When the country's energy ministers sit down together on Friday as part of the COAG process, they will have a full agenda. Their challenge will be to balance the ongoing decarbonisation of our electricity supply with current pressures on affordability and reliability. It is little wonder that Energy and Environment minister Josh Frydenberg has labelled this energy summit a top priority.
Wholesale electricity prices in South Australia are notoriously volatile, as high levels of renewable generation means the electricity supply can be intermittent, and the state is reliant on a single connection with the broader electricity market.
New technologies are not only delivering emissions-free electricity, but are driving the evolution of the electricity supply chain by providing new ways to generate, distribute and pay for electricity. This is giving consumers more choice and more control about how they use and how much they pay for the power they need.
In response to this change, transmission and distribution businesses are evolving their infrastructure to support renewable energy, investigating storage projects and reconfiguring existing kit to meet the demands of consumers right now and anticipate the energy needs of consumers in the future.
It is in the national interest for different parties in the energy sector to work together. Transmission businesses have nothing to fear from renewables and vice versa. In fact, transmission networks can build a bridge to greater use of more sustainable energy sources. Renewables are not undermining the value proposition of incumbent grid infrastructure. In fact, as renewable generation continues to come online, the grid remains crucial to delivering the Australian economy and individual consumers can continue to rely on affordable, safe electricity.
It is hoped that the COAG meeting can arrive at a balanced outcome which reflects this new reality.
As the South Australian experience shows, there is no getting around the need for affordable and reliable backup power supplies when the wind doesn't blow and the sun doesn't shine.
To ease the pressure on consumers, backup supply needs to come online as soon as possible.
Strategic interconnection offers a cost-effective and, most importantly, a direct and timely solution to the current challenges facing the energy market.
We've crunched the numbers on an interconnector linking NSW and SA, because we think that's the obvious, most advantageous link.
Our initial estimates show we can deliver an interconnector at a capital cost of around $500 million. We're confident we can get this new interconnector up and running within 18 months, depending on the pace of regulatory, planning and environmental approval processes.
This interconnector will help deliver affordable, reliable electricity to consumers as well as facilitate the development of renewable energy corridor along the route we've identified. New transmission infrastructure in south-west NSW will encourage development in this prime region for renewable resources.
The challenges faced by South Australia show the need for more integrated, national planning for the transition to a low emissions electricity supply. It also highlights the critical role that transmission networks can play in supporting the national electricity market.
A new interconnector linking NSW and SA is the key to a better integrated market that will support an affordable, accessible and reliable electricity supply for all users.
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Paul Italiano is Chief Executive Office of TransGrid, the company that operates and manages the high voltage transmission network in NSW and the ACTT