The Australian Energy Regulator (AER) has a role in making revenue determinations for Network Operators who are authorised or directed to undertake network infrastructure projects. We are undertaking this role as 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 (PTIP).
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 load centres in the Sydney/Newcastle/Wollongong (SNW) region. The battery will operate as part of a broader System Integrity Protection Scheme (SIPS). The SIPS is designed to monitor transmission lines and enable the battery to act as a 'shock absorber' in the event of any sudden fault on the transmission system. 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)
SIPS battery service
EnergyCo NSW, as the Infrastructure Planner for the WSB project, recently completed a competitive assessment process to select a service provider for the SIPS battery service. Akaysha Energy will be responsible for the construction and operation of a battery that is capable of providing a guaranteed continuous active power capacity of at least 700 MWs, and a guaranteed useable energy storage capacity of at least 1400 MWh.
Transgrid is required under the Ministerial direction to enter into a contractual arrangement to procure the SIPS battery service from Akaysha Energy.
On 17 October, the AER received a revenue proposal from Transgrid for the SIPS battery service component of the WSB project. The revenue proposal sets out a schedule of quarterly payments that are proposed to be paid to Transgrid as the Network Operator for the project and, in turn, to the SIPS battery service provider (Akaysha Energy).
Under the EII framework, the AER is able to rely on and adopt the outcomes of a competitive assessment process, if it is satisfied that the process was genuine and appropriate. Once our revenue determination is made, a Network Operator is required to be paid by the Scheme Financial Vehicle in accordance with the schedule of payments contained in our revenue determination.
The EII Regulations do not permit the AER to publish a revenue proposal from a Network Operator. However, the Regulations do permit the AER to publish its revenue determination, subject to an assessment being undertaken against certain criteria (for example, whether information is confidential or commercially sensitive).
We will make our revenue determination in accordance with the EII Act, the EII Regulations and the AER’s Revenue determination guideline for NSW contestable network projects. Under clause 50 of the EII Regulations we have 42 business days to make a revenue determination (that is, by 14 December 2022).