Greater benefits for landholders essential to success of AEMO plan

Released every two years, the ISP is the roadmap for where the Australian energy industry is heading and lays out how our energy system can transition away from fossil-fuels towards cheaper, cleaner renewable energy.

The Draft 2022 Plan is wonderful news for those hoping to see a speedy transformation of the electricity generation sector and the broader economy.

For the first time, energy industry stakeholders, surveyed in the development of the AEMO plan, consider the most likely modelled scenario to be one in which “domestic and international action rapidly increases to achieve the objectives of the Paris agreement, to limit global temperature rise to well below 2 degrees compared to pre-industrial levels.” 

Under the optimal modelling results, by 2050 the National Electricity Market (NEM) will see:

• Double the delivered electricity to industry and homes per year to replace much of the gas and petrol currently consumed in transport, industry, office and domestic use. 
• Existing coal plants retire two to three times faster than anticipated. Modelling suggests that all brown coal and over two-thirds of black coal generation could withdraw by 2032. 
• Nine times the amount of wind and solar farms.
• Nearly five times the capacity of rooftop solar, and substantial growth in home batteries. 
• significant investment in storage including big batteries, and pumped hydro.

The Draft Plan identifies 10,000 km of new transmission to connect renewable developments and deliver renewable energy to homes, schools and workplaces across the grid. All up, investment in new generation and transmission lines will save households and businesses $29 billion in electricity bills over 30 years, while enabling the transformation to a clean electricity powered grid. 

These renewable energy transmission projects are essential for rapid decarbonisation and meeting our climate obligations. 

Approximately $12.5 billion in transmission projects are identified as actionable or high-priority projects with further significant expenditure foreshadowed for 11 future transmission lines starting after 2028. 

The Draft Plan recognises some important risks to timely implementation. It notes that regional communities will host the majority of the renewable energy infrastructure required, including solar, wind, storage and transmission. It states that “early community engagement will be needed to ensure investments have an appropriate social licence’.

Late in the report, AEMO calls on states to look into appropriate compensation mechanisms for farmers and other landholders who will host the transmission line towers on their land. We think this is a critical point that deserves more prominence, seeing as the completion of these essential projects relies on the support of host communities. Right now, compensation is not transparent and may not be adequate for the adjustments farmers will need to make to farm around transmission lines. 

We’ve previously argued through our report, Building Trust for Transmission, that the national planning and investment framework for transmission lines should be expanded to include an additional line item to pay for improved landholder compensation and community benefit sharing projects in affected communities.

The Australian Energy Market Commission and Australian Energy Regulator have indicated that increased landholder compensation payments could be allowed under national Rules if enhanced landholder payments were required under state law.

As New South Wales and Victoria establish their own regulatory frameworks for building new, renewable energy transmission lines, they should include increased compensation for landholders, compensation for neighbours on adjacent properties, and funding for community benefit sharing programs. This will help make sure that landholders and local communities can share in the benefits that the broader community gain from the project.

The NSW Government has recently indicated that it is reviewing the compensation arrangements payable to landholders affected by new transmission infrastructure. This is important work and also needs to be undertaken by other states.

Ensuring regional communities are involved in planning and have opportunities to share in the benefits from new solar, storage and transmission projects is fundamental to the success of the Integrated System Plan, and replacing fossil-fuels with clean, cheap, reliable, renewable energy.