The Australian Renewable Energy Agency (ARENA) has issued $5 million in funding to TransGrid as part of efforts to accelerate the deployment of renewable energy in Australia.

TransGrid will use the funding to conduct a detailed feasibility study to develop the proposed Central-West Orana Renewable Energy Zone (REZ) in New South Wales (NSW).

The study requires $16.2 million in total and will assess the technical and commercial options for the development of new high voltage transmission lines.

The transmission lines will enable Australia’s first coordinated REZ and demonstrate a pathway for future REZs across the National Electricity Market.

Once the study has been completed and approved, the Energy Corporation of New South Wales will oversee the development of the REZ.

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The zone is expected to unlock 3,000MW of new energy capacity into the country’s grid network in the mid-2020s. This will require an investment of up to $4.5 billion. The project will produce enough energy to power 1.3 million households.

The New South Wales government will provide $9 million for the project and a further $31.2 million for the pilot.

Construction is due to begin at the end of 2022 and the project is expected to provide 450 regional jobs.

REZs will play an important role in removing barriers to investment in new renewable generation over the coming decades.

The Central-West Orana region has been chosen for the pilot due to the existing investment and investor interest in the area, relatively low build costs and strong mix of solar and wind resources.

ARENA CEO Darren Miller said: “The Australian energy system is transitioning from dispatchable thermal generation to largely variable renewable energy generation. New transmission will be required to connect regions with strong renewable resources to load centers and to reduce network congestion.

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Transgrid CEO Paul Italiano said: “We are pleased to be working closely with ARENA and the NSW Government to develop the first coordinated renewable energy zone, where new generation will be co-located with new transmission infrastructure in the state’s Central-West Orana region.

“Investment in the new infrastructure will enable renewable energy providers to connect to the grid and enable more affordable, reliable and clean energy for New South Wales customers,” he said.