Australia’s Giant SynCon Bet: Can OEMs keep up?

In a recent industry briefing webinar, Transgrid presented the outcomes of its system  strength Project Assessment Conclusions Report (PACR)1. This marked the culmination of  a multi-year regulatory investment test for transmission (RIT-T) process, which involved  extensive market modelling, power systems analysis and stakeholder engagement. 

The Q&A session at the end of the webinar raised many interesting questions, but one  stood out in particular: 

” Considering the number of synchronous condensers (syncons) required in Australia and around the world, how viable do we think it is to secure at  least 29 syncons by 2032 for Australia?” 

This article attempts to unpack this question and provide some potential answers, noting  that a syncon is a rotating machine that provides grid stability and system strength services to complement the increase in renewables, and that there may be alternatives to syncons. 

Firstly, where does the figure of 29 syncons come from and is it accurate? Secondly, how  does this figure compare to the global production capacity that original equipment  manufacturers (OEMs) have for syncons? 

The first is relatively simple to answer. The Australian Energy Market Commission’s (AEMC) “Efficient management of system strength on the power system” rule change, finalised in 2021, introduced a new framework for managing system strength in the National Electricity Market (NEM). The rule change introduced obligations on Transmission Network Service Providers (TNSPs) in each region of the NEM to proactively plan for and procure system strength. This triggered a wave of RIT-Ts related to meeting system strength obligations. 

In recent months, several TNSPs have completed, or are close to completing, their respective RIT-Ts related to meeting system strength requirements in their respective jurisdictions. These are summarised in the table below. 

The preferred options proposed by TasNetworks and ElectraNet do not include syncons, so we can rule out Tasmania and South Australia for this assessment (although it is noted that  TasNetworks has yet to determine post-2030 system strength needs). For New South Wales, Queensland and Victoria, we can compile the number of syncons the respective TNSPs have identified as necessary over the coming decade and when they are required.  These results are summarised in the chart below. 

A few conclusions jump out immediately. The figure of 29 syncons by 2032 referenced in the question posed to Transgrid in the webinar appears to be accurate. The cumulative total continues to increase out to FY 2035, reaching 32 syncons across the three states. 

Based on the syncon unit cost assumptions provided by each TNSP, the total cumulative cost exceeds 4.7 billion dollars (AUD).  

Furthermore, these figures exclude: 

• The 7 syncons that are required for the Central-West Orana Renewable Energy Zone (REZ) which will be provided by Siemens Energy under a contract agreed with ACEREZ3. 
• 4 smaller non-network syncons for Hunter-Central Coast REZ, which were also identified in Transgrid’s PACR.  

If the syncons associated with these two projects are also included, the total number of new build syncons required in Australia by FY 2035 would be 43. 

An important consideration is not just the cumulative total number of syncons needed, but when specifically, this need occurs. When plotted on a graph by year, there is a very strong clustering of syncon installations in FY2029 and FY2030, with 8 and 11 syncons required respectively (excluding all syncons associated the CWO and HCC REZ). 

This level of syncon demand in FY2030 represents a non-trivial proportion of global OEM’s annual syncon production capacity. For context, Siemens Energy’s managing director of Australia, Samuel Morillon, recently noted in Renewables Now that the company has “delivered over 51 synchronous condensers globally.”4. While it’s somewhat unclear whether this figure represents Siemens Energy’s total historical production or deliveries over a specific timeframe, it highlights that historical production volumes have been relatively small. This is partly because there are only a handful of heavy-industry foundries worldwide capable of producing the steel forgings necessary for the huge rotor shafts and stator frames required in large synchronous condensers. 

One country (Australia) requiring 19 syncons over a 2-year period will materially stress global production capacity. This raises a matter around how realistic it is that Australia will be able to command this large a slice of the global market, and if it can, what will the price premium will be. 

The major OEMs that produce syncons include: 

• GE Vernova 
• Siemens Energy 
• Hitachi 
• Andritz Hydro 
• ABB 
• Voith Hydro 
• Ansaldo Energia 
• Baker Hughes (BRUSH Power Generation) 

This may seem like large pool of suppliers but there are additional complications to consider. 

