Common to both packages is an emphasis on transmission network planning to help with firming of renewables (improving system reliability), aligning the development of generation interest with transmission capacity and improving the efficiency of resource sharing between regions.

In NSW, a REZ transmission development scheme will introduce a Transmission Efficiency Test, to determine an appropriate allowance for the investment. It will de-risk REZ grid investment, by allowing speculative transmission to be built, the cost for will eventually be recovered from connecting generators, but underwritten by NSW consumers.

In contrast, VIC Government is currently producing a REZ development Plan which will map out how alternative patterns of generation might impact the optimal development of transmission in the state – considering network projects that might best support areas of high developer interest. While the exact details including cost recovery have not been publicly announced, VIC’s recently legislated NEVA bill allows for expedition of transmission projects provided the project delivers value for VIC consumers.

Both packages have potential to accelerate the economic retirement of coal fired power stations which provides an opportunity for storage including batteries and pumped hydro similar to the Victorian Big Battery. Further, transmission investment will provide opportunities for the development of network support solutions at strategic locations for contestable transmission service providers.

The nature of the financial investments from these state government is moving away from simple grants and offtakes to providing more sophisticated and targeted investment certainty in order for projects to take FIDs.  Additionally, high levels of intervention potentially indicate a subtle return to centralised planning of generation. This places a lot of pressure on respective bureaucracies i.e. state governments to make economic decisions in the market.

Yet while the claimed public benefits of both NSW and VIC state policies are to drive wholesale prices down, the impact to network prices is hard to determine. Ultimately both these components get passed on to consumers.

Additionally, given the volume of renewables connecting to the grid and the projected boom in essential infrastructure, the ambitious state targets are likely to drive supply chain capacity constraints, particularly for wind tower manufacturing and the EPC market.

While both states have adopted different mechanisms, the NSW and Victorian Governments have demonstrated their shared commitment to supporting new large-scale renewable generation.