Transmission: Fast-tracking regulatory reform

Fast-tracking regulatory reform

In a recent Renew Economy article, the Australian Energy Market Operator (AEMO) renewed its calls for a fast-tracking of new transmission links, saying that parts of the country’s main grid are effectively in gridlock and causing unprecedented amounts of wind and solar to be curtailed.

During a CEDA Rewiring the Nation speech, AEMO CEO, Daniel Westerman, said that "regional and rural communities are being asked to shoulder the burden of construction and hosting transmission, while the benefits are shared with populations hundreds of kilometres away, even interstate." "What we must do is to put the processes and resources in place to hear and understand communities’ concerns, and come up with a better way to work together and benefit together," added Mr Westernam. "Because in this energy transition, people matter most," he said.

So how do we put people first and put the processes and resources in place?

When considering the scale of transmission development that is being proposed over the next decade (and I won’t comment on the realistic need), many actors in the energy sector (including Minister Bowen) believe the RIT–T process is not fit-for-purpose. Here’s a couple of quotes from this article and from an article on Renew Economy in March 2022.

"Until now, the economic pros and cons were the key driver of the RIT-T process – not the social benefits, or risks," Bowen said.

A cost benefit analysis which does not take appropriate account of the views of local communities is not a fit-for-purpose process for communities or for TNSPs," Bowen said.

"To me, the situation in Western Victoria has confirmed my inclination that the RIT-T process is no longer fit for purpose, especially when you consider the massive scale of transmission upgrades we have to complete over the next decade," Bowen said.

From these words, it’s clear that the current failed regulatory environment, not community opposition, is delaying the investment in transmission. The Australian public have every right to object to something that is broken and demand it be fixed, especially when it is impacting them and the regions in which they live. If not urgently addressed, these delays will not only slow the investment in Variable Renewable Energy (VRE) generation, impacting Australia's capacity to achieve net zero emissions, delays will also likely result in higher than necessary electricity prices to consumers and less reliable supply outcomes than would otherwise be the case under more robust framework.

Acknowledging that the regulatory environment is not fit-for-purpose is one thing. Proceeding with existing projects developed under this not 'fit-for-purpose' framework is absurd. Talking around this topic will not hide the significant cracks that have appeared, will not bridge the vast chasm between planners and the people, and will not prevent the long-term consequences of not setting the framework and institutional arrangements right from the start. How can trust ever be built when the very thing that supports transmission planning lacks credibility and legitimacy? As communities have strongly indicated, no amount of financial incentive will compensate for planning oversights, lack of action, or complacency.

We have the perfect opportunity, in this once in a lifetime transition, to develop new framework and institutional arrangements that are better suited to a future decentralised system and to reset the process on new and existing transmission projects. There is an urgent need for regulatory reform to support best practice planning and better facilitate acquisition of social licence. Not only for TNSPs but for all industry participants.

Yes, the reform required will take time, that some may argue we do not have, but you must ask; what is the consequence of inaction on this much needed reform? Why has so much time already been wasted? Why are recent rule change requests, that seek to improve community outcomes, not being applied to all transmission projects, including those that are still in the early stages of development? These questions are particularly relevant given Minister Bowen first announced his intention to overhaul the framework 14 months ago and minor changes may not take effect until November 2023.

Fast-tracking the transition

To help fast-track the transition, rather than forging ahead with a 'new push for "unglamorous" transmission', the energy market should apply 'lessons learnt' from the past three years of significant community and industry angst, prioritising society, and the planet, to develop equitable laws, rules, policy, and framework that considers the triple-bottom-line and ensures least-impact transmission pathways are developed.

When you consider the 'business as usual' alternative, which is what we are still dealing with today, the cost of inaction on regulatory reform is likely to lead to increased opposition to overhead transmission and REZ developments across the nation. The industry is also likely to dispense of any opportunity to acquire social licence, resulting in further material project delays that will adversely impact the industry, economy, consumers, investors and above all, our legislated climate change objectives.

Instead of trying to patch the current framework, maybe it’s better to abandon it completely and for each state to develop its own (or adopt a new national standard) more robust and defensible framework that better supports people, businesses, the environment, climate policy and investment objectives.

The Victorian government has departed from the RIT-T by developing the Victorian Transmission Investment Framework (VTIF). This new framework introduces a much needed strategic and proactive process to ensure timely co-ordination of investment in transmission, generation, and storage infrastructure across Victoria’s REZs, tailored to Victoria’s energy needs. It also seeks to better integrate land use considerations, environmental impacts, and community views into the planning process. This new framework should be applied to all transmission projects that are being delivered under the current RIT-T framework, noting the Victorian Government and the VTIF consultation paper also indicate the RIT-T is not fit-for-purpose.

Instead of fast-tracking of new transmission links, regulators, law makers, government and AEMO should be fast-tracking the reform that is necessary for a smoother, more robust, and defensible transition. This is the role of all policymakers.

We have seen a decade of inaction on this, and the Australian public should not be paying the price.

Share This Post