Submission to NSW Office of Energy & Climate Change South West REZ Access Scheme

PIAC has provided a response to the NSW Government’s South West Renewable Energy Zone (REZ) Access Scheme.

REZs are an important tool for coordinating and co-optimising investment in renewable energy generation, storage, and transmission infrastructure. They function by providing increased rights for generators relative to generators across the rest of the energy network.

PIAC has a model for allocating the costs and risks associated with REZs fairly and efficiently. It is based on a ‘beneficiary pays’ principle and a ‘causer pays’ principle.

Applying these to the South West REZ, we argue that as key beneficiaries of the REZ, generators should contribute to the costs of it. Specifically, they should contribute more to the construction and operation costs of shared transmission assets in the REZ, and accept all the costs of ‘shallow’ transmission assets (those that serve only one generator).

We also argue that the Target Transmission Curtailment Level (TTCL) for the REZ is raised from the planned very low level of 0.54%. This is needed to avoid overprovision of transmission capacity, or ‘gold-plating’, which increases the energy prices consumers face.