The stated objectives of the NSW Government in embarking on this program are:
- To improve the affordability, reliability, security and sustainability of electricity supply
- To co-ordinate investment in new generation, storage, network and related infrastructure
- To encourage investment in new generation, storage, network and related infrastructure by reducing risk for investors
- To foster local community support for investment in new generation, storage, network and related infrastructure
- To support economic development and manufacturing.
Stated objectives aside, the NSW Government has been positioning an aggressive agenda on renewables investment, with a focus on renewable energy zones.
While there is considerable excitement from investors in the announced zones, to reach financial close, investors need an offtake agreement of some tenure.
There were (until the NSW Government’s announcement) reasonable questions to be asked about where these offtake agreements would come from. There are three to four main buyers in the market, with balanced portfolio and may not require additional supply before their coal assets retire. This would put pressure to find offtake agreements in the corporate Power Purchase Agreement (PPA) market in NSW, which is growing but is yet to mature. This posed a significant risk to the development of the zones, which has been addressed through the reform package.