New South Wales’ New England Renewable Energy Zone (NE REZ) network operator tender is likely to be delayed again to early next year, four sources familiar said.

Potential bidders were expecting state government agency EnergyCo to call for expressions of interest in Q4 this year. It recently sent them a memo indicating that it would not finalise the commercial model until the end of this year, the sources said.

Two of the sources said it is likely that the tender will be issued in late January, given the traditional long Christmas/New Year summer break.

The delay is due to EnergyCo wanting to ensure it uses the right commercial model, a spokesperson said, adding that it would release the details of this and the timing of the tender by the end of the year.

It has been conducting market consultations for several months, which are ongoing, she said. She stressed that the feedback it has received is that it should be “as certain as possible” they procure the project with the right commercial model before taking it to market.

About five consortia have formed to bid on the multibillion-dollar deal, including:

• Endeavour Energy, Plenary, WeBuild and FCC Construction;
• AusNet’s Mondo, CIMIC and GS E&C;
• Ausgrid, Iberdrola, John Holland, Samsung and Capella Capital;
• TransGrid’s Lumea; and
• APA Group and French utility EDF.

Macquarie Capital was allied with TransGrid, but the sources said it has dropped out. A Macquarie spokesperson declined to comment.

The tender was originally due to start by mid last year but a new Labor government elected last May decided to delay the project following a major review of the previous Liberal-National government’s Electricity Infrastructure Roadmap, which includes five REZ’s.

The review concluded in September last year and the government prioritised the Hunter Transmission project, which is being procured now.

The NE REZ was delayed so that community consultation could be completed, and the location of the new grid infrastructure could be finalised. Infrastructure NSW was also tasked with a governance review of EnergyCo and it has been hiring additional staff and established its own board.

In December last year, EnergyCo said the tender would start this year.

In March, EnergyCo began a market sounding, with registrations of interest lodged in April.

New infrastructure projects continue to be dogged by rising costs, including the cost of capital and worker shortages. Construction company insolvencies have jumped 34% in the past year, according to ASIC data.

Local media reported this week that Spanish builder Elecnor was moving to pull out of Project EnergyConnect, a new 900km electricity interconnector it is helping to build for TransGrid between NSW and South Australia.

Elecnor was in a consortium bidding for the AUD 7bn Central West REZ Orana network operator tender, but it dropped out during the bid process in 2022 because it felt it would become overstretched between the CW Orana and EnergyConnect.

Elecnor’s JV partner, Clough, later fell into administration.