Meeting system strength requirements in NSW

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Transgrid, as the System Strength Service Provider (SSSP) for NSW, is responsible for ensuring sufficient system strength is available to maintain power system stability in NSW. The retirement of NSW’s coal generators and the growth in inverter-based resources in the coming decade is driving an urgent need to add new sources of system strength to the power system.

Transgrid completed the system strength Regulatory Investment Test for Transmission (RIT-T) in mid‑2025 and is now progressing the procurement of network and non-network solutions in NSW to meet the identified need.

Assessing material changes in circumstances (MCC)

In April 2026, Transgrid notified the AER of an MCC related to an increase in costs and extended delivery timing for synchronous condensers, as well as delayed coal unit retirement dates under AEMO’s Draft 2026 Integrated System Plan Step Change scenario.

In June 2026, the AER published its determination on our proposed actions, which included for Transgrid to complete a streamlined assessment and publish a draft report outlining any changes to the PACR preferred portfolio.

Transgrid’s draft MCC Assessment report can be found here.

Draft MCC Assessment workbooks can be found here.

The draft report will be open for submissions for one month from the 1 July 2026 to 1 August 2026. Submissions should be emailed to our Regulation team via regulatory.consultation@transgrid.com.au*. In the subject field, please reference ‘Meeting system strength requirements in NSW MCC assessment’.

Transgrid intends to incorporate stakeholder feedback and publish the final report by 24 August 2026, as specified by the AER.

* Transgrid is bound by the Privacy Act 1988 (Cth). In making submissions in response to this consultation process, Transgrid will collect and hold your personal information such as your name, email address, employer and phone number for the purpose of receiving and following up on your submissions. If you do not wish for your submission to be made public, please clearly specify this at the time of lodgement. See Privacy Notice within the Disclaimer for more details.

Regulatory Investment Test for Transmission (RIT-T)

Transgrid has identified a preferred portfolio of system strength solutions to meet our regulatory obligations and to maximise net market benefits, via the RIT-T process. The system strength RIT-T process is now complete, and the project is now moving into the implementation phase.

Regulatory documentation for each stage of the RIT-T, as well as stakeholder submissions are published here.

Transgrid is continuing to monitor changes in the energy market to ensure that the portfolio of system strength solutions remains robust. If required, Transgrid will undertake a Material Change in Circumstances assessment to identify impacts of energy market changes on the optimal portfolio.

Network solutions

The RIT-T concluded that the installation of synchronous condensers at ten strategic locations across Transgrid’s network represents a core component of the optimal portfolio of system strength solutions to ensure a safe, secure and reliable power system.

The RIT-T identified that the ‘accelerated’ procurement of synchronous condensers delivers significant economic benefits and mitigates risk of system strength gaps. In September 2025, the NSW Government directed Transgrid to deliver synchronous condensers at the first five substations across NSW as a Priority Network Infrastructure Project (PNIP). The accelerated procurement of these units is expected to deliver more than $1 billion in market benefits.

GE Vernova will supply the first order of synchronous condensers, following the completion of a global tender process. To accelerate their delivery, GE Vernova will deploy two smaller synchronous condensers at each of the five sites, rather than one larger synchronous condenser.

Additional details of the acceleration of synchronous condensers at the first five site can be found here.

Non-network solutions

The RIT-T concluded that non-network solutions will play a core role in providing system strength in NSW.

Synchronous machines

Transgrid has signed its first system strength network support contract with Snowy Hydro for operation of its Tumut 3 hydro units in synchronous condenser mode. This contract was reviewed by the Australian Energy Regulator (AER) and took effect from 2 December 2025.

The RIT-T identified that contracts with additional synchronous machines are likely to be required in coming years to maintain the minimum level of system strength in NSW. Transgrid will engage with non-network proponents as this need grows.

Grid-forming batteries

The system strength RIT-T identified that grid-forming batteries represent half of the portfolio of system strength solutions in NSW by the early 2030s.

Transgrid expects that non-network grid-forming batteries will start providing system strength services to the NSW transmission network this year. In early 2026, Transgrid shortlisted nine battery projects following completion of technical modelling, which determined the initial capacity and priority locations in NSW. This initial tranche of procurement is focused on batteries that already exist, or are in the advanced stages of development, in specific locations on our network to address system strength needs as they emerge.

Transgrid expects to undertake annual procurement rounds to meet growing system strength requirements and ultimately reach the RIT-T identified portfolio of up to 5 GW of grid-forming batteries by the early 2030s.

To be eligible for consideration as part of future tenders, please see the information for non-network proponents below, and return a completed Expression of Interest (EOI) form to Transgrid, so your project can be included in the technical analysis to determine the included parties in subsequent tenders.

Transgrid has developed several guidance documents to help non-network proponents understand their opportunity to provide system strength services.

If you are interested in participating in the procurement process for system security contracts and have not previously submitted an EOI for your project(s) or there have been material changes to your project since your EOI, you may submit a new or updated EOI at any time using the below documentation. Please also advise us if the contact person named on your most recent EOI submission has changed.

The system strength RIT-T process is now complete. Transgrid has developed a portfolio of system strength solutions to meet our regulatory requirements and to maximise net market benefits.

The report and supporting documentation for each stage of the RIT-T, as well as stakeholder submissions are published here.

For any questions, please contact the system strength project team at systemstrength@transgrid.com.au.