Broken Hill Supply

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Broken Hill is one step closer to becoming one of the world’s largest grid-connected all renewable mini-grids.

We are in the final stages of a Regulatory Investment Test for Transmission (RIT-T) process which is investigating a new grid-scale storage facility to leverage the significant wind and solar generation of the region and ensure a more reliable supply in Broken Hill.

However, we are temporarily putting on hold the development of the Broken Hill PACR as we are seeking confirmation from the AER about whether we can continue to apply the current approach to estimating non-network option costs or whether we must apply the revised approach set out in the AER’s Final Decision Guidelines to make the Integrated System Plan (ISP) actionable.

The estimated costs for non-network options under the current approach is based on the non-network support contract offer whereas under the new approach it would be based on the underlying resource costs. We recognise that a change in approach to estimating the costs for non-network options would have a material impact on the outcome of the RIT-T.

Proponents of non-network options for Broken Hill have engaged with us in good faith and invested substantial effort and financial costs in the RIT-T process.

For fairness and transparency, we have therefore temporarily put on hold the development of the PACR until this matter is resolved.

We will provide a further update on our next steps in the RIT-T process as soon as we have obtained clarification from the AER.

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 gas turbines owned by Essential Energy to avoid involuntary load shedding (these turbines each have a nameplate rating of 25 MW). TransGrid relies on these gas turbines to meet the NSW Electricity Transmission Reliability and Performance Standards 2017 (the 'reliability standards') 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 gas 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 has notified TransGrid of its decision to divest the gas turbines located at Broken Hill. 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.

TransGrid considers 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.

The Consultation Process

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 gas turbines owned by Essential Energy and EUE exceeds the allowance.

In order to efficiently avoid involuntary load shedding and meet the reliability standards TransGrid adopted a two-step approach.

Step 1 – Establish a short-term non-network support solution, via an Expression of Interest (EOI) process. This short-term non-network support solution will be required to be available:

immediately; and
until the long-term solution, which will be identified under this RIT-T process, is operational.

Step 2 – Establish a long-term solution via the RIT-T process. It may take up to three years for this long-term solution to be operational.

A timeline for the RIT-T process is below.

November 2019	Project Specification Consultation Report (PSCR) published for consultation
31 January 2020	Deadline for written submissions to Project Specification Consultation Report (PSCR) and accompanying EOI.
11 August 2020	Project Assessment Draft Report (PADR) published for consultation
22 September 2020	Deadline for written submissions to PADR
To be advised	Project Assessment Conclusions Report (PACR). The PACR will address PADR submissions and determine preferred option. The development of the PACR is temporarily on hold: Awaiting advice from the AER regarding estimating non-network option costs. We will provide a further update on our next steps in the RIT-T process as soon as we have obtained clarification from the AER.
To be advised	Conclusion of RIT-T process

The RIT-T Process

In November 2019, TransGrid 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.
Maintaining a reliable supply to Broken Hill Project Specification Consultation Report (PSCR)
In response to the PSCR, TransGrid received submissions from five parties. Four of these parties requested confidentiality. The fifth submission was from the Public Interest Advocacy Centre and is available below:
Public Interest Advocacy Centre
Comments and points raised in all submissions were considered when preparing the Project Assessment Draft Report (PADR). The PADR is a full quantitative analysis of the proposed options and expected market benefit across a range of scenarios and sensitivities.
Maintaining reliable supply to Broken Hill Project Assessment Draft Report (PADR)
Due to the confidentiality requested by proponents of solutions, TransGrid is only able to present the overall net market benefits of each credible option in the PADR and publish this supporting document:
Market Modelling Report
Prior to, as well as after, receiving submissions, TransGrid 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 have played a pivotal role in being able to define and include the credible options assessed in this PADR.
TransGrid will be engaging further with parties based on the outcome of this PADR to confirm the technical feasibility of the options, which is expected to involve the provision of further information and modelling from these parties. A full assessment of technical feasibility is intended to be undertaken ahead of the PACR where parties confirm they are proponents and provide the required information.
Submissions and Next Steps

Submissions to our PADR are now closed.
Thank you to those who made a submission.
The next formal stage of this RIT-T is the Project Assessment Conclusions Report (PACR).
The PACR will address PADR submissions and determine a final preferred option.
The development of the PACR is temporarily on hold.
We are awaiting advice from the AER regarding estimating non-network option costs. We will provide a further update on our next steps in the RIT-T process as soon as we have obtained clarification from the AER.