Over the next decade, NSW will completely transform the way in which it generates, stores and transmits electricity.
The Electricity Infrastructure Roadmap is an ambitious policy framework that co-ordinates investment in new infrastructure to ensure that the transition delivers a cleaner, more affordable and more reliable electricity network.
AEMO Services has been appointed as Consumer Trustee, with a legislated mandate to represent the interests of energy consumers across a number of important Roadmap functions, including:
- Designing and conducting tenders to accelerate project plans into built generation, storage and firming infrastructure.
- Developing Infrastructure Investment Objective Reports – the central-planning document for the Roadmap, which set out a development pathway for the state’s electricity infrastructure over the next 20 years and a tender plan for the next decade.
- Authorising renewable energy zone network infrastructure on the basis of consumer value.
- Appointing a Financial Trustee to establish the Scheme Financial Vehicle, which serves as a contractual counterparty for Roadmap service agreements.
The Roadmap is making progress in its ambition to deliver at least 12 GW of new renewable electricity generation by 2030.
- The Roadmap will support the private sector to deliver at least 12 GW of new renewable electricity generation
- Since the Roadmap was enacted more than 5.79 GW of generation has been committed across New South Wales
Roadmap entities
Implementation of the NSW Electricity Infrastructure Roadmap depends on a number of different entities.
Collectively, we are incentivising and bringing forward private investment in a holistic way, that delivers opportunities for host communities, First Nations peoples, and regional economic development, and supports reliability, affordability and sustainability of electricity supply for consumers.
Together, we are working to deliver the Roadmap – an ambitious policy framework that coordinates investment in generation, storage and firming infrastructure to deliver whole-of-system benefits, transforming the energy system into one that is clean, reliable and sustainable.
Scheme Financial Vehicle (SFV) has been established by the Financial Trustee, as a proprietary company limited by shares. Those shares are held on trust by the Financial Trustee (by way of a statutory trust), independent of the State of NSW. SFV has a number of statutory functions under the Electricity Infrastructure Investment Act 2020, including establishing and maintaining the Electricity Infrastructure Fund and serving as the independent counterparty to long-term energy service agreements with project proponents recommended by the Consumer Trustee’s rolling tender process. It also provides revenue, as determined by the Australian Energy Regulator (AER) for Renewable Energy Zone network infrastructure projects and priority transmission infrastructure projects developed under the Roadmap.
The Australian Energy Regulator (AER) is appointed as a regulator under the NSW Electricity Roadmap and has a number of statutory functions, including determining the amount payable to network operators for network infrastructure projects. The AER makes 5-year revenue determinations for network infrastructure authorised by the Consumer Trustee including the calculation of the prudent, efficient and reasonable capital costs of these projects; makes annual contribution determinations in relation to the Electricity Infrastructure Fund; approves a risk management framework developed by the Consumer Trustee; and reviews tender rules in relation to long-term energy service agreements.
As the Energy Security Target (EST) Monitor, the Australian Energy Market Operator (AEMO) is responsible for calculating and setting a 10-year energy security target for New South Wales and providing a continuous assessment of the network’s capacity to meet this target. The EST is designed to provide market certainty as it ensures that there will be reliable supplies of electricity available to meet electricity demands over the medium term.
The Renewable Energy Sector Board comprises representatives of unions, the steel, electricity and manufacturing sectors, the renewable energy industry, and consumer advocates. The Renewable Energy Sector Board provides the Minister for Energy with a plan for the NSW renewable energy sector in relation to the operation of the sector and the manufacture and construction of infrastructure in the sector. AEMO Services is required to consider this plan when exercising its functions as the Consumer Trustee. The Renewable Energy Sector Board also advises the Minister for Energy on actions intended to drive sustainable growth and competitiveness of local industries, and to realise benefits for local workers and communities in relation to the construction of generation, storage and network infrastructure. This includes making recommendations on the use of locally produced and supplied goods and services, employment of suitable qualified local workers, and opportunities for apprentices and trainees, in the construction of generation, storage and network infrastructure.
The Electricity Infrastructure Jobs Advocate is an independent statutory office that advises the Energy Minister on strategies and incentives to encourage investment, development, workforce development, employment, education and training in the energy sector as New South Wales transitions to renewable energy. The Jobs Advocate has a particular focus on the Hunter, Central Coast, Illawarra, Far West, South-West, New England and the Central West regions of NSW. The Jobs Advocate also provides advice on road, rail and port infrastructure required in those regions to promote export opportunities for generation, storage and network technology.
Our role as NSW Consumer Trustee
At a time of rapid change in the dynamics of demand and supply in the NSW energy market, AEMO Services is an independent voice for the consumer in the decisions that will shape the future of our energy sector.
In 2021, the NSW Government appointed our organisation as the Consumer Trustee, giving us a duty to protect the long-term financial interests of NSW electricity consumers. This responsibility is at the core of everything we do.
As the Consumer Trustee, we co-ordinate planning of long-term investment in generation, storage and transmission in New South Wales, design and conduct competitive tenders to facilitate this investment, undertake authorisation of Renewable Energy Zone transmission infrastructure, and provide financial risk management and advice.
