How NEC can support Australia’s shift towards renewable energy

So how is NEC doing in Australia? As you may have seen in previous NEC Newsletters and case studies, five years ago Sydney Water became the country’s first major infrastructure provider to adopt NEC as its standard procurement route for works and services.

In December 2019 the utility signed framework agreements with three consortia for delivering up to AU$4 billion (£2.1 billion) of integrated design, construction, maintenance and facilities management services for its water and wastewater assets over the next decade.

Sydney Water has also since adopted NEC4 contracts for its major projects, starting with the AU$280 million (£146 million) ProMac water supply upgrade from 2021 to 2025. Other NEC users include energy firm Santos, various councils and more recently, the Square Kilometre Array Observatory, which on completion in 2029 will be the world’s largest radio telescope.

Shift to defence and renewable energy

At the moment we are in the middle of the Australian government budget season and there is a growing focus on the cost of infrastructure projects, skill constraints and access to resources. The impact of record investment without corresponding investment in industry capacity, has led to cost escalation and governments are curtailing their ambitions.

In addition to an amelioration of spending in future years, a significant shift of expenditure is occurring. New project activity is concentrated in the defence sector and renewable energy, especially on wind and complementary investment in pumped hydro and electricity interconnectors.

The shifting spend will create the need for new suppliers and supply chains, as well as a significant uplift in the capacity and capability of government commercial and project managers to deliver major infrastructure.

The energy sector in particular has seen the scale of projects move from the tens of millions into the tens of billions of dollars. This requires greater supply chain coordination, increased collaboration and better alignment to shared outcomes.

Borumba pumped hydro project

Queensland Hydro is an example of a new state-owned entity planning to deliver a massive programme of new infrastructure in central Queensland. I am pleased to say the company has chosen NEC to deliver the works packages of its AU$14 billion (£7.2 billion) Borumba pumped hydro project, making this the most substantial use of NEC in Australia since the contracts were adopted by Sydney Water. Work starts in 2025 and is due for completion in 2030.

In New South Wales, private energy network operator Ausgrid has also transitioned to NEC having recently approached the market with an NEC-based transmission towers contract, shifting the organisation into a collaborative contracting environment. The NEC contract suite is also seeing more widespread use by Australian councils on smaller projects.

International standard contract

So, to sum up, adoption of NEC in Australia is currently being spearheaded by government-owned enterprises in New South Wales and Queensland. The certainty provided by an international standard contract will also reduce barriers to new investors entering the Australian energy market, operating on familiar terms.

In response to the growing interest in NEC, many Australian businesses have responded with an increase in workforce recruitment, seeking specialist skills as well as a growing interest from employers in NEC training and upskilling their staff.

The key to successful deployment of NEC in Australia is supportive behaviour, enabled by training, education and cultural settings, with both client and service providers ensuring shared commitment to collaboration and an outcomes-focused delivery environment.