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Jul 10 2020

New England REZ needs to make economic sense

The New South Wales Government’s plan to expedite the construction of a Renewable Energy Zone in the New England region may create some short-term construction jobs, but more work needs to be done to understand whether it is needed and if it will bring down power prices, the Australian Energy Council said today.

While this is a relatively attractive location for NSW renewable energy projects, any commitments should follow the Australian Energy Market Operator’s national Integrated System Plan (ISP), which, in the short-term, prefers renewable energy investment being directed either closer to the existing grid or to superior locations in other states.

AEMO’s draft ISP recommended the New England REZ for development in 2036.

“The AEC supports the national planning process overseen by AEMO and the Australian Energy Regulator. This process includes a rigorous and independent cost-benefit analysis critical to understanding the impacts on supply and consumers’ bills,” said Sarah McNamara, Chief Executive of the AEC.

“Deviations from the national plan create confusion for market investors, can discourage private investment and can result in upward pressure on energy prices for customers.”

"The COVID-19 pandemic and recession mean many customers are already struggling to pay their bills.  It is also too early to know their impact on future electricity demand.  So, it is critical that projects are carefully planned to ensure they are necessary and that they will deliver the best value and lowest cost for the grid, and lowest prices for consumers,” said Ms McNamara. 

The most recent draft ISP studied a large wish list of potential zones, promoted by developers along with transmission companies and state governments, but proposed caution in terms of timing.

"The cost savings of harvesting sun and wind energy a long way from population centres often do not outweigh the cost of transporting it long distances. It is crucial that each project is shown to be economically justifiable in its own right, consistent with the ISP and places downward pressure on customer bills,” said Sarah McNamara.

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The Australian Energy Council represents 22 major electricity and downstream natural gas businesses operating in competitive wholesale and retail energy markets. These businesses collectively generate the overwhelming majority of electricity in Australia and sell gas and electricity to over 10 million homes and businesses.

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