zzzzzzDartboard,
Another scenario for you, in fact a combination of both scenarios 1 and 2.
GDY connects to the NEM via the link to Olympic Dam. The power notionally is sold to the NEM although in reality most of it is absorbed by Olympic Dam. This is in fact no different to the current situation. A consumer in Newcastle may be subscribing for green power but in terms of current flows, that person's power would almost entirely come from the local coal fired plants.
In this way all the advantages you suggest for scenario 2 remain but the connection is made via the shortest route to the NEM and in the process, solves problems for both BHP and the SA Government. (As I understand, SA is a nett importer of power via the NEM.)
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