NSW Electricity Infrastructure Investment Bill 2020

Thursday, November 26, 2020

WHAT HAS HAPPENED?

As coated in our earlier article right here, the NSW Authorities launched its Electrical energy Infrastructure Roadmap (the Roadmap) on 9 November 2020. The Roadmap units out a framework to ship a contemporary electrical energy system which might set NSW as much as be a “international power superpower”. 

Since then, the Electrical energy Infrastructure Funding Invoice 2020 (NSW) (Invoice) was launched to provide authorized impact to the important thing options of the Roadmap. The Invoice has now handed each homes  of the NSW Parliament with the help of all main events, though the decrease home might want to verify its settlement to some minor amendments made within the higher home earlier than the Invoice might be despatched for assent and grow to be regulation. The brand new laws will begin on a date to be appointed by proclamation. 

WHY IS IT IMPORTANT? 

New South Wales (NSW) is at a important juncture in its power journey. 

4 of NSW’s 5 coal fired energy stations (which at the moment present 75% of NSW’s power provide) are scheduled to shut over the subsequent 15 years, beginning in 2022. This opens up huge alternatives for the renewables sector to fill this hole. It’s estimated that that AU$5.1 billion of long-duration power storage and between AU$22.four and AU$33.6 billion of wind and photo voltaic funding can be required to fulfill the power necessities of NSW and keep a dependable provide.

Whereas NSW has a number of the greatest renewable power and pumped hydro assets on the earth, the present NSW electrical energy system has not been in a position to harness this energy.

The Roadmap represents a ‘complete of system strategy’ to ship new era, transmission and lengthy length storage and firming, primarily based on 5 key pillars:

Funding into regional NSW

Vitality storage infrastructure

Renewable Vitality Zones

Grid safety and reliability

Harnessing trade alternative.

It’s anticipated that the Roadmap will ship AU$32 billion in non-public sector funding by 2030 and help 6,300 development jobs and a couple of,800 ongoing jobs in 2030, principally in regional NSW.

KEY FEATURES OF THE ROADMAP AND THE BILL

Renewable Vitality Zones (REZs)

REZs are the centrepiece of the Roadmap. REZs are meant to perform as “the modern-day equal of conventional energy stations”. 

Underneath the Invoice, the Minister has the facility to declare REZs comprising of specified geographical areas and specified electrical energy infrastructure with or with out an software, topic to some procedural steps. 

Three REZs had been proposed within the Roadmap, however an additional two REZs had been included within the Invoice arising from amendments. The Minister will now initially declare 5 REZs, being:

Central-West Orana with an meant capability of 3GW (see indicative map right here);

Illawarra (map not but out there);

New England with an meant capability of 8GW (see indicative map right here);

South West (map not but out there); and

Hunter-Central Coast (map not but out there).

The existence of an REZ permits different options of the Invoice (outlined beneath), nevertheless, there may be nothing within the Invoice which gives for fast-tracking of renewable power tasks in REZs. That is regardless of the NSW Authorities’s dedication within the Roadmap to help planning processes for REZ tasks. 

We anticipate that any adjustments to planning processes for REZs can be achieved:

administratively (as per the Division’s present Planning System Acceleration Program); and

probably, by reforms to environmental planning devices or the Environmental Planning and Evaluation Act (1979) (NSW) (EP&A Act), which might be progressed through the Minister for Planning and Public Areas (fairly than the Minister for Vitality and Surroundings who’s accountable for this Invoice).

New energy to close down controversial power tasks in REZs

A considerably counterintuitive inclusion within the Invoice is a brand new energy for Vitality Company of NSW to prohibit the connection to the grid of recent era or storage tasks of higher than 30MW that are considerably opposed by the neighborhood and don’t but have growth consent underneath the EP&A Act (topic to the management or course of the Minister for Vitality and Surroundings). This presents a danger for renewables tasks inside REZs which doesn’t exist in areas outdoors REZs. 

To mitigate the danger of renewables developments being shut down in REZs, we advocate that builders: 

implement stakeholder engagement methods at an early stage;

design tasks round important constraints or considerations; 

foster help from native communities and authorities; and

be certain that planning functions and related environmental assessments are legally reviewed and refined in session with neighborhood and authorities. 

Funding in REZ Community Infrastructure 

The Roadmap and the Invoice create a brand new framework to help funding within the community to allow renewables era in REZs and create extra certainty for traders. 

Key components of the framework embrace:

Entry schemes for REZs to make sure strategic and optimum use of recent transmission infrastructure by coordinated funding in transmission infrastructure and neighborhood profit tasks, funded by members within the entry scheme.

