VNI West and Job Security in Gippsland

Energy Grid Alliance recently attended the Gippsland New Energy Conference. It was so great to see the region showing real leadership as Victoria, and the Latrobe Valley in particular, transitions away from fossil fuels. With all coal plants scheduled to close in the Latrobe Valley by 2032, the renewable energy sector in Gippsland is projected to grow to cater for the wide range of projects in development. To match this growth, the region aims to identify the skills, training and workforce needs to match the project pipeline. A number of renewable energy projects are now coming online, many of which have been supported through the Latrobe Valley Authority’s New Energy Jobs and Investment Fund, as well as through the Gippsland Smart Specialisation strategy.

The Star of the South, Australia’s first offshore wind project, is proposed to be located off the south coast of Gippsland, and has the potential to supply up to 20% of Victoria’s electricity needs while creating jobs and investment. Offshore wind in Gippsland is a step closer to becoming a reality, with the Australian Government announcing the Bass Strait off Gippsland as the first area to be formally assessed under its new Offshore Electricity Infrastructure framework.

This is all great news for the Latrobe Valley, and makes complete sense from a planning perspective as the high-voltage transmission infrastructure already exists.

But is it?

The Australian Council of Trade Unions (ACTU) released a paper today ahead of the Jobs Summit. The report, ‘Secure Jobs for a Safer Climate’, shows how Australia’s energy transition has been chaotic to date. Twelve coal-fired power stations have closed in the past decade, in most cases leaving workers and communities devastated.

Yet with proper support, those workers can be the first in line to benefit from Australia becoming a renewable energy superpower, generating 395,000 secure and well-paid jobs and $89 billion in revenue by 2040 in export industries alone. But as the report makes clear, this won’t happen without clear national leadership and a voice for workers at the table.

Energy Grid Alliance (EGA) express great concern that the Australian Energy Market Operator’s (AEMO’s) Integrated System Plan (ISP) does not consider externalities beyond the power systems. Therefore, security of workers and communities, in regions where the fossil fuel industry has been a notable employer, and transmission already exists, has been completely ignored. This will have devastating consequences not only for families, but for the regions they live and work.

EGA is critical of the recently published VNI West Project Assessment Draft Report (PADR). VNI West is a proposed new high capacity 500 kilovolt (kV) double-circuit overhead transmission line in Western Victoria between Victoria and New South Wales.

EGA acknowledges both the Victorian Government and Australian Government are in support of VNI West to ensure the ongoing reliability and security of the power system. However, EGA is concerned the projects very existence threatens the transitioning workforce in Victoria’s Latrobe Valley, directly contravening Victoria’s REZ development strategy and effectively stalling Victoria’s renewable energy industry.

The VNI West PADR states, in all three scenarios, the vast majority of benefits are from avoided or deferred generation and storage capital costs and avoided fuel costs (which, together, make up between 83% and 94% of Option 1’s gross benefits across the three scenarios). Avoided transmission costs associated with the connection of REZs make up the remainder of the estimated benefits. The PADR assumes that, if VNI West is built, Victoria’s (more importantly Gippsland’s) transition to renewables will sit idle until VNI West is commissioned in early 2030’s after all coal plants have closed. [bolded for emphasis]

Additionally, based on costs, the wholesale market modelling in the WNI West PADR finds there is no Gippsland offshore wind built in the ‘step change’ scenario under Option 1 and Option 2. This is an implausible assumption that is at odds with Government’s offshore wind commitments and is at odds with the Latrobe Valley’s plans to transition its fossil fuel workforce to a new renewable industry.

The Australian Energy Market Operator (AEMO) has, presumably, been driven to make implausible assumptions to justify a business case for the ongoing reliability and security of the NEM, and quite possibly to justify the very development of Snowy 2.0, without holistic consideration of Victoria’s state-level objectives such as creating a wave of new jobs right across the state; unlocking more wind and solar power in Victoria; and allowing renewable energy to play a vital role in powering the future of Victoria’s workforce and economy.

If the Victorian Government and the Australian Government endorse the outcomes of the VNI West PADR, it signals that emissions policies have no merit and Victoria’s renewable workforce has no value or future. This transmission augmentation directly and blatantly threatens emission reduction policies, renewable energy development, offshore wind strategies and job security.

It is clear from analysis of the VNI West PADR that these augmentations directly benefit New South Wales and Tasmania but do little to achieve the Victorian Energy Minsters objectives which are to:

• maximise the capacity for new renewable energy projects
• create a wave of new jobs right across the state
• unlock more wind and solar power in Victoria than ever before
• enable renewable energy to play a vital role in powering the future of Victoria’s economy.

It is also clear that AEMO, under its declared network functions, including for Victorian transmission planning has no consideration of, or interest in, the development of Victoria’s new renewable industry, Victoria’s REZ development plans or Victoria’s offshore wind developments. If VNI West and Marinus Link are implemented, this will reduce Victoria to a net importer of electricity (by 2028), reliant on other states for its electricity needs. By 2032 Victoria will require imports exceeding 30% of its energy needs, leaving a lasting impact on workers and communities.

This vision for Victoria’s energy future is a significant departure from the state’s historical net energy surplus and appears to place critical dependence a small number of key transmission elements. This leaves Victoria heavily dependent on its interconnector transmission corridors. In addition to the broad economic and job security impacts, reliance on other states is an important risk to assess.

AEMOs vision for Victoria’s energy future is a significant departure from the Victorian Energy Minsters vision of a once-in-a-generation energy transition with investment in large-scale renewable energy generation and storage and investment in job security to provide reliable and affordable electricity at the scale needed to power Victorian homes and businesses.

While AEMOs ISP and associated RIT-Ts do not consider Victoria’s jobs, economic and energy future, it is important Governments do. EGA express genuine concern that endorsement of these augmentations will result in significant and far-reaching consequences for the future of the Victoria’s renewable economy and all Victorians.

VNI West (via Kerang) is the proposed preferred option identified under the PADR. AEMO Victorian Planning (AVP) and Transgrid are welcoming feedback on the PADR until 9 September 2022. More details can be found here https://aemo.com.au/initiatives/major-programs/victoria-to-new-south-wales-interconnector-west-regulatory-investment-test-for-transmission

These are critical matters to consider.