By Verity Watson, Head of Transmission, Energy Networks Australia
In 2022, Energy Ministers agreed to improve the coordination of electricity and gas planning by reviewing the Integrated System Plan (ISP) to “supercharge” the planning system across the sector to support a more coordinated investment and planning across Australia. Here, we look at how the review is progressing and outline some of the key considerations being undertaken.
The Energy and Climate Change Ministerial Council (ECMC) agreed to the terms of reference for the ISP review in July last year, setting an almighty agenda to manage energy reliability and affordability to help us reach net zero by 2050. The ISP sets out to integrate electricity and gas planning, and will consider gas fired generation, demand and the necessary transition pathways.
This “supercharged” ISP review will include generation, storage, transmission and distribution requirements to maintain affordable and reliable energy for consumers.
The review is being undertaken in two stages:
» Firstly, quick and easy enhancements that can be made for the 2024 ISP, in anticipation for the Draft 2024 ISP, which is expected to be released in December 2023 for comment.
» Secondly, the more comprehensive changes needed to support the 2026 ISP. Presumably the completed review will result in the Federal Energy Minister leading the recommended or required rule changes in mid-2024.
These changes could take a further two years of rule- making and possible guideline-making and may need significant procedural and IT system changes. All of which puts a tight timing constraint on material needed to meet the July 2025 deadline.
The barriers to planning and construction of ISP projects are also being looked at and will feed into this review, however there are some clear observations that cannot be looked over:
Social license – there are some nine processes underway looking at social license, including developing guidelines. What is needed is an appropriate, fit-for-purpose community engagement framework supported by funding for transmission networks. The compensation framework both at the landholder and community benefits level should be fair, equitable and fit-for-purpose.
Environment and planning approvals – these approvals are time-consuming. Significant rework can be required where the network planner and delivery parties differ.
Improvements in environmental and planning approvals would help facilitate timeliness as would the ability to undertake more early works in relation to community engagement and route selection, as well as cultural and environmental studies.
This would need to be accompanied by sufficient early works funding and the ability to progress early procurement planning and contracting for long lead time items.
Skilled workforce – this also needs to be increased via migration and training, both with local content and local resourcing. Sequencing of transmission projects could allow a smoother workflow but needs to be factored into transmission network service providers (TNSPs) project delivery timeframes.
Creating more planners or more networks only serve to spread the key planning resources more thinly and increase the level of poaching, and ultimately this increases costs for all networks.
Supply chains – the UK is making major changes to its framework to accelerate transmission investment. The rationalewas noted in our Rewiring the UK article which is available to read on our website. A key element of this is to give the established transmission businesses certainty that they will be the parties proceeding with the projects agreed in the central plan.
This allows them to accelerate project delivery by bringing forward community engagement, route refinement, enabling works and procurement commitments. It also enables a programme of work or portfolio of projects to be efficiently sequenced, with associated cost benefits.
The UK recognises the stretched global supply chain and are encouraging the TNSPs to establish long term relationships with key providers. Regulatory constraints – it will be important regulatory frameworks support the financeability of projects consistent with the Energy Ministers rule change request to resolve the issues in the regulatory framework without the need to rely on government funding.
It is crucial that rules seek to provide the level of certainty that investors need early in the life of the project. Every regulatory change or decision needs to consider if it is adding value to consumers, ensuring beneficial projects proceed in a timely and efficient manner.
Managing the state interactions – a future focus
The state and federal governments are active in the policy space in gas and electricity from supply to end use consumers. Getting the policies out of the cupboard and included as key inputs into the ISP would be beneficial. The ISP is a comprehensive plan identifying an optimal transmission development path.
One area of focus that might be valuable could be to seek to identify options to better incorporate the future plans of state governments to ensure the optimal development path remains robust to both the future scenarios considered and to potential state developments.
