Broken Hill Supply

Transgrid has completed the final stage of the Regulatory Investment Test for Transmission (RIT-T) for a new backup supply and after assessing multiple options, identified Hydrostor’s 200MW/1,500MWh compressed air storage as the preferred solution.

Transgrid’s analysis found the clean technology:

• Provides the highest net benefit for consumers and a reliable back-up supply for 17,000 people who live in Broken Hill
• Would be able to store up to 200 MW of renewable generation which could be made available to meet peak demand, benefiting existing generator customers and electricity consumers
• Aligns with the Federal Government’s Technology Investment Roadmap and Low Emissions Technology Statement, which specifically identifies electricity storage for firming as a priority low emissions technology.
• Aligns with the strategy of Broken Hill City Council to reach 100% renewable status by 2030, as outlined in their Sustainability Strategy 2018-2023 and Cities Power Partnership Pledge.

About Broken Hill

Broken Hill is located in the far west of New South Wales and is part of Transgrid's south western transmission network. It is currently supplied by a single 220 kV transmission line, 'Line X2', from Buronga which spans approximately 260 km.

When Line X2 is out of service due to a planned or unplanned outage, electricity supply to Broken Hill is supported by two diesel-fired turbines owned by Essential Energy to avoid involuntary load shedding (these turbines each have a nameplate rating of 25 MW). Transgrid relies on these diesel-fired turbines to meet the NSW Electricity Transmission Reliability and Performance Standards 2017 set by the NSW Energy Minister and regulated by the NSW Independent Pricing and Regulatory Tribunal (IPART). In accordance with these standards, Essential Energy's diesel-fired turbines allow Transgrid to operate its network so as not to expect more than 10 minutes of unserved energy (EUE) per year at average demand.

Essential Energy notified Transgrid of its decision to divest the diesel-fired turbines located at Broken Hill and that it would withdraw its provision of network support from 10 January 2022. If no action is taken by Transgrid, this will result in the required reliability of supply to Broken Hill not being maintained, and involuntary load shedding when Line X2 is on planned or unplanned outage.

We consider this a 'reliability corrective action' under the RIT-T as the identified need is to ensure that the externally-imposed reliability standards for Broken Hill continue to be met. 

In light of Essential Energy’s notification that it would withdraw its provision of network support, we made the decision to purchase the existing turbines directly from Essential Energy. The continued use of the existing diesel-fired turbines is the only way for us to meet our supply reliability obligations at Broken Hill in the immediate term. The sale is expected to be completed by 31 May 2022. Essential Energy has agreed, as a condition of the sale, to continue to provide network support until the sale process has been completed. We consider this purchase to be a ‘no regrets’ decision, as the continued use of the existing turbines, at least in the near-term, was found to be a common feature across all three of the top-ranked options in the PADR assessment.

Transgrid’s revenue determination for the 2018-2023 regulatory control period includes a contingent project for the reliability of supply to Broken Hill. This contingent project is to provide additional capacity to supply Broken Hill in an event that the total 220 kV and 22 kV load at Broken Hill exceeds the capacity of the back-up diesel-fired turbines owned by Essential Energy and EUE exceeds the allowance.

A timeline for the RIT-T process is below.

Project Specification Consultation Report

In November 2019, we published the Project Specification Consultation Report (PSCR). The PSCR detailed the need to maintain reliable supply to Broken Hill and describes credible options to meet the need, including technical characteristics of a non-network option.

In response to the PSCR, we received submissions from five parties. Four of these parties requested confidentiality. The fifth submission was from the Public Interest Advocacy Centre.

Initial Project Assessment Draft Report (superseded)

Comments and points raised in all submissions were considered when preparing the Project Assessment Draft Report (PADR). The initial PADR presents full quantitative analysis of the proposed options and expected market benefit across a range of scenarios and sensitivities, based on expected non-network option contract/transfer costs submitted to our EOI process accompanying the PSCR.

Due to the confidentiality requested by proponents of solutions, we are only able to present the overall net market benefits of each credible option in the PADR and publish this supporting document: Market Modelling Report.

In response to the initial PADR, we received submissions from eight parties. Submissions approved for publication are from:

• Public Interest Advocacy Centre
• Hitachi ABB Power Grids

Prior to, as well as after, receiving submissions, we held a number of bilateral meetings with submitters to enable greater understanding of the RIT-T assessment, the reliability requirements at Broken Hill and how the proposed solutions are expected to be able to assist with meeting the identified need. These discussions played a pivotal role in being able to define and include the credible options assessed in this initial PADR.

We engaged further with parties based on the outcome of the PADR to confirm the technical feasibility of the options, which involved the provision of further information and modelling from these parties. A full assessment of technical feasibility will be undertaken ahead of the PACR, where parties confirm they are proponents and provide the required information.

Revised Project Assessment Draft Report

Following publication of the initial Project Assessment Draft Report (PADR) in August 2020, the Australian Energy Regulator (AER) published an update to its RIT-T Application Guidelines which outlined a revised approach to the estimation of non-network option costs.

The AER’s guidelines clarified that RIT-T analysis should reflect total costs and market-wide benefits of credible non-network options. This is a change from the previous approach, in which costs of non-network options were estimated based on costs that could be expected in a tender process.

We subsequently put development of the Broken Hill Project Assessment Conclusions Report (PACR) on hold to seek confirmation from the AER on whether to continue to use the previous approach or apply the change outlined in the updated guidelines.

Having sought advice from the AER, we have issued a revised PADR incorporating changes outlined in the AER’s updated RIT-T Application Guidelines.

Due to the confidentiality requested by proponents of solutions, we are only able to present the overall net market benefits of each credible option in the revised PADR.

We invited written submissions on the material contained in the revised PADR. In response to the revised PADR, we received submissions from four parties, one of which is confidential. Submissions approved for publication are from:

• Broken Hill City Council
• Energy Estate
• Hydrostor

We engaged further with parties based to confirm the status and technical feasibility of the options, which involved the provision of further information from these parties as well as technical feasibility assessments.

Thank you to those who made a submission throughout the RIT-T process.

Project Assessment Conclusions Report

In May 2022, we have published the Project Assessment Conclusions Report (PACR) for maintaining reliable supply to Broken Hill.

The PACR has been prepared as the final step in the Regulatory Investment Test for Transmission (RIT-T) process and follows the Revised Project Assessment Draft Report (PADR) published in October 2021.

The assessment in this PACR finds that the continued operation of the existing diesel-fired turbines as an interim measure, followed by network support provided by the Hydrostor compressed air storage solution (Option 1A(4)) in the long term is the top-ranked option.

Due to the confidentiality requested by proponents of solutions, we are only able to present the overall net market benefits of each credible option in the PACR.

Resources

• EY Market Modelling Report

If you have any questions, please contact 1800 222 537 or community@transgrid.com.au.