Renewable energy zones key to accelerating our energy transition
A once-in-a-century transformation of the way we generate and consume electricity is underway as we replace legacy fossil fuel-based assets with zero-carbon renewable energy sources, add storage solutions and firming capacity, and reconfigure the grid to support two-way energy flow.
In response, electricity transmission utilities globally are grappling with providing enough location-specific capacity to support the rapidly expanding renewable energy generation industry. In Australia and New Zealand, limited large-scale transmission projects have been developed over the last few decades, and the need for transmission infrastructure is slowing the energy transition. Renewable energy zones (REZs) have emerged as a promising path to meet the expanding needs of communities and help our collective net zero vision.
REZs centralise investment, enabling multiple generation parties to co-locate and share common transmission and grid connection infrastructure. They unlock benefits like economies of scale through shared infrastructure costs, accelerating the timely connection of large-scale generation, incentivising regional investment and helping meet government-mandated renewable energy targets.
AECOM has been at the forefront of REZ development in Australia, assisting transmission network utilities and government entities in developing these projects. In this article, we share key learnings and what we need to mobilise future projects.
Key learnings
Changes in delivery mechanisms
Faster timelines and large-scale projects drive the need to adapt transmission project delivery in the energy sector. Historically, network providers managed projects under separate design and construct contracts, ensuring well-controlled design standards and construction. However, we need a faster and more agile approach to enable the speed of change required to transition our network to support net-zero goals.
Australian government bodies are increasingly involved in developing strategies and projects to accelerate the transition to net zero and are bringing different skill sets to project development. Leveraging diverse skill sets from aligned industries like transport and oil and gas is helping the sector to be more agile and develop projects under time pressure. As a result, existing power industry teams must adjust, becoming more flexible and responsive to client and regulatory demands.
Social licence
It has been several decades since large-scale transmission projects have been undertaken in Australia, and the expectations of landholders and stakeholders have changed significantly.
- Unlike roads, where the benefit and impact can be seen in the same area, transmission lines tend to impact areas that don’t see the direct benefit. While landowners may support the net-zero goal, there is limited benefit to them directly from a transmission line project.
- Transmission projects can cause significant community concern and angst, often amplified by media coverage and negative sentiment.
Considerable work is needed to improve social licence to build on recent developments and work through what best practice looks like at an industry level.
Resource availability
The global move to net zero means many countries are competing for the same resources, both people and the equipment supply chain. Most countries are tasked with the same challenges to transform their energy sectors, and in many cases are ahead of Australia and New Zealand from a delivery perspective.
With pressure rising to deliver critical energy infrastructure, we are seeing innovative procurement approaches. In NSW and ACT, high voltage transmission operator Transgrid is developing several large-scale projects over the next five years and is using a bundled procurement process, with support from the Commonwealth Government. While bundling is not new in some infrastructure sectors, it is unusual for large transmission projects, typically undertaken as singular regulated asset projects. However, innovative approaches must become more common to quickly deliver the industry’s vision.
Attracting talent
The industry’s significant challenge is the need for more skilled and technically competent people for large-scale transmission projects. The number of engineers, technical professionals and contractors in the energy sector constrains the number of projects we can deliver in parallel. It is likely that there will not be enough time and resources to have the same level of control over the design as seen historically. So, how will we increase the number of people working on developing electrical infrastructure? The industry can increase participation in projects by:
- incentivising migration post-COVID
- improving female participation (currently around 24 percent)
- increasing vocational employment opportunities
- advertising to build awareness of the industry and its benefits.
Unlike the mining sector, which used increased wages to help solve resourcing challenges, the energy sector must prioritise keeping consumer power prices affordable. We will need varied approaches to address our resourcing challenges as we increase project numbers and size, looking at partnerships with education organisations and industry-specific programs to drive uptake.
As we push toward a net-zero future, REZ developments will be an important part of our overall energy mix, reaping the benefits of shared infrastructure, driving economies of scale, and accelerating grid integration.
The journey of REZ projects has highlighted the need for agile project delivery, embracing diverse skill sets, digital tools, and new procurement methods to accelerate the transition in a competitive landscape. Social licence remains our biggest challenge, and fairness and equity must be a strong focus. After all, we’re all in this together.
Learn more about AECOM’s energy transition services here.