RIT-T Project Assessment Draft Report CONFIDENTIAL These records and accompanying documentation consist of confidential and/or internal deliberative information prepared by representatives or consultants working for Project Marinus for deliberative purposes. The document is not for public release as the information may not be final in nature and could be misapplied or misinterpreted. The information should not be used, disclosed or transferred. without TasNetworks express wRIT-Ten permission. All records are not intended for public release. This document has been produced by Tasmanian Networks Pty Ltd, ABN 24 167 357 299 (hereafter referred to as "TasNetworks"). Enquiries regarding this document should be addressed to: Stephen Clark Technical and Economic Leader, Project Marinus PO Box 606 Moonah TAS 7009 Email: [email protected] This Activity received funding from ARENA as part of ARENA's Advancing Renewables Program. The views expressed herein are not necessarily the views of the Australian Government, and the Australian Government does not accept responsibility for any information or advice contained herein. Page 2 of 169 Table of Contents Foreword ...........................................................................................................................................................6 Testing Marinus Link against competing alternatives ............................................................................. 6 Customer and stakeholder engagement ................................................................................................. 7 Marinus Link provides a cheaper supply option for mainland NEM regions ........................................... 7 Marinus Link should proceed in two stages ............................................................................................ 8 Early project delivery ............................................................................................................................... 9 Pricing impact ........................................................................................................................................ 10 Further engagement .............................................................................................................................. 11 1 Introduction and Overview ................................................................................................................. 12 1.1 Purpose of this document ...................................................................................................... 12 1.2 RIT-T analysis supports Marinus Link ................................................................................... 13 1.3 Marinus Link and other NEM investments ............................................................................. 14 1.4 The case for advanced project delivery ................................................................................. 16 1.5 Structure of this PADR ........................................................................................................... 17 1.6 Consultation and next steps ................................................................................................... 17 2 Key recent developments ................................................................................................................... 18 2.1 Actionable ISP........................................................................................................................ 19 2.2 Snowy 2.0 .............................................................................................................................. 21 2.3 Renewable Energy Zones ...................................................................................................... 22 2.4 AEMO’s 2019 planning and forecasting assumptions and scenarios.................................... 24 2.5 AEMO Insights Papers ........................................................................................................... 26 2.6 Hydro Tasmania “White Paper” ............................................................................................. 27 2.7 Related RIT-Ts and Transmission Annual Planning Reports ................................................ 28 2.8 AEMC’s Coordination of Generation and Transmission Investment review .......................... 30 2.9 Post-2025 market review ....................................................................................................... 31 2.10 AER’s RIT-T Guidelines ......................................................................................................... 32 Page 3 of 169 3 Submissions and feedback received ................................................................................................ 33 3.1 Feedback on PSCR ............................................................................................................... 34 3.2 Feedback on the Initial Feasibility Report .............................................................................. 37 3.3 Key messages and our response .......................................................................................... 38 4 Description of the credible options ................................................................................................... 42 4.1 Identified need........................................................................................................................ 42 4.2 Base case .............................................................................................................................. 44 4.3 Credible options ..................................................................................................................... 44 4.4 Technical requirements of the power system ........................................................................ 47 4.5 Technical characteristics of credible options ......................................................................... 50 4.6 Technology choices ............................................................................................................... 53 4.7 Costs of each option .............................................................................................................. 56 4.8 Options considered but not assessed further ........................................................................ 57 5 Calculation of market benefits – approach, assumptions, scenarios and sensitivities .............. 58 5.1 Overview of market benefits modelling .................................................................................. 58 5.2 Market Expansion Model ....................................................................................................... 61 5.3 Reasonable scenarios ........................................................................................................... 66 5.4 Sensitivity analysis ................................................................................................................. 70 6 Net market benefit results .................................................................................................................. 71 6.1 Net market benefit results ...................................................................................................... 72 6.2 Sensitivity testing ................................................................................................................... 79 6.3 Preferred option and timeframes ........................................................................................... 82 6.4 Why does Marinus Link provide a net market benefit? .......................................................... 85 6.5 Other interconnector options .................................................................................................. 96 7 Who pays for the link? ........................................................................................................................ 99 7.1 Current pricing arrangements ................................................................................................ 99 7.2 Who benefits from Marinus Link? ........................................................................................ 101 Page 4 of 169 7.3 A way forward ...................................................................................................................... 104 Appendices and attachments ..................................................................................................................... 106 Appendix 1 – Summary of submissions to the PSCR ............................................................................. 107 Appendix 2 – Cost analysis for each credible option .............................................................................. 115 Appendix 3 – Analysis of AC transmission augmentations in Tasmania .............................................. 120 Appendix 4 – Market Modelling Sensitivity Studies ................................................................................ 135 Appendix 5 – National Electricity Rules Compliance Checklist ............................................................. 166 Acronyms ..................................................................................................................................................... 169 Page 5 of 169 Foreword Electricity markets around the world are changing rapidly as economies decarbonise in response to global warming. In Australia, the rapid growth in renewable generation,