Scale Efficient Network Development to Support Renewable Generation Development

Scale Efficient Network Extension (SENE) to connect remote renewable generation resources requires a new regulatory regime to facilitate construction of transmission in anticipation of uncertain generation development. This paper first discusses the conflicting requirements of such transmission development. While it is desirable to take advantage of significant economies of scale of high voltage/ultrahigh voltage (HV/UHV) transmission, there is a risk of part of these assets getting stranded, if generation does not eventuate. This is a trade-off that traditional cost-benefit analysis of transmission under the current regulatory regime does not take into account. On the other hand, a transmission asset that is scale efficient and does not have stranding risk may not necessarily have positive net market benefit. We have analyzed how these fundamentally different benefits and risks associated with transmission assets may be shared among various parties. Second, we have presented realistic case studies for three major renewable generation hubs in Australia to quantitatively demonstrate these trade-offs. We conclude the discussion on a number of insights to use the scale efficiency and market benefit concepts in a complementary way to shape future regulatory developments.