A “client trustee” who will symbolize the pursuits of NSW shoppers and:

An “infrastructure planner” who will coordinate the design and growth of REZs and can make suggestions to the buyer trustee about REZ community infrastructure tasks.

An influence for the Minister to direct community operators to hold out:

community infrastructure tasks in REZs on advice of the buyer trustee; or

precedence transmission infrastructure tasks, the place wanted for power safety. 

A value-recovery course of for community operators who perform REZ community infrastructure tasks or precedence transmission infrastructure tasks to get well prices:

at an quantity decided by an appointed “regulator”; and

paid by a scheme monetary car (being an organization restricted by shares underneath the Firms Act 2001 to be established by a “monetary trustee”) by a brand new Electrical energy Infrastructure Fund (described beneath). 

New regulation-making powers to change off or modify provisions of the Nationwide Electrical energy (NSW) Regulation (NEL) or the Nationwide Electrical energy Guidelines (NER) with concurrence of AEMO, together with to create REZ-specific guidelines. 

Funding in Vitality Safety and Firming Capability

The Roadmap identifies the necessity for funding in storage and firming capability as a result of variability of wind and photo voltaic era. 

To make sure that the State has enough firming capability and dependable electrical energy provide, the Invoice gives for:

A brand new “power safety goal monitor” with data gathering powers to calculate and report on annual power safety targets to make sure that enough capability is on the market within the community at peak occasions. 

An “electrical energy infrastructure funding safeguard” comprising of:

legislated targets for brand spanking new infrastructure;

a course of for the buyer trustee to plan the event pathway to assemble new era, lengthy length storage and firming infrastructure; and

long-term power service agreements (LTES Agreements) awarded by a aggressive tender course of run by the buyer trustee.

LTES Agreements can be spinoff agreements which:

present for the development and operation of recent renewable power or storage infrastructure; and

give builders an choice to train a monetary spinoff association to provide certainty that the venture can earn an agreed minimal stage of income.

Put merely, underneath LTES Agreements, shoppers will underwrite the danger of community infrastructure tasks by the scheme monetary car. 

The LTES Agreements may have provisions to encourage tasks to come back on-line rapidly and are meant to offer a significant incentive for traders.

Electrical energy Infrastructure Fund 

The Invoice creates a brand new Electrical energy Infrastructure Fund (Fund) for the scheme monetary car to fulfill its liabilities, together with to pay for community infrastructure tasks and to fulfill its liabilities underneath LTES Agreements. 

The Invoice requires cash to be paid into the Fund, together with by members in entry schemes and distribution community service suppliers (DNSPs). 

The Fund basically gives a mechanism for shoppers and members to pay for funding in community infrastructure, though it’s touted that households will general lower your expenses on their electrical energy payments underneath the reforms. 

New Board, Plan and Advocate of Jobs within the Renewable Sector

Jobs and financial growth are key coverage drivers of the Roadmap, and the Invoice was amended by parliament to incorporate further provisions to “be certain that no regional neighborhood can be left behind”. 

Specifically, the Invoice:

consists of objects and reforms focussed on native jobs and financial growth, together with native manufacturing, training and coaching, and employment for Aboriginal and Torres Strait Islander folks; 

establishes a NSW renewable power sector board to be appointed by the Minister with trade, union and client representatives;

requires the brand new board to develop a plan for the NSW renewable power sector (which can then be accepted by the Minister) setting out how community infrastructure can help native producers, native jobs and native coaching alternatives;

requires the Minister and client trustee to take the plan into consideration when exercising features underneath the laws; and

gives for the appointment of a brand new electrical energy infrastructure jobs advocate to offer recommendation to the Minister.

Funding for Inexperienced Hydrogen

Hydrogen is quickly growing as a world power supply, as mentioned in our Hydrogen Rising podcast and The H2 Handbook. 

The Invoice gives constructive help in direction of growing inexperienced hydrogen by together with a brand new legislative dedication of AU$50 million in funding to develop the inexperienced hydrogen sector from 2021 and 2030 out of the Local weather Change Fund. 

WHAT IT MEANS FOR RENEWABLES PROJECTS

The Roadmap and the Invoice exhibit that the NSW Authorities is dedicated to supporting renewable power tasks by funding in infrastructure to allow large-scale era, storage and transmission. 

Whereas it’s not but clear what reforms can be made to facilitate planning approvals in REZs, we count on that the brand new REZs will facilitate growth for renewables tasks the place builders can exhibit that the venture:

has help of the area people; 

will create important financial advantages and employment in NSW; and

delivers advantages by way of power safety and reliability.