The NSW State Government plans to attract $32 billion of investment to build the infrastructure needed to replace coal-based power with cleaner and secure energy.
The New South Wales Government announced its Electricity Infrastructure Roadmap on 9 November. It plans to attract $32 billion of private investment to build the energy generation, transmission and storage infrastructure that the state will need by 2030. Four of the state’s five coal power stations, accounting for 75% of its electricity and two-thirds of the firm required capacity during summer heatwaves, are expected to close in the next 15 years. The Roadmap sets out how they will be replaced with a cleaner and secure supply of power.
The announcement has created some controversy given the Federal Energy Policy supports the use of gas as a transition fuel. The NSW Minister for Energy and the Environment, Matt Kean, was reported as saying that gas would not be a solution for the electricity market at the National Energy Summit hosted by the AFR back in November.
The Summit also heard from several retailers who announced their intention to revisit corporate investment plans in light of the release of the Roadmap along with a call for greater policy certainty to compel the private sector to take up the challenge.
The 20-year plan aims to develop 12 gigawatts of renewable energy plus 2 gigawatts of storage capacity, mostly pumped hydro. That is in addition to the energy storage to be provided by Snowy 2.0. An additional $50 million Pumped Hydro Recoverable Grants Program will support up to 3 gigawatts of firm capacity to ensure reliable power supply.
The $32 billion investment will be focused on two of the state’s Renewable Energy Zones – Central-West Orana and New England and is projected to reduce carbon emissions by 90 million tonnes to 2030. The Roadmap, which also includes on-demand gas power generation, will help the State Government to meet its goal of net zero emissions by 2050.
Lower cost of capital
Central to the Roadmap’s call to private investors are the new Electricity Infrastructure Investment Safeguard and Long Term Energy Services Agreements. The latter is similar in concept to Power Purchase Agreements (PPA).
Both measures are intended to provide long-term certainty to investors and lower the average cost of capital.
Lower power prices
In turn, that is anticipated to result in lower prices for energy users. The State Government estimates that households will save an average $130 each year on their electricity bills over the period 2023-2040, while small businesses will save around $430 annually.
Average wholesale power prices are forecast to be $50 per megawatt-hour, compared with an estimated $73 per megawatt-hour without the new Roadmap. Industrial power prices are projected to fall to US$84 per megawatt-hour, placing them in the lowest 10% of jurisdictions in the Organisation for Economic Co-operation and Development (OECD).
New South Wales Minister for Energy and Environment Matt Kean said that the low-cost, clean energy will provide a competitive advantage, re-industrialise the state, and attract more investment, jobs and innovation. It will make it cheaper to do business at all scales.
An overview of the Electricity Infrastructure Roadmap can be found here.