New South Wales’ Renewable Plan Suffers Cost Blowouts and Delays

A wind turbine is seen set amongst trees at the Taralga Wind Farm in Taralga, New South Wales, Australia on Aug. 31, 2015 in Taralga, Australia. Photo by Mark Kolbe/Getty Images

The government of the Australian state of New South Wales (NSW) has revealed that its plan to replace coal-fired power stations and transition to renewable energy will be subject to higher costs and delays.

In her briefing on the Labor government’s network infrastructure strategy, NSW Energy Minister Penny Sharpe expressed concerns that the project would cost more and take longer time to complete than when it was proposed in 2020.

“I want to be very upfront about this. There’s some real challenges within this plan,” she told reporters.

The strategy outlined NSW’s plan to “modernise” the state’s energy system to cut carbon emissions by 50 percent by 2030 and reach net-zero by 2050 while meeting the rising electricity demand.

Under the plan, the NSW government seeks to replace 8.3 gigawatts of capacity from coal-fired power stations.

It also expects to raise the grid-scale renewable capacity to 34 gigawatts and large-scale storage and firming capacity to 13 gigawatts by 2040.

The strategy also proposes options to add 14-24 gigawatts of capacity to the system in the next 20 years through the establishment of several renewable energy zones and downstream network augmentations.

Two Renewable Energy Zones Suffers Delays

As she elaborated on the project’s progress, the energy minister said two renewable energy zones (REZ) accounting for most of the new generation capacity would face a delay of up to two years.

Specifically, the Central West-Orana REZ, which was initially estimated to complete by 2025, will not connect to the grid before 2027-2028.

The zone covers around 20,000 square kilometres with a generation capacity of 4.5 gigawatts from solar panels and wind turbines.

In addition, the New England zone, which has an estimated network capacity of six gigawatts, will come online in 2029 instead of the initial 2027 goal.

Sharpe blamed the former Coalition government for the delays, saying its privatisation of the energy sector and time frames that did not include the need to consult local communities had made the renewable energy roadmap more difficult.

Meanwhile, some projects under the strategy have been subject to cost blowouts.

The Age newspaper reported that the cost of the Central West-Orana REZ would jump from $650 million to $3.2 billion.

The Hunter Transmission Project will also see its cost rise from $880 million to $990 million.

As a result, the revised total cost for the projects needed to achieve the government’s energy target by 2030 now reaches around $9.3 billion.

NSW Energy Minister Penny Sharpe speaks during the debate on the Reproductive Health Care Reform Bill 2019 in Sydney, Australia, on Sept. 17, 2019. Brook Mitchell/Getty Images

Sharpe acknowledged that the cost overruns were an issue.

“It’s not a small amount of money,” she said.

“The increase has been substantial, and I am concerned about that.”

The delay announcement comes as NSW is expected to see four coal-fired power stations retire by 2033, putting pressure on energy supply in the state.

In late April, Energy producer and retailer AGL shut down Liddell, a major power plant, after 52 years of service to build a renewable energy hub.

While the company and authorities have assured the public that Liddell’s closure will not pose a risk to the power grid, there have been concerns about its impact on electricity prices.

NSW Government to Conduct Electricity Sector Review

In a related development, the NSW government has announced that it will commission an independent check-up on the state’s energy policies to ensure that the transition to renewable energy is delivered in a timely and cost-effective manner.

It assigned specialist Cameron O'Reilly and an expert panel to stress-test electricity supply and reliability in metropolitan and regional NSW and make recommendations about removing barriers and getting infrastructure underway.

The state government expected that a final report would be released in August.