Poles and wires marketplace

Gaining a stake in the renewables marketplace has potential pitfalls


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Once a straightforward means of getting electricity to homes and businesses, the grid is now transformed, delivering huge profits to players who can gain a foothold in its operations.

Once a straightforward means of getting electricity to homes and businesses, the grid is now transformed, delivering huge profits to players who can gain a foothold in its operations.

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Once a state-owned one-way delivery system to customers, the electricity grid has become a marketplace, attracting players of many types, yet with a common goal of profit.

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THE marketplace that has replaced Australia’s once state-owned national energy grid is becoming brutal.

Companies tussle to gain rights to upload renewable power via the grid’s substations, originally designed to service a one-way system from power station to customer.

NSW’s biggest operator, Transgrid, does not have enough capacity to fulfill interest in uploading power.

It is not a race to save the planet, it is about leveraging deals and optimising debt gearing to generate profit.

Suppliers, developers and “aggregators” are vying to secure the rights to substations, in NSW largely managed by Transgrid and Essential Energy.

One industry observer used an analogy for the business of aggregation as “putting together construction sites with no intention of constructing anything”.

Essential Energy and Transgrid have seen a significant increase in companies wanting to upload power.

As of June this year, TransGrid had connection interest for a combined 6250 megawatts of renewable energy projects in NSW, but there is only 4670MW of network capacity across the nominated connection points – the carrier’s capacity is oversubscribed by 130 per cent.

Essential Energy is adjusting its business model and network operations to accommodate the rapidly evolving energy industry.

“Connection inquiries have increased by close to 400 per cent since 2015, predominantly from solar farms,” the operator said.

”Essential Energy currently has 725MW of medium to large-scale generators connected to its network.”

Applications received this year propose to add more than 3600MW of renewable-generated electricity.

The jostling for rights in the new market is creating winners and losers.

Andrew Aitken, principal at Sydney-based Aitken Lawyers, laments the division of rural and regional communities for which he advocates.

Mr Aitken is a participant in negotiations to gain rights to use privately owned land to get to the grid. He helps negotiate carriageways to gain physical access to substations and land on which to place electricity producing infrastructure to feed substations. “The market is starting to move very fast,” says Mr Aitken, who heads a firm with a long history of representing rural landholders.

The renewable landscape has gone beyond developers with capital to build solar or wind farms seeking access to the grid. In many cases the companies involved have just enough capital to borrow heavily and set up a deal, which is then handballed to a newcomer. There are others who apply for access to a substation to create “a slice of the action, where there wasn’t a slice,” said Mr Aitken.

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