1. Many of the syncons in Australia require flywheels to be included in their design to provide the desired level of inertia support. Not all OEMs offer flywheel-coupled high-inertia syncons, limiting the pool to larger OEMs such as GE, Siemens, and Andritz Hydro.  
2. Flywheels introduce an additional layer of complexity to syncon manufacturing, requiring precise rotor-shaft integration, additional couplings and bearings, and auxiliaries such as vacuum pumps, lube circuits, and control circuits5. This may lead to greater procurement bottlenecks, challenging the delivery schedules outlined in the TNSPs respective RIT-Ts.
3. The need for syncon manufacturer support in Australia for installation, testing, and commissioning, may further limit the number of suitable OEMs. 
4. The syncons required in each of the three states are very large units (in the range of 250 MVA to 400 MVA rated capacity), ruling out OEMs that are only capable of producing smaller syncon units.  

Additionally, it may be reasonable to assume that Siemens Energy’s Australia business will have its hands full delivering the 7 syncons already contracted for the Central West Orana REZ, with the 2028/29 delivery date looming large. This may further constrain the available pool of OEMs for other TNSPs in the NEM. So TNSPs are also competing with REZ network operators such as ACEREZ.  

Global demand for syncons is also surging. The rapid adoption of wind and solar is driving the need for grid support services. A limited snapshot of some of these international projects is outlined below.  

UK – National Grid ESO: The Stability Pathfinder initiative (Phase 3) contracts were awarded in 2022 and will deliver 12 syncons6. National Grid ESO has now identified needs for locational stability services across Great Britain from 2029 onwards, and is launching its first long-term tender. It is seeking solutions that can provide services from 1 April 2029 onwards7.  

Ireland – EirGrid / SONI: The first Low Carbon Inertia Services (LCIS) tender took place in 2023, and Eirgrid awarded four contracts for syncons in November 2024, with delivery expected between 2027 and 20288. Second LCIS tender in 2026 targeting delivery for 20309, seeking large syncon units similar in size to those required in Australia.  

US – National Grid, Upstate New York: GE Vernova was contracted to supply two sites with three syncons each (6 syncons total). The first site is expected to be completed by August 2028, with the second site following in March 202910. 

US – Texas: The Electric Reliability Council of Texas (ERCOT): A 2023 study by ERCOT concluded that to enhance grid stability in West Texas, six new high-inertia synchronous condensers (~350 MVAr each with flywheels) should be installed at six substations11. The Bakersfield substation project is already progressing, with an EPC contract awarded to a  GE-Verona- Andritz Hydro consortium to deliver two 175 MVAr syncon units by mid-202712. 

Chile – Transelec: In July 2024, GE Vernova was contracted to deliver four syncons across two sites in Northern Chile, with commercial operation expected to in 202713.  

These examples illustrate the intensive global demand for this hardware. It appears to be a common feature across all these markets that the late 2020s is a key period for syncon delivery and commissioning, possibly driven by 2030 climate targets.  

What will happen if Australia can’t secure the ~30-40 syncons it needs by 2035 in time?  Which technologies will be required to plug the gap? Will coal closures have to be delayed?  Can grid-forming (GFM) battery energy storage system (BESS) technologies play a bigger role than is currently envisioned? 

This last point is hotly debated. AEMO’s current stance is that “minimum levels of system strength must be provided by protection quality fault current, which grid-forming inverters have not yet demonstrated capability to provide”14-(Section 4.4.1. of Transgrid PACR). It does seem that if Australia cannot secure the quantities of syncons required, other technologies may have to play a significant role.  

The Improving Security Frameworks for the Energy Transition (ISF) rule change in March 2024 requires AEMO to publish an annual ‘Transition Plan for System Security’ report15. The rule change also introduced a new ‘Transitional Services Framework’, enabling AEMO to trial new sources of security services or new applications of existing technologies (Type 2 contracts). AEMO has identified ‘advancing GFM inverter service delivery readiness’, as a priority to be explored under the Type 2 transitional services framework16.  

The insights gleaned from these trials may prove timely in evolving our understanding around the nature of system strength services that different technologies can provide, and whether they can present as a suitable alternative to syncons.