The Australian Energy Market Operator (AEMO) and TransGrid have opened consultation on plans for the interconnector between Victoria and New South Wales (NSW).

“Under this proposal, AEMO’s initial analysis shows that for every dollar invested in increasing the transfer capacity between Victoria and NSW, the project is expected to deliver approximately four times that in net market benefits,” AEMO Chief System Design and Engineering Officer, Dr Alex Wonhas, said.

“This will help to lower the cost of electricity in the long term.

“Furthermore, this investment is a critical early step in our Integrated System Plan to achieve a lowest cost portfolio of resources and strategic transmission development that meets consumer energy needs.”

Electricity transfers between Victoria and NSW are currently restricted by thermal, voltage stability and transient stability issues.

AEMO says these limitations will increase the underlying economic cost of electricity as a result of reduced access to lower-cost generation produced in the southern states, and increased need for new generation investment to maintain adequate supplies.

The new Project Assessment Draft Report (PADR) marks step two of the Regulatory Investment Test for Transmission (RIT-T) consultation process and details an investment proposal to increase transmission capability from Victoria to NSW by approximately 170 megawatts.

 “AEMO now looks forward to working with stakeholders to test and refine the assumptions where necessary to ensure any investment decision is taken in the best interest of Australian consumers,” the authority said.

More information including an analysis of all the options assessed is available in the full PADR, available here in PDF form.