Next step in delivering the Queensland Energy and Jobs Plan

Part 3 of the Draft Bill sets out targets for government ownership of energy assets. Specifically, the government currently intends for transmission, distribution and deep storage assets¹ to be 100% publicly owned, with generation assets set to be 'more than 50%' publicly owned. The precise targets will be codified in a public ownership strategy (to be released at a date still to be confirmed), and will be periodically reviewed in conjunction with the SuperGrid Infrastructure Blueprint discussed below.

The Draft Bill contemplates three forms of 'public ownership'—specifically:

• ownership in whole or part of assets by the Commonwealth, state or local government
• direct or indirect rights or interests of the Commonwealth, state or local government, in an entity that owns, wholly or in part, relevant assets
• interests prescribed by regulation held in relation to relevant assets, under an agreement or arrangement prescribed by regulation to which the state or a government-owned corporation is a party.

Progress made towards the public ownership targets, including the percentage of public ownership for each class of energy assets and the manner in which the public ownership percentage of an asset class is calculated, will be publicly reported on an annual basis from 2025 onwards.

While the Department of Energy and Public Works (the Department) has indicated that it intends to meet the 50% public ownership of generation asset target through increased public investment rather than constraints on private investment, it is not yet clear how these targets will be implemented in practice and whether, for example, projects that qualify for one of the three public ownership categories may be prioritised over competing private projects in the connection and approvals processes.

It is also not yet clear whether privately owned rooftop solar will be counted in the context of the generation asset target. While the Department has expressed that it does not anticipate private rooftop solar being calculated within the general breakdown of public/private generation infrastructure, this item remains open for consultation.

Part 4 of the Draft Bill focusses on the 'Queensland SuperGrid Infrastructure Blueprint', through which the Queensland Government aims to identify key electricity infrastructure projects (including Renewable Energy Zones) and the sequencing and timing of project delivery, and may also address changes to the operations of the state-owned coal-fired generators.

The Blueprint will be reviewed and updated over time, with the initial review to occur by 31 May of 2025 and then typically every two years thereafter.

Similar to the NSW Electricity Infrastructure Roadmap, the Minister is able to declare 'priority transmission investments'² which they can then direct Powerlink to identify and assess, and project delivery options under a modified regulatory investment test for transmission (RIT-T) process known as a 'candidate PTI assessment'.

Where the Minister directs Powerlink to carry out a priority transmission investment, they will also direct Powerlink to amend its Revenue Determination/Revenue Proposal (as relevant) to include the costs specified in the Minister's regulated asset base allocation direction in Powerlink's regulated asset base.

While few details have been confirmed at this stage, it appears the Queensland REZ access scheme is intended to be simpler than those in New South Wales and Victoria, both of which require a competitive tender for the allocation of access rights. Key details announced for the Queensland scheme include:

• REZ declaration: the Minister (on the recommendation from the REZ delivery body, currently intended to be Powerlink) may declare a part of the Queensland electricity network a REZ. Declared REZs will be smaller areas within the three broad regions identified in the Plan. Declarations will last for a minimum of 15 years after the first participant connects and will set out the objectives for the REZ (including the target connecting capacity).
• REZ management plans: when a REZ declaration is made, a draft REZ management plan for that REZ will be published for public consultation. The draft management plan will detail the technical qualities of the REZ (eg total capacity and target technology mixes), timeframes for development of transmission network assets and the processes and requirements for participants to connect.
• Access and connection: access and connection to a REZ will be determined in accordance with the requirements set out in the management plan on the basis of the following asset classes:
  • REZ transmission network, being the nominated transmission lines (existing³ or new) within a REZ that participants may connect to and use to transfer their energy to the shared network; and
  • REZ controlled assets, being assets in the vicinity of a declared REZ that may materially affect the functioning of the REZ. Powerlink may restrict connection to these assets to ensure the objectives of the REZ are achieved.

Powerlink will be responsible for negotiating access and connection agreements directly with each prospective REZ participant to fill the REZ to the nominated capacity.

• Funding and cost recovery: costs associated with REZ transmission network assets are intended to be recovered on a commercial basis from REZ participants. It is expected that the fees and charges payable to Powerlink by REZ participants under the network connection and access agreements will include an amount representing that participant's share of the establishment and operational costs of the REZ transmission network. If a residual shortfall exists and Powerlink is unable to reach a commercial resolution with the REZ participants to meet that shortfall, the Queensland Government may determine how the remaining costs are recovered (eg through a combination of Powerlink, government support or through transmission charges to consumers).

There are a number of details still to be revealed about the proposed REZ framework, including how:

• REZ participants will be identified
• the proposed framework will balance the need for investor certainty regarding the connection process, connection costs and timing of project delivery with the proposed flexibility, and coordinate this with the timing of transmission network investment decisions so as to mitigate the risk of inefficient investment of public funds
• Powerlink will streamline and coordinate the connection of multiple REZ participants with the delivery of the REZ transmission infrastructure.

The Queensland Government is aiming to release its REZ Roadmap later this year and its REZ Management Plans during 2024.

A number of new entities are proposed to be established pursuant to the Draft Bill, including the Queensland Energy System Advisory Board, the Energy Industry Council and the Queensland Renewable Energy Jobs Advocate.

The Energy System Advisory Board is proposed to be an independent board that will have several functions, including:

• providing advice to the Minister about long-term electricity demand projects, the optimal infrastructure pathway and achievement of the legislated renewable energy targets (including opportunities to accelerate achievement of the targets)
• preparing an annual progress statement assessing progress towards achieving the legislated renewable energy targets and matters relevant to the optimal infrastructure pathway
• any other functions conferred on the Board by legislation.

The Energy Industry Council is intended to advise the Minister on industry employment issues, and the Queensland Renewable Energy Jobs Advocate is intended to advise on, and promote opportunities for, employment, education and training in the Queensland energy industry.