Type
Sector
Electricity
Segment
REZ
Transmission
Issue date
AER reference
AER22005187
Contacts

The Australian Energy Regulator (AER) has today published its revenue determination on the amounts payable to ACEREZ Partnership (ACEREZ) for the main Central-West Orana Renewable Energy Zone (CWO REZ) network project. The AER made its determination on 13 December 2024. Since that time, the AER has consulted with the Infrastructure Planner and assessed any claims for non-disclosure prior to publishing the determination. 

The project, initiated under the New South Wales (NSW) Electricity Infrastructure Investment Act (EII Act), provides for new network infrastructure to deliver 4.5 gigawatts of network capacity, to support up to 7.7 gigawatts of new generation from solar, wind and energy storage projects. The scope and timing of the CWO REZ network project was decided by the Energy Corporation of NSW (EnergyCo) as the Infrastructure Planner. 

ACEREZ was selected by EnergyCo as the network operator following a competitive assessment process, and authorised by the NSW Consumer Trustee (AEMO Services) to undertake the project. ACEREZ will construct, own, control and operate the project for 35 years. 

Consistent with our role under the NSW regulatory framework, we have reviewed the competitive assessment processes for the project and are satisfied that they were ‘genuine and appropriate’. On this basis, the revenue determination must adopt the outcomes from those processes.

The revenue determination sets out a schedule of quarterly payments to be paid to ACEREZ over the project term, which includes total revenue over the first 5 years (2025–29) of $1,475.3 million (nominal). The revenue determination also includes mechanisms to adjust the amounts payable to ACEREZ over the project term. 

NSW electricity customers are not expected to fund the full cost of the CWO REZ network project. Costs for connection assets and system strength infrastructure are expected to be funded through access fees paid by generators and storage projects connecting to the CWO REZ network. These costs have been included in the revenue determination to allow for effective coordination of the REZ network with generation and storage projects.  Access fees are determined by AEMO Services.

We intend to publish the capital cost of the project associated with this revenue determination as part of our financial close adjustment decision, which is expected in mid‑2025. This recognises that some components of the capital cost will only be finalised as part of that process.    

Background

The CWO REZ is approximately 20,000 square kilometres in central NSW, centred by Dubbo and Dunedoo. It is the first renewable energy zone to be developed under the NSW Government’s Electricity Infrastructure Roadmap (NSW Roadmap). The CWO REZ was declared by the NSW Minister for Energy and Environment under section 19(1) of the EII Act in November 2021.

Completion of the CWO REZ network project and connection of foundation generators will be staged between 2028 and 2030.

On 4 June 2024, AEMO Services (NSW Consumer Trustee) under s. 31(1)(b) of the EII Act authorised ACEREZ as the network operator to develop, construct, own, control and operate the main CWO REZ network project. ACEREZ is a consortium comprising Cobra, Acciona and Endeavour Energy.

We have made our determination in accordance with the EII Act, the EII Regulation and our Revenue determination guideline for New South Wales (NSW) contestable network projects.

Under the contestable framework, there are clearly defined roles for the different NSW Roadmap entities:

  • EnergyCo, as the Infrastructure Planner, determines the scope and timing of network projects required to meet the NSW Roadmap objectives and undertakes a competitive assessment process to select a network operator for the project. It then recommends projects and network operators to undertake them to AEMO Services. The public version of the recommendation report from EnergyCo for the CWO REZ project can be found here.
  • AEMO Services, as the NSW Consumer Trustee, reviews EnergyCo’s project recommendations and decides whether to authorise the recommended network operator and project. AEMO Services will authorise projects that it finds to be in the long-term interests of consumers and that are consistent with the Development Pathway set out in the Infrastructure Investment Objectives Report. The authorisation from AEMO Services for the CWO REZ network project can be found here. 
  • The AER is required to assess whether a competitive assessment process undertaken by EnergyCo was genuine and appropriate. If so, the AER must determine a schedule of payments that reflects the competitive outcome on the basis that the costs resulting from the process are deemed to be prudent, efficient and reasonable.  

Under the EII Act, ACEREZ is required to be paid by the Scheme Financial Vehicle (SFV) in accordance with our revenue determination. The SFV recovers these costs (and other NSW Roadmap costs) from NSW electricity distributors, who in turn recover them from NSW electricity customers via their retail bills.