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Transmission to play a key role in 2019

We are only a few weeks into 2019, but it is already clear that the transmission network will be a key topic for the year.

Planning, investment, congestion, access, charging, renewable energy zones, transmission upgrades, new interconnectors, marginal loss factors, frequency control and connections are all on the list. That’s already quite a list and no doubt there’s more to come!

Planning, investment, charging, congestion and access

While most of us were winding down for Christmas, the energy market bodies were busy finalising reports relating to transmission. The Energy Security Board (ESB) released advice on how to make the Australian Energy Market Operator’s (AEMO) Integrated System Plan (ISP) ‘actionable’, while the Australian Energy Market Commission (AEMC) released the final report on its review of the coordination of generation and transmission investment. Together these reports outline a considerable pipeline of work to reform the planning, investment, charging, congestion and access elements of the transmission network.

Most significantly, the AEMC recommends a new framework to make generators’ access to the transmission network and congestion management fit-for-purpose for the energy transformation. Through a phased approach to 2023, the market rules will be changed to implement a dynamic regional pricing regime followed by changes to allow connecting parties to purchase firm transmission rights or firm access to the network. For those who were around in 2014-15, the access changes appear to have a number of similarities with the shelved optional firm access proposal.

Renewable energy zones (REZs) were first suggested in the Finkel Review and then identified in AEMO’s ISP. Both the AEMC and ESB make recommendations relating to REZs. The AEMC suggests that REZs are best achieved by changing the access regime. Under the new access arrangements, REZs would emerge as a consequence of generators’ and prospective generators’ commercial locational investment decisions. The ESB suggests a fund should be set up for shared connections costs for REZs. The CEC has long supported the idea of REZs but we are still assessing whether these recommendations are sufficient to ensure REZs can develop efficiently and benefit generators.

There are more recommendations in the two reports, but the following are worth highlighting:

  • enhancements should be made to the ISP to make it ‘investment grade’
  • changes should be made to streamline and improve the regulatory investment test for transmission (RIT-T), particularly by allowing the ISP to replace the initial step of the RIT-T process
  • a fund should be set up to underwrite expenditures on ISP Group 1 projects that are time critical
  • the AEMC should review the current transmission charging arrangements, namely transmission use of system (TUOS) and inter-regional TUOS charges.

Work to action the recommendations in both reports will commence in coming months, and the CEC will certainly be involved. Briefings are organised for members on these reports for 5 February (AEMC) and 14 February (ESB).

Transmission upgrades and new interconnectors

Regulatory approval processes (or RIT-Ts) for several transmission upgrades and new interconnectors are underway and at different stages of the process.

ProjectNext steps
AEMO and TransGrid’s Victoria to NSW Interconnector Submissions on the Project Specification Consultation Report (PSCR) are due on 15 February 2019
TransGrid and Powerlink’s Queensland-NSW Interconnector (QNI) Submissions on the PSCR are due on 22 February 2019
AEMO’s Western Victoria Renewable Integration Submissions on the Project Assessment Draft Report are due on 28 February 2019
ElectraNet’s SA Energy Transformation (new interconnector between SA and NSW) The Project Assessment Conclusions Report is due to be release by the end of February 2019
TasNetwork’s Project Marinus (new interconnector between Tasmania and Victoria) An Initial Feasibility Report is likely to be released in February 2019

The CEC is monitoring each of these projects, will advise members on progress and will lodge submissions where appropriate.

Powerlines Wmu

Marginal loss factors

The marginal loss factors (MLFs) announced in April 2018 saw some MLFs fall by as much as 22 per cent. This had industry coming to us and AEMO with concerns about the MLF methodology. AEMO has heard these concerns and may commence a holistic review of MLFs after it releases this year’s MLFs in April 2019. At the same time, the AEMC has received rule change proposals relating to MLFs and is considering undertaking a holistic review of MLFs themselves. The CEC is engaging with both AEMO and the AEMC and once we have clarity about how MLFs will be reviewed, we’ll be working with members to figure out what MLF regime would be best for the clean energy industry.

Frequency control

On 25 August 2018, a lightning strike led to the islanding of Queensland and South Australia and supply interruptions to customers in Victoria, NSW and Tasmania. AEMO’s Final Report on the event makes recommendations to improve primary frequency control (PFC) and investigate power system response and resilience during similar events. AEMO will be working with the AEMC, Australian Energy Regulator and generators to establish interim PFC responses at both existing and new (synchronous and non-synchronous) generator connection points where feasible by Q3 2019, with plans to support work on a permanent mechanism to secure adequate PFC by mid-2020. AEMO is providing a member briefing on 5 February on its report and next steps.


Last and by no means least, grid connections came out as the number one issue for our members in a survey at the end of last year. It’s well known that the regulatory arrangements and connections process are complex, confusing and opaque. This is not helped by the fact that networks and AEMO are receiving an unprecedented number of enquiries and applications. This is all leading to increased costs and delays for developers. The CEC is working with AEMO and our members on connections. This year we are looking to progress some initiatives in this important space.

Want to get involved?

These are all critical issues for the clean energy sector, so the CEC will be working closely with our members to drive positive outcomes for the industry. All these matters will be managed through the CEC’s Market & Grid Directorate. If you are interested in joining the Directorate, please contact [email protected].