PIAC lodged a submission to the NSW Government’s consultation on the access scheme governing generator connections to the Central-West Orana Renewable Energy Zone (REZ).
REZs are an important tool to meet increasingly urgent emissions reduction targets while delivering lower energy prices. The transmission investments necessary to deliver REZs are materially different to more normal transmission investments the current planning and regulatory frameworks are designed for.
Instead of being designed and built to meet consumers’ needs (such as growing demand and reliability requirements), the primary beneficiary and driver for REZ projects are connecting generators. It is evident that the current cost recovery framework is not suitable for this.
While the issues paper considers alternative access schemes, it does not fully consider necessary reforms to risk allocation and cost recovery for REZ transmission investments. An essential objective of any REZ framework must be that connecting parties should contribute to covering shared REZ network costs in return for access. To do otherwise would breach the beneficiary-pays principle and send inefficient price signals.
To achieve this, PIAC has developed a model for how the cost and risk of investment in new and existing transmission for REZs could be shared between consumers, generators, transmission network service providers, and other investors, potentially including government underwriting.
PIAC also provides detailed comments on the access scheme designs considered by the NSW Government.