Energy Grid Alliance Submission to AEMO’s Western Renewables Link Project Analysis

Since the Western Victoria PACR was published in 2019, there have been material changes that could impact market benefits for the Western Renewables Link (formerly Western Victoria Transmission Project). In accordance with the National Electricity Rules, AEMO has undertaken further analysis to determine if these changes in circumstances mean the option in the PACR with the highest net economic benefits (Option C2) is still the preferred option.

The Analysis for the purposes of clause 5.16.4(z3) of the National Electricity Rules was published on AEMO's website in November 2022.

The Regulatory Investment Test for Transmission (RIT–T) must be applied in a way that is credible, which reduces the scope for misunderstandings and disputes, and increases the AER's ability to fast-track further regulatory assessments on expenditure related to that project.

As such, Energy Grid Alliance conducted a review of the Analysis to better understand the material changes, impacts on the preferred option and how the overall analysis concludes C2 remains the preferred option. This submission responds to matters of importance in respect to the Analysis.

This review has been submitted to AEMO and key stakeholders for further consideration and discussion, seeking clarification of all queries raised.

Background

AEMO identified following the release of the 2022 Integrated System Plan (ISP) and the preparation of the project assessment draft report (PADR) for the proposed VNI West Project that modelling may be required to reassess the market benefits for the Western Renewables Link (WRL) Project in light of the latest Step Change scenario assumptions set out in the 2022 ISP. AEMO commenced initial steps to undertake that assessment in July 2022. AEMO monitors changes in relevant circumstances as part of its broader national transmission planner function and had identified that various changes in circumstances had occurred which could impact upon the assessment of market benefits for the WRL Project.

Separately, the Moorabool & Central Highlands Power Alliance Inc (Alliance) wrote to AEMO in late August 2022 outlining a number of changes in circumstances that the Alliance considered to be “material changes in circumstances” for the purposes of the application of clause 5.16.4(z3)(3) of the National Electricity Rules (NER) to the WRL Project, and requesting that AEMO undertake the analysis required by clause 5.16.4(z3). Whilst AEMO has continued to hold the opinion that Option C2 was the preferred option in relation to the WRL Project, the release and publication of the 2022 ISP, the changes in relevant circumstances that AEMO had become aware of when developing the 2022 ISP, together with the receipt of the Alliance's request emphasised the need to undertake this analysis taking into account all of these matters.

Based on the analysis in this document, AEMO is of the opinion that Option C2 remains the preferred option with higher net market benefits than Option B3.

Key points of this submission

• Does the WRL meet the identified need or is more work to be done to meet this need?
• Does the cost-benefit test include all components?
• Are costs and benefits shared between integrated projects?
• Are government policies being considered?
• Does the PACR preferred option remain the preferred option?
• What oversight mechanisms exist to ensure claimed market benefits are realised to the end of the modelling period?
• What is the status of the WRL and VNI West and are market benefits probability weighted?
• Is the primary aim of the WRL to stage the development or VNI West?