Modern Australian

what is the electricity transmission system, and why does it need fixing?

  • Written by Tony Wood, Program Director, Energy, Grattan Institute

Shifting Australia to a low-emissions energy system is a big challenge. Much has been said of the need to change the electricity generation mix, from mostly fossil fuels to mostly renewables. Yet our electricity transmission network must also be overhauled.

The transmission network largely consists of high-voltage cables and towers to support them, as well as transformers. This infrastructure moves electricity from where it’s generated, such as a coal plant or wind farm, to an electrical substation. From there, the distribution network – essentially the “poles and wires” – takes the electricity to customers.

On Australia’s east coast, increased renewable energy generation is already stretching the capacity and reach of Australia’s ageing transmission network. New capacity is being built, but is struggling to keep up.

In his budget reply speech last week, Labor leader Anthony Albanese pledged to create a A$20 billion corporation to upgrade Australia’s energy transmission system. So let’s take a look at what work is needed, and what’s standing in the way.

Anthony Albanese, centra, with Labor frontbenchers Labor leader Anthony Albanese’s budget reply speech included a $20 billion plan to upgrade transmission networks. Mick Tsikas/AAP

Starting with the basics

The electricity grid covering Australia’s east is part of the National Electricity Market (NEM). It’s one of the largest interconnected electricity networks in the world, and covers every jurisdiction except Western Australia and the Northern Territory.

The NEM comprises:

  • electricity generators (which produce electricity)

  • five state-based transmission networks, linked by interconnectors that enable electricity to flow between states

  • the distribution network (poles and wires)

  • electricity retailers (which sell electricity to the market)

  • customers, such as homes and businesses

  • a financial market in which electricity is traded.

The NEM’s transmission grid currently has a long, thin structure, running from the north of Queensland to the south of Tasmania and the east of South Australia. This reflects the fact that electricity has traditionally been produced by a small number of large, centralised (mostly coal and gas) generators.

Electricity transmission infrastructure Electricity transmission infrastructure is expensive and complex to upgrade.

Who owns and runs transmission networks?

Australia’s electricity networks were originally built and owned by state governments, mostly during the latter half of the 20th century. Over several decades, interstate transmission interconnectors were built to share resources more efficiently across borders. The NEM was formally created in the late 1990s.

Between 2000 and 2015, several states either partly or fully privatised their transmission networks, leading to the mixed model of today. The transmission companies are monopoly providers, and the prices they charge are set by the Australian Energy Regulator (AER).

Read more: Sure, no-one likes a blackout. But keeping the lights on is about to get expensive

The Australian Energy Market Operator (AEMO) operates the national market and is responsible for transmission planning. In Victoria, AEMO also decides on transmission investments. In the other jurisdictions, that role rests with the transmission companies.

In the past, electricity companies made some infrastructure investments far beyond what was needed – mostly in distribution networks, but also in transmission. This so-called “gold plating” of networks led to inflated costs for consumers, who ultimately pay for the investments via their power bills.

A $50 note in a power socket The cost of transmission upgrades is passed onto power consumers. Julian Smith/AAP

Why do the transmission networks need fixing?

Renewables have increased the total NEM generation capacity from 40 gigawatts to 60 gigawatts since 2007. More than 30 gigawatts of renewable generators and 12 gigawatts of energy storage are expected to come online by 2040.

In mid-2017, a panel led by Australia’s Chief Scientist Alan Finkel recommended a plan be drawn up to create “renewable energy zones”. These would coordinate the development of new renewable projects with new grid infrastructure.

The zones were contained in AEMO’s 2018 “Integrated System Plan (ISP). It identified transmission projects that should start immediately, and possible future projects.

Two initial projects involve expanding the system’s capacity between Queensland, New South Wales and Victoria. Possible future projects include a second interconnector between Victoria and Tasmania.

Read more: In a world first, Australian university builds own solar farm to offset 100% of its electricity use

But upgrading the transmission grid is easier said than done. The large size and cost of new transmission lines means planning and approval is subject to lengthy, intensive economic assessments.

What’s more, renewable energy generators are often built in regional areas, where solar and wind energy are plentiful. In many cases the electricity grid in those areas, designed in a different era, doesn’t have the capacity to accommodate them.

In September, the Energy Security Board (ESB), created by COAG energy ministers, said the transmission grid must be reconfigured along the lines of the ISP to suit the emerging mix of renewable generation and storage. This means upgrading existing interconnectors, and building new interconnectors and intrastate transmission from regional areas to coastal centres.

Transmission lines The Energy Security Board has called for transmission infrastructure upgrades. Shutterstock

Weighing the political promises

Labor leader Anthony Albanese last week released a A$20 billion "Rewiring the Nation” policy to upgrade the grid. It would establish a government-owned body to partner with industry, providing low-cost government finance for the upgrades.

The Morrison government, for its part, is also working on transmission solutions. It’s supporting projects prioritised in the ISP, including up to A$250 million allocated in this month’s federal budget.

