The Commonwealth and New South Wales Governments have agreed to jointly underwrite up to A$102m ($69.5m) to support the upgrade of the New South Wales-Queensland Interconnector (QNI) to ensure the security of electricity in New South Wales (NSW).

The move is expected to allow NSW network operator, TransGrid, to upgrade the transmission link and add 190MW capacity to NSW grid during peak demand.

TransGrid to start critical early works for QNI upgrade project

TransGrid will now commence critical early works for QNI ahead of the final regulatory determination of the Australian Energy Regulator (AER).

Prime Minister Scott Morrison said: “The decision to underwrite QNI will unlock important transmission infrastructure and back the future of the New South Wales energy grid.

“This is about putting downward pressure on wholesale prices to make sure businesses and households have access to reliable and affordable power.

“Industry needs certainty. They need to know their electricity won’t cut out, and their power bill won’t suddenly double. You can’t run a business like that, and you can’t employ people.

“That’s why we are underwriting this interconnector. It’s a practical step to make sure it happens, and it happens quickly.”

The upgrade of the QNI is also considered as a cost-effective option for New South Wales, following the planned closure of the AGL’s Liddell power station scheduled in April 2023.

In order to mitigate other potential supply risks from the Liddell power plant closure, the Morrison and Berejiklian Governments are working closely as part of the Liddell Taskforce.

NSW Premier Gladys Berejiklian said “The QNI upgrade will ease cost of living pressures for people across NSW, providing reliable and affordable power to households and businesses.

“Last year, the NSW Government announced its Transmission Infrastructure Strategy which outlined our commitment to accelerate the delivery of key interconnector projects, including the QNI.”

Planned to be completed in 2021, the NSW–Queensland transmission interconnector was declared a high-priority project under the Australian Energy Market Operator’s Integrated System Plan.