Renewable energy zones
- Energy
- Energy regulation
- Hydrogen
- Offshore wind
- Oil & Gas
- Batteries & Storage
- Renewable energy zones
Renewable energy zones (REZs) are a key tool for unlocking new renewable generation, and promoting efficient and coordinated investment in transmission infrastructure.
Australia's successful transition to a net-zero electricity system depends on renewable energy generators being able to secure connection to electricity networks on a timely, affordable and reliable basis. In addition to this, electricity networks themselves need to evolve – to be fit for purpose in a world where intermittent and geographically diverse sources of renewable generation are replacing legacy coal-fired power stations.
An important tool for managing this dual challenge is the development of REZs in the National Electricity Market (the NEM). REZs provide a means of coordinating and co-locating the construction of new generation and network infrastructure.
Each state has now announced initiatives to promote the development of REZs in their jurisdictions. As these processes to design and implement reforms continue, it will be crucial for sector participants to understand the opportunities they have to engage with those reforms (through consultation), and to participate in the resulting network infrastructure and associated generation projects.
How we can help
Allens is at the forefront of energy reform and regulation as well as electricity network, renewable generation and storage projects across Australia. Our market-leading team of utility, electricity, infrastructure and project financing specialists regularly advise across all sections of the market, at all stages of the project lifecycle. We have a comprehensive understanding of the issues that are likely to arise in relation to generation, storage and network infrastructure projects across various state jurisdictions.
We have an excellent understanding of the regulatory framework that governs REZ projects in NSW, including direct experience on:
- the Central-West Orana (CWO) REZ network operator tender process;
- the CWO and South West (SW) REZ access right tender processes;
- priority transmission infrastructure projects under NSW's Electricity Infrastructure Investment Act 2020 (the EII Act); and
- related tender processes for Long-Term Energy Service Agreements (LTESAs).
Having advised the financiers to the winning bid, the underbidding consortium and a separate equity investor on the CWO REZ network operator tender, as well as several generators on their applications for access rights in both the CWO and SW REZ, we have broad insights and perspectives that mean we give our clients comprehensive advice. We leverage this experience when advising clients on REZ regulatory frameworks in different state jurisdictions.
Through our experience in delivering successful outcomes for the private and public sector on a wide range of major infrastructure and energy projects, we understand the relevant legislative and contractual framework and challenges, as well as the broader stakeholder environment within which REZs are being designed and delivered. We know how to work with, and in front of, state governments, and use that lens when assisting our clients.
Allens has worked on successful PPPs since their inception in Australia, up to and including all recent transactions. We have been involved in some of the largest and most complex transactions in the market, demonstrating our knowledge of key stakeholders and our ability to help bring such projects to completion. Our deep understanding of PPP transactions and the positions that can be achieved in the PPP market means we are well placed to advise on the hybrid PPP models being adopted to procure the development of greenfield REZ network infrastructure in NSW.
Experience
CWO REZ
Advised the financiers to the winning bidder and another shortlisted consortium on their bids to design, construct, finance, operate and maintain new transmission network infrastructure within the CWO REZ – a unique and first-of-its-kind transaction, procured using a hybrid regulated asset base and PPP model.
REZ access arrangements
Advised a number of generators on their applications for access rights in both the CWO and SW REZ, including in relation to the different connection regimes that apply for each REZ. Our team has extensive experience advising on network access and connection arrangements in the REZs, and we are at the forefront of navigating these evolving regulatory regimes with our clients.
Waratah Super Battery
Advised the Energy Corporation of NSW on the procurement of the Waratah Super Battery project, the first priority transmission infrastructure project to be delivered under the EII Act. This included advising on transaction documents and funding, as well as revenue determination, within a bespoke regulatory regime.
Transmission projects
Worked with Transgrid on:
- its bid to design, construct, own and operate the Western Victoria Transmission Network Project, including all Australian Energy Market Operator documents; and
- the procurement and construction of Project EnergyConnect.
Also acted for connecting parties (generators and loads) on large-scale connections to transmission infrastructure in every NEM jurisdiction and in the Wholesale Electricity Market.
NSW network leases
Acted for NSW Treasury on the devising and disposal of the long-term network leases that underpin the Transgrid, Ausgrid and Endeavour Energy network businesses. Also advised NSW Treasury on the impact of the EII Act REZ proposals on the network leases.
Victorian Big Battery
Acted for the Australian Energy Market Operator to procure additional system reliability assets to enable the state's transmission system to run at a higher rating. This involved a novel transmission support agreement to underwrite the project.
Connection agreements and renewable project experience
Advised on connection agreements in every NEM jurisdiction and in the Wholesale Electricity Market. Acted for sponsors regarding developing and connecting renewable generators, energy storage projects and customer loads across the NEM.
Transmission regulatory matters
Worked with Transgrid in relation to:
- the application of the Australian Energy Regulator ring-fencing guidelines;
- the impact of rule changes, including in relation to contestable connections, inertia and system strength services;
- Transgrid’s contingent project for the Victorian–NSW interconnector upgrade; and
- cost recovery and the Regulatory Investment Test for Transmission issues.
Electricity market regulatory reforms
Acted for the Australian Energy Market Commission / Energy Security Board on implementing a number of high-profile electricity reforms. This has involved integrating complex policy objectives, technical and commercial know-how, and a detailed knowledge of the National Electricity Rules. Recent examples are the Transmission Planning and Investment Review, Retailer Reliability Obligation, Market Liquidity Obligation and Coordination of Generation and Transmission Investment.
LTESA and CISA experience
Involvement in the LTESA and Capacity Investment Scheme Agreement (CISA) schemes, including:
- consultation discussions with EnergyCo on the form of the contract;
- assisting a number of bidders with their review of the LTESA and CISA documents, including requested changes and mark-ups for one of the successful proponents; and
- full bankability reviews of both agreements.