Some states have separately accelerated their own high-priority transmission projects. However, none of the above measures effectively solve two big impediments to modernising the transmission network.

Read more: Energy giants want to thwart reforms that would help renewables and lower power bills

First, the processes to identify, analyse and build transmission projects is too slow. Second, a state’s transmission infrastructure is currently paid for by consumers in that state – a poor fit for the increasingly integrated, and therefore shared, national grid.

Much work must be done to address these issues. Perhaps a government-owned national company could be established. It would own the shared transmission system, while AEMO would drive what gets built. Operations could be outsourced to a private company to deliver efficiencies.

Separating planning from owning would minimise the perverse financial incentives that led to past “gold plating”.

To minimise the risk of white elephants being built, strong, up-to-date benefit-cost assessments would be required.

Such alternatives will come with their own challenges. But the transition towards low emissions is too important for radical solutions to be ignored.

Authors: Tony Wood, Program Director, Energy, Grattan Institute

Read more https://theconversation.com/explainer-what-is-the-electricity-transmission-system-and-why-does-it-need-fixing-147903

NEWS

UN report says up to 850,000 animal viruses could be caught by humans, unless we protect nature

Shutterstock Human damage to biodiversity is leading us into a pandemic era. The virus that causes COVID-19, for example, is linked to similar viruses in bats, which may have been...

The reputation of Australia’s special forces is beyond repair — it's time for them to be disbanded

Australian Department of DefenceFour years into a constant stream of misconduct allegations, it’s hard to know how to process the latest revelations about the actions of Australia’s special forces in...

Alice Pung — how reading changed my life

Annie Spratt/UnsplashHaving survived starvation and been spared execution, my father arrived in this new country, vassal-eyed and sunken-cheeked. I was born less than a month later and he named me...

From scary pumpkins to bridal bling, how masks are becoming a normal part of our lives in Australia

www.shutterstock.comOn Halloween this Saturday, it won’t be just trick-or-treating children who are wearing spooky costumes. Adults handing out sweet treats may also be sporting Halloween-themed face masks, which are now...

we'll never cut unemployment to 0%, but less than 4% should be our goal

ShutterstockOne of the most concerning things that happens in any recession is the spike in unemployment. The COVID-19-induced recession in Australia and around the world is no exception – other...

Aged care isn't working, but we can create neighbourhoods to support healthy ageing in place

Image: Kathleen Brasher, Author providedThis article is part of our series on aged care. You can read the other articles in the series here.In 2020, the coronavirus pandemic has exposed...

COVID-19 slashed health-care use by more than one-third across the globe. But the news isn't all bad

ShutterstockIt’s no secret the COVID-19 pandemic has changed many aspects of our lives. One is how often we access health care.We’ve conducted what we believe is the first systematic review...

education research should answer to the same standards as medicine

ShutterstockAustralia has one of the highest-quality systems of medical research in the world. It has helped underpin the high standing of Australia’s health system — it’s ranked as one...

As Melbourne's Christmas arrives early, Queensland's election will test whether COVID is a vaccine for incumbents

Anticipating reactions to political attacks can be a tricky business.When Scott Morrison spectacularly trashed the reputation of Australia Post CEO Christine Holgate over her now-notorious gift of Cartier watches to...

Colourful opal fossils point to a diverse group of giant dinosaurs that shared Australia's terrain

North-central New South Wales today is known for its arid, drought-prone climate. During the Cretaceous period, however, it was a lush coastal floodplain with a high diversity of vertebrates including...

Genome and satellite technology reveal recovery rates and impacts of climate change on southern right whales

University of Auckland tohorā research team, Department of Conservation permit DJIAfter close to a decade of globe-spanning effort, the genome of the southern right whale has been released this week...

We put forward a way to govern ASIC better. The government said no

The current governance/management crisis at the Australian Securities and Investments Commission, ASIC has seen a deputy chairman resign and the chairman step aside under a cloud.It might have arisen simply...



News Co Media Group

Content & Technology Connecting Global Audiences

More Information - Less Opinion













Popular articles from Modern Australian

These Countries Have the Best Netflix Catalogs4 Ways to Boost Your Games Winnings with BonusesThink You Know Classic Solitaire Inside out? Here Are Some Interesting Facts You’ve Probably Never Heard of4 Memorable Places to Visit in IndiaGoogle's New Pixel 5 is 5G Ready, but is it Good for Gamers?Mistakes To Avoid When Choosing Your Tasmanian Vacation AccommodationBonus Codes for Online PokiesParental Responsibility and Rights When Handling Custody MattersSix Things You Should Never Do During DivorceShipping Container Homes Made From BlocksNHL's Best and Brightest All You Need To Know About The Hyundai i45 For SaleThe Most Popular Cosmetic Surgery Procedures to Look Out for in 2021Tadalafil vs. Vardenafil: Which Is Better?Benefits of sleep for a healthier life