Mountain, Bruce ORCID: 0000-0002-2093-2038, Woodley, Ted and Outhred, Hugh (2021) A review of the HumeLink Project Assessment Conclusions Report. Working Paper. Victoria Energy Policy Centre, Victoria University, Melbourne, Australia.

Abstract

HumeLink will be the most expensive transmission project in the history of the Australian electricity industry, and one of the biggest, with TransGrid’s preferred option comprising 330 km of 500 kV double-circuit lines and construction or augmentation of three 500/330 kV substations in southern New South Wales (NSW). HumeLink is essential for the 2,040 MW Snowy 2.0 pumped hydro station,the largest single-point load ever to be connected to the National Electricity Market and the largest generator for 35 years. TransGrid’s recent Project Assessment Conclusions Report (PACR) reveals that HumeLink’s estimated cost has increased from $1.3bn in the Project Assessment Draft Report, to $3.3bn (accuracy of -30%/+50%). NSW transmission tariffs will increase by about 40% if the total cost is borne by electricity consumers. The PACR has incorrectly treated Snowy 2.0 as a sunk cost in the cost/benefit analysis. HumeLink is a necessary complement to Snowy 2.0 and the economic analysis of HumeLink should include the cost of Snowy 2.0, since the benefits of Snowy 2.0 are also counted. When the cost of Snowy 2.0 is included in the cost/benefit analysis, HumeLink is found to impose a deadweight loss exceeding $4bn. If HumeLink nonetheless proceeds, Snowy Hydro should be required to pay its fair share of the cost, especially since Snowy 2.0 is the main determinant of HumeLink’s route, size and timing. In addition to the fundamental error in the cost/benefit analysis, our review finds many other errors and inconsistencies in the PACR and a failure to justify the preferred HumeLink option relative to other options. There is an urgent need for an independent transmission planning review process in NSW.

Data Citation/Attribution

Mountain, B., Woodley, T., & Outhred, H. (2021). A review of the HumeLink Project Assessment Conclusions Report. Victoria Energy Policy Centre, Victoria University. https://doi.org/10.26196/3YVG-EY15

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