Owners of wind and solar plants in western Victoria and NSW are still unsure about when their completed projects will be able to fully connect to the grid, while others yet to begin construction on potentially billions of dollars of projects have been warned of delays for up to seven years.

The grim news was delivered by the Australian Energy Market Operator at a “crisis” meeting in Melbourne on Monday afternoon called to brief owners and developers of wind and solar projects in the two states who have had their output constrained, have been held at “hold points”, or been warned of long queues for connection.

The Clean Energy Council says there is $6.28 billion in investment and more than 5000 jobs in renewable energy developments that are currently threatened by these grid constraints, and says the situation it is adding to concerns for an industry that has already seen commitments cut in half because of the lack of a coherent federal policy, and connection issues.

The CEC – along with individual developers – have questioned the legality of AEMO’s intervention, particularly its plans to connect new projects one at a time. AEMO rejects this, but says it is constrained by the physics of the grid, although it also points to the failure of grid planning and the perverse impact of new rules governing connections that it wants changed.

“There is a sad reality that some of the projects that are in the grid connection process will probably not be able to secure a grid connection under the system make up,” Alex Wonhas, the head of system design at AEMO, told RenewEconomy after the meeting.

“We desperately hope that this is not the case. This is really a difficult situation for our industry. We would love to find a solution that minimises pain and suffering and allows projects to go through.”

The issues arise out of “system strength” concerns in what is known as the West Murray region of the National Electricity Market, an apparently weak part of the grid which includes areas of western Victoria (broadly west of Ballarat), and large areas of south west NSW.

Five solar farms – Wemen, Bannerton, Karadoc and Gannawarra in Victoria, and Broken Hill in NSW – had their output cut in half last September as a precautionary measure, and as their supplier sought to “re-tune” the inverters to overcome the risk of “severe oscillations” and voltage issues in the case of a network fault. AEMO says a solution could be found by April.

Another five wind and solar projects – the Murra Warra and Bulgana wind farms in Victoria, and the Silverton wind farm, and the Limondale solar farms in NSW – have had their output constrained at certain “hold points”, which limits their output to well below potential capacity.

They have been told that those constraints could start to be relaxed once the solution to those five solar farms is found, and particularly if new synchronous condensers can be activated in the region to boost system strength.

The short term outlook for other near complete wind and solar plants – such as Kiamal, Yatpool, Cohuna, and Sunraysia, and many others – is clouded. Developers have been told they will be connected one by one, but it is not yet clear where they sit in the queue. Some could wait nine months.

But the situation is worse for those seeking approval for grid connections, and which may have been planning construction in the next year or two. Wonhas says that the long term solution is a new link from Victoria to NSW to boost capacity, known as VNI West.

But despite efforts to fast track this proposal, part of AEMO’s much lauded Integrated System Plan, the earliest this would likely be built in 2026 or 2027. The warning is not new, AEMO has flagged the problem on several occasions, and as far back as 2017. See Victoria’s big renewable energy plans face major network hurdle

Before the meeting, developers had expressed their frustration at the lack of information and clarity from AEMO, and had also questioned its role – unique to Victoria – as network planner. Its decision to slow down the rollout of wind and solar farms is a particular source of angst.

“Some of these projects are built and ready to export to the grid now but have been held up with no indication of when they might be able to generate,” said Lillian Patterson, the head of energy transformation at the Clean Energy Council.

One developer said he asked why Victoria, with only around 20 per cent renewables, is handling every connection sequentially and will not look at any new connections until next year, while Electranet in South Australia was hosting about 60% renewable energy and processing connections in parallel and signing connecting agreements for new generators.

He said the response was that South Australia’s wind and solar projects were “close to load”. He did not seem satisfied with the response. “This does not seem like a very persuasive answer to me; I have not seen many wind or solar farms near Adelaide,” he said.

AEMO says the issue in Victoria is not just about system strength and the risk of oscillations, it is also about “thermal capacity”, which is unlikely to be resolved without significant grid upgrades and new links. There is simply not enough capacity in the grid for all the proposed developments, it says.

But Wonhas’ remarks also point to a deeper, more fundamental problem with the Australian grid, and for renewables, because it reflects not just a lack of planning and investment in grid infrastructure, it also highlights the perverse effects of some of its market rules.

AEMO is seeking to address the lack of planning through its ISP, although it is clearly too late for some projects anxious to move forward now. But it also wants a review of some key market rules, particularly a recently introduced requirement commonly known commonly known as “do no harm”.

This effectively allowed all generators to connect to the grid, but if any additional capacity is added beyond the limits of the network, the last arrivals are required to solve those problems. The result, says AEMO, is low cost and haphazard solutions, instead of a well-planned and ultimately lower cost solution.

Transgrid – the main transmission company in NSW, and the network planner in that state – has echoed those concerns, saying it is likely to worsen grid reliability rather than improve it.

Wonhas says AEMO is keen to have discussions with the market rule maker, the AEMC, about these rules. He prefers a “scale efficient” system which allows for holistic planning and where the onus is on network providers to ensure that the thermal limits in the grid are sufficient for proposed capacity.

“It’s time to look at this and see if it is still fit for purpose,” Wonhas said.

The CEC’s Patterson says here remains a number of unanswered questions regarding AEMO’s proposed approach.

“We will work with AEMO and industry on these,” Patterson said in a statement.

“A stable grid is fundamental to the continued deployment of renewable energy projects. The priority needs to be resolving the West Murray issues that continue to curtail the success of renewable energy projects in the region. Relieving these grid limitations is essential to rebuild investor confidence in the industry and resume the pipeline of renewable energy projects in the region.

“The proposal from the AEMO today has left the industry with unanswered questions, The Clean Energy Council will continue to work with AEMO and others in the industry to ensure renewable energy in the West Murray region can grow and support the national system.”

AEMO rejected the suggestion that it was breaking electricity industry rules. “As the independent system operator, AEMO’s oversight of generator connections in the NEM has the clear and unambiguous objective of minimising the risk that a new or altered generating system will negatively impact secure operation,” it said in a later statement. “This is very clear in the National Electricity Rules.

“Clearly the status quo is failing to deliver the best outcome for energy consumers, and new projects. If industry have new or alternative suggestions that may satisfy the technical requirements of the west Murray zone AEMO would welcome engagement and discussion of these.”

AEMO, meanwhile, is conducting a tender for synchronous condensers in the region to help fill a “shortfall” of system strength in the region. One party likely to bid into this is the near complete Kiamal solar farm, which shipped in a massive syncon machine last year to overcome its own connection issues.

But because it is oversized, it could help out other projects, and because it is on site, it could be deployed quickly, helping to unlock the bottlenecks on connections, AEMO says.