Budget $1.8b to steer energy transition 'back on track'

Bianca De Marchi/AAP PHOTOS

Almost $2 billion will be earmarked in the next NSW budget to re-energise the stalled transition to a grid powered by renewable energy.

Premier Chris Minns on Thursday said the state's energy transition is off track and needs significant public investment and quick decisions to fix.

The fresh funds include $1 billion to set up a promised Energy Security Corporation (ESC) to invest in storage projects, address gaps in the market and improve the electricity network's reliability.

The funding could support investments in community batteries and virtual power plants that would allow households and communities to pool electricity generated from rooftop solar, reducing their reliance on the grid and cutting their power bills.

The remaining $800 million will be directed to the Transmission Acceleration Facility, set up by the former coalition government to connect the state's renewable energy zones to the grid.

A main focus will be supporting early works in the central-west Orana zone near Dubbo, which is up to three years behind schedule for its planned 2025 completion date and billions over its original $600 million budget.

The funds would help maintain "momentum" in other planned renewable energy zones, many of which also face delays, as well as the Hunter Transmission Project and the Waratah Super Battery on the NSW Central Coast, the government said.

Earlier this week, Labor revealed it would start talks with operator Origin Energy on extending the life of the Eraring coal-fired power station beyond 2025 to help deal with forecast challenges in electricity reliability.

NSW needed to produce an additional 33 terawatt hours of electricity from renewable sources by 2030, roughly three times what was being produced by Eraring, Mr Minns said.

"We don't have a second to lose and as a result we've got to invest public money into transmission lines and the ESC for transmission of that energy as well as storage," he said.

"We're determined to get NSW back on track when it comes to the energy transition and this announcement is part of that."

Funding for the corporation will be confirmed in the NSW budget, to be handed down on September 19.

But opposition energy spokesman James Griffin said the premier's funding announcement was "underwhelming" given the former coalition government had pledged $1.2 billion for a transmission acceleration facility.

"In the space of 48 hours, Labor have committed to extending the life of a NSW coal plant without explaining how much it will cost taxpayers, and are now taking credit for key milestones from the former government renewable energy zones," he said.

"We still have not seen any detail on how the proposed ESC will lower energy prices and improve reliability."

The Transmission Acceleration Facility will use its funding to speed up the delivery of power lines and other infrastructure by funding early work in the renewable zones.

Public investment in projects will eventually be recouped from private-sector developers and recycled back into the facility to support future renewable energy projects, according to the government.