TransGrid have issued their update on Project Energy Connect (PEC), which showed the cost of the transmission line has almost doubled to $4.1b, which is twice that approved by the AER for the line, which was initially valued at $1.82b ($2.1b real).
With delays pushing the project’s full commissioning to late 2027—and that date still uncertain, the impact could be passed on to transmission-connected tariffs, potentially doubling them. The delays have been laid at the floor of COVID-19, labour shortages, the war in the Ukraine, floods and inflation. However, arguments are being heard that some of these should have been fully covered by contingency valuations.
In contrast the SA Electranet project has come in relatively on time and budget, again leaving questions as to why the TransGrid numbers are so much higher.
However, in good news for TransGrid, Elecnor, who in 2024 had indicated they would not be proceeding with Phase 2 of the project look to remain. They are cited as being under a fixed price arrangement of $3.6b, however they still have the option to walk away through the second stage if the project becomes unprofitable.
Overall, the re-negotiation with Elecnor will at least allow the second phase of the project to be started, a 700km line between Buronga and Wagga Wagga. However, they did not go as far as to ensure the AER additional funding would be approved or that the Elecnor issues that plagued stage 1 have been fully resolved. Overall, this is not a win for the project, the ongoing issues will lead to increased pass-through costs and likely further delays.
