The AER is required to make determinations for Network Operators who are authorised or directed to undertake network infrastructure projects. We undertake this role as a Regulator under the NSW Electricity Infrastructure Investment Act 2020 (EII Act).
On 14 October 2022, the NSW Minister for Energy directed Transgrid as the Network Operator to carry out the Waratah Super Battery (WSB) project, which is classified as a Priority Transmission Infrastructure Project under the EII framework.
Throughout 2022, EnergyCo undertook a competitive process to select a portfolio of generators to deliver the paired generation service component of the WSB project. The Ministerial direction required Transgrid to enter into contracts to procure the paired generation services.
On 10 November 2023, Transgrid submitted a revenue proposal to the AER for the paired generation services component of the WSB project, seeking to recover the cost of payments it will make to the paired generators. On 29 November 2023, we made a determination setting out the amounts that Transgrid is to be paid.
Under the EII Act, Transgrid is required to be paid by the Scheme Financial Vehicle (SFV) in accordance with our determination. The SFV recovers these costs (and other NSW Roadmap costs) from NSW electricity distributors, who in turn recover these costs from NSW electricity customers via their retail bills.
Paired Generation Services
The aim of the WSB project is to increase power transfer capacity on transmission lines that connect generation in the northern and southern regions of NSW to the Sydney, Newcastle and Wollongong region. The paired generation services operate in tandem with the battery service. Upon receiving a signal from the SIPS control system under a contingency event or fault, the paired generators rapidly ramp down power output, removing the load from the transmission network and allowing the event to be resolved.
The WSB project comprises the following four elements:
- SIPS battery service (contestable)
- Paired generation services (contestable)
- SIPS control system (non-contestable)
- Network augmentations (non-contestable)
The NSW Energy Corporation (EnergyCo), as the Infrastructure Planner for the WSB project, completed a competitive assessment process to select a portfolio of generators to deliver the paired generation service.
Transgrid, as the Network Operator for the WSB project, is required under the Ministerial direction to enter into a contractual arrangement to procure the paired generator services.
Determination review and remake – March 2024
Transgrid submitted a revenue adjustment proposal to the AER on 2 February 2024 for the addition of a third Paired Generation provider to the Waratah Super Battery The revenue adjustment proposal was triggered by an adjustment mechanism in our November determination (Waratah Super Battery Determination – Paired Generation Component – November 2023).
We decided to review and remake the determination to amend the existing adjustment mechanisms. This is because we found that the adjustment mechanisms in our November determination needed to be updated to account for the addition of a third Paired Generation provider.
In our review of Transgrid’s revenue adjustment proposal we remain satisfied the agreement with the third Paired Generation provider was procured in the same competitive assessment process outlined in Section 2 of the determination. On this basis we are able to adopt the outcomes from that competitive assessment process in our remade determination.