The Australian Energy Regulator has today published its determination specifying actions Transgrid must take to respond to a material change in circumstances (MCC) in relation to its Meeting System Strength Requirements in NSW regulatory investment test for transmission (RIT-T).
In a written notice to the AER, Transgrid identified that an MCC had occurred for its Meeting System Strength Requirements in NSW RIT-T. In response, it proposed actions to undertake a streamlined analysis of the MCC and publish this analysis alongside a statement identifying whether the preferred option identified in the PACR has changed and, if so, the new preferred option. These actions were proposed to be completed by 24 June 2026.
Our determination specifies that Transgrid is required to undertake updated analysis, publish a draft statement and allow for 1 month of public consultation. Following this consultation, Transgrid is required to prepare and publish a final statement which responds to submissions and identifies any refinement to the preferred option.
Having considered Transgrid’s proposed actions in the context of the MCC, the AER considers that the benefit of consultation in providing transparency around changes in inputs since the completion of the RIT-T in July 2025, outweighs the limited risk of delay associated with the required process.
We require the draft statement to be published by Transgrid by 24 June 2026 and the final statement be published by 24 August 2026.
Background
Transgrid is responsible for ensuring sufficient system strength services are available to maintain the stability of the NSW power system.
Between December 2022 and July 2025, Transgrid applied the RIT-T to assess options that would address the system strength shortfall projected by AEMO in the second half of 2025 and meet system strength requirements in NSW. Regulatory investment tests are a cost benefit test which network businesses must apply before undertaking investment in their networks to address an identified need.
The preferred option identified in the RIT-T includes:
- commissioning 3 synchronous condensers in Transgrid's network in 2028-29 and another 7 in 2029-30
- procuring non-network solutions, provided they meet the criteria for efficient and prudent expenditure, including grid-forming battery energy storage systems.
The estimated cost of the preferred option in the project assessment conclusions report is approximately $6.3 billion.
The procurement of 5 of the synchronous condensers in the preferred option is proceeding as a Priority Network Investment Project under state legislation, the Electricity Infrastructure Investment Act (NSW) (EII Act), rather than under the NER.
On 29 April 2026, Transgrid notified the AER that a material change in circumstances has occurred for this project. The notice identified that the primary cause of the MCC was a material increase of more than 30% in the cost to procure synchronous condensers which was included in its RIT-T as a RIT-T reopening trigger.