Designing tender processes to identify the best generation and storage projects for consumers.
Designing long- term agreements to encourage new generation and storage investment.
Managing and approving tender processes to identify the best generation and storage projects for consumers.
Through our competitive tenders and coordinated planning of long-term investment, we act in the long-term financial interests of NSW electricity consumers by supporting an energy transition that delivers quality energy, when it’s needed, and in a way that secures consumer value.
By running efficient and regular competitive tenders we ensure competition thrives and only the best, most efficient projects that deliver energy in a socially responsible way are supported to construction and operation as early as possible. Successful projects enter into innovative Long-Term Energy Service Agreements, which encourage investment whilst protecting consumers from high energy prices.
We are also responsible for the authorisation of Renewable Energy Zone network infrastructure, which is an important check and balance on consumer value from the development of this infrastructure.
Contributing to positive consumer outcomes, we will drive competition between technologies and proponents and deliver a more efficient investment process.
Delivering value for consumers
Since establishment in 2021, AEMO Services as the Consumer Trustee, has engaged closely with proponents and other stakeholders to design innovative products and processes that incentivise investment and secure value for NSW electricity consumers.
Drawing on insights from this market engagement, we deployed our in-house expertise in project development and financing, financial markets, governance and risk and market modelling to finalise the design of key elements of the Roadmap, including:
- The tender process, which will serve as the basis for biannual tenders for at least the next decade;
- Created the LTESA’s, the innovative contracts for generation and long-duration storage projects available through the tender process;
- Development of three IIO reports, which set out the expected timing and size tenders for firming, generation, and long-duration storage infrastructure; and
AEMO Services has delivered three highly successful tenders, two for generation and long-duration storage infrastructure, and one for firming infrastructure following a direction from the NSW Minister for Energy.
Participation in the tenders has been strong, demonstrating the market value and fit of the LTESA’s, which provides projects opportunity to capitalise on the upside of the market and reduces the risk and cost to consumers compared to traditional schemes.
Our first three tenders have fast-tracked 15 projects.
This represents 2,140 MW of generation, 574 MW (4592 MWh) long-duration storage and 1075 MW (2980 MWh) firming capacity, with a collective capacity of almost 3,800 MW and bringing in over 8 billion in investment for New South Wales.
AEMO Services’ overall objective for generation is the construction of infrastructure necessary to minimise electricity costs for NSW electricity customers. The minimum objective is the construction of infrastructure to make available 12 GW of annual renewable energy generation and 2 GW of long-duration storage by 2030.
We will only recommend a Bid where it is in the long-term financial interests of NSW electricity consumers, and the recommendation satisfies or is consistent with all relevant statutory requirements and duties.
AEMO Services has also worked extensively to establish the Scheme Financial Vehicle (SFV), which serves as the independent counterparty to LTESA’s and provides revenue (as determined by the AER) for Renewable Energy Zone network infrastructure projects and Priority Transmission Infrastructure Projects developed under the Roadmap. The SFV achieved an Aa3-stable credit rating from Moody’s.
AEMO Services appointed Equity Trustees Limited as the Financial Trustee – the entity that establishes and administers the SFV under the Roadmap – and the SFV has established the Electricity Infrastructure Fund to manage cash inflows and outflows.
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The Consumer Trustee is an independent body appointed by the NSW Government under the Roadmap to carry out coordinated planning of long-term investment, competitive tenders to facilitate this investment, authorisation of Renewable Energy Zone transmission infrastructure, and to provide financial risk management and advice. Central to this mandate, is the duty to act independently and in the long-term financial interest of NSW electricity consumers.
AEMO Services, an independent subsidiary to the Australian Energy Market Operator (AEMO), was appointed as the Consumer Trustee in 2021.
The Consumer Trustee is committed to delivering the energy transition at least cost to NSW electricity consumers. We do this by ensuring consumers are considered in every decision we make in our day-to-day operations from procuring professional services to recommending transformational energy infrastructure.
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Through our competitive tenders and coordinated planning of long-term investment, we act in the long-term financial interests of NSW electricity consumers by supporting an energy transition that delivers quality energy, when it’s needed, and in a way that secures consumer value.
By running efficient and regular competitive tenders we ensure competition thrives and only the best, most efficient projects that deliver energy in a socially responsible way are supported to construction and operation as early as possible. Successful projects enter into innovative LTESA’s, which encourage investment whilst protecting consumers from high energy prices.
We are also responsible for the authorisation of Renewable Energy Zone network infrastructure, which is an important check and balance on consumer value from the development of this infrastructure.
In line with our value of transparency, our important work to date our future goals and our operational costs have been published in our Corporate Plan (AEMO Services Corporate Plan at a Glance 14/12/2022) available on our website.
Next Steps
The contribution determination specifies only the costs DNSPs are to pay to provide for the functions of the Roadmap. Further information on the direct cost to consumers will become available over the coming months through AER announcements.
For further information on the Roadmap policy and achievements visit www.energy.nsw.gov.au.
For further information on the Contribution Determination visit the AER website.