contact us at consultation.enet@electranet.com.au and we will be happy to arrange an opportunity to discuss.