Decarbonisation pre-panel address | The Hon Matt Kean MP, Minister for Energy and Environment, New South Wales

Decarbonisation pre-panel address

Key points:

• The New South Wales Government intends to leverage the state’s competitive advantage in renewables as part of its infrastructure-led recovery effort. • There are significant opportunities for the private sector to invest in generation and transmission infrastructure. • The New South Wales Government is working to ensure that projects in Renewable Energy Zones have social licences, along with streamlining processes for investors and fast-tracking priority transmission projects.

Speaker:

► The Hon. Matt Kean MP, Minister for Energy and Environment, New South Wales

I would like to thank Infrastructure Partnerships Australia for the invitation to address this forum. New South Wales was an infrastructure economy leading into the COVID-19 pandemic, and the Government is determined that we will have an infrastructure-led recovery coming out of it. Reliable, cheap and abundant energy has been New South Wales’s competitive advantage for generations, and it will continue to be our competitive advantage in the recovery.

What has changed is that rather than using carbon-intensive resources, we are shifting to the renewable resources that our state has in abundance. This change is being driven by economics and science. The cheapest way of producing electricity is not coal, gas or nuclear. It is wind and solar backed up by pumped hydro and batteries, and batteries are coming down the cost curve dramatically. With pumped hydro, the major cost is capital by nature. Once you have actually built the infrastructure, the marginal cost to produce the electricity is close to zero.

Now the science tells us the climate is changing and that carbon emissions are the cause, and there is a need to reduce them to net zero in order to live without the damage. Science and economics point us in exactly the same direction. With interest rates at record lows – likely to remain so for the foreseeable future – now is the time to invest in the infrastructure that will power New South Wales’s future. The clear advice from the Reserve Bank of Australia is for governments to do everything we can to create jobs and stimulate the economy as we emerge from the shadow of COVID-19.

We are accelerating the clean energy transition to ensure that New South Wales captures the jobs and growth that we will need to power our economic recovery. Now, there are significant opportunities for the private sector to invest in both the generation and transmission infrastructure that’s needed. On the generation side, we have been able to take advantage of the hard work and detail put into our state’s electricity strategy and Net Zero Plan.

Our Renewable Energy Zones (REZ) are the modern-day equivalent of coal-fired power stations, and we have had a massive vote of confidence from investors in the creation of Australia’s first REZ in the Central West and Orana region. Our industry registration of interest process received 27,000 megawatts of proposals, worth $38 billion of private capital. That is nine times the amount needed. In June, I announced that in order to speed up the development of the zone, the Government will invest more than $40 million.

Overall, this will parlay into more than $4.4 billion worth of investment coming into the Central West, creating 450 jobs in the region. The Government is working with TransGrid to undertake a feasibility scoping study for the REZ, and that is supported by $5 million from the Australian Renewable Energy Agency. A second REZ in the New England region has the potential to produce as much energy as all of the state’s coalfired power stations combined.

The phenomenal level of investor demand in the CentralWest Orana REZ has led us to bring forward our plans for the development of the New England zone, with a further $79 million worth of investment. We have repurposed the Energy Corporation of New South Wales in code to coordinate the construction and operation of the zones so that we can streamline processes for investors, and ensure that the infrastructure is going where it is accepted by the community.

The Energy Corporation’s job would be to make sure that the infrastructure has a social license before the first sod is turned. We are also creating a special access right regime to connect into the zones, giving projects greater certainty over grid access, insulating them from congestion risk, and enabling them to better predict revenue. New South Wales has extraordinary levels of renewable resources, but they are in different parts of our state from our traditional energy resources.

Transmission infrastructure is going to be crucial to our energy transformation. We know we have to ensure that transmission investment keeps up with the rapid changes in the generation mix. We are fast-tracking the delivery of four priority transmission projects identified in the New South Wales Government’s 2019 Transmission Infrastructure Strategy, and the Australian Energy Market Operator’s (AEMO) Integrated System Plan. The first two of these projects – upgrades to the state’s existing interconnectors with Victoria and New South Wales – will help guarantee reliable power supplies after the Liddell Power Station closes in April 2023.

There are two other priority projects: the interconnector with South Australia, and Humelink, which will unlock the capacity of Snowy 2.0. We have worked with TransGrid and AEMO to bring forward early planning and feasibility works on these projects so we can accelerate delivery, create jobs and build capacity at the same time. Our joint underwriting of the $102 million with the Commonwealth has brought forward TransGrid’s delivery of the Queensland-NSW Interconnector upgrade by more than a year.

In my first major speech as the Minister for Energy, I said I wanted New South Wales to be the easiest jurisdiction in the OECD in which to build infrastructure. What that looks like is making sure that we are investing in the projects that we need to move through the planning system quickly. The Government is investing to get the groundwork done. We are getting the regulatory regimes right, and we are slashing red tape, and we are not finished yet. I invite your businesses to join with us as we make sure New South Wales is the leading destination for investment in renewable energy, as we transition to a future powered by clean, green energy.