It would also help mitigate growing fears of more regular unit failures at the Latrobe Valley’s coal-fired generators during peak periods and the potential early closure of the Yallourn plant.
About 2000 megawatts of committed new renewable generation will be built, or is undergoing commissioning, in western Victoria by 2020, with projections of a further 3000 megawatts by 2025.
Another 1000 megawatts of new generation will be built by 2030, based on proposed new connections and the increase to the Victorian government’s Victorian Renewable Energy Target.
The market operator has warned that without adequate transmission capacity, generators connecting to the network will become increasingly constrained, limiting the ability for existing and new generators to export power to the network, and hiking up power prices over the long term.
AEMO managing director Audrey Zibelman said the investment would advantage consumers and energy producers through significant reductions in the capital and dispatch costs of generation over the longer term.
“This investment will future-orient Victoria’s power system capabilities and supply availability, and help achieve a lowest-cost portfolio of resources and strategic transmission development to meet consumer needs today, and into the future,” Ms Zibelman said.
AEMO will undertake a competitive process to appoint a successful tenderer to design, build, own and operate the new infrastructure.
The successful tenderer, to be finalised later this year, will undertake extensive investigations and community engagement, before any routes or locations are approved.
It will be responsible for securing the necessary planning and environmental approvals to deliver the infrastructure.
AEMO chief system design and engineering office’s Alex Wonhas said the recommendation to increase transmission capacity in western Victoria would reduce network congestion and ensure more efficient connection for renewable generation.
“This will help to ensure consumers don’t pay more than necessary for their electricity in the long term,” he said.
Energy and Emissions Reduction Minister Angus Taylor said while the government supported the process, it remained concerned that “reckless” Victorian government actions were hurting Victorian, Tasmanian and South Australian energy consumers.
“The Victorian government has thrown taxpayer dollars at renewable developments in western Victoria, with no thought as to how these will properly connect into their grid,” Mr Taylor said.
“Consumers will be now charged hundreds of millions of dollars to patch up the Victorian government’s poorly planned market interventions.”
Rob Harris is the National Affairs Editor for The Sydney Morning Herald and The Age, based at Parliament House in Canberra