The Australian state of New South Wales (NSW) has officially opened the third in what’s to be a decade of rolling tenders as the state continues to implement its Electricity Infrastructure Roadmap which aims to deliver at least 12 GW of renewable energy generation and 2 GW of long-duration storage by 2030 to help replace the state’s ageing coal-fired power stations.
AEMO Services, which is administering the tender process in its capacity as NSW Consumer Trustee, said the latest tender is seeking an indicative amount of 2,500 GWh (about 950 MW) of generation and 550 MW of long-duration (at least eight hours) storage, but more can be awarded if it is in the long-term financial interest of NSW consumers.
The tender is open to all projects across the state that can connect to existing grid infrastructure, irrespective of their location within the renewable energy zones.
AEMO Services Chair Paul Moy said the tender will look to build on the success of the inaugural tender round, which concluded at the start of May.
That tender delivered renewable energy projects worth $2.5 billion of investment, including two solar farms, a wind farm and a long-duration battery that will contribute 1.4 GW of renewable energy generation in NSW. The three generation projects selected for the first tender round exceeded AEMO Services’ indicative target by more than 400 MW.
Moy said the first tranche of renewable energy projects, drawn from a shortlist of 16 projects representing more than 4.3 GW of large-scale generation and long-duration storage, would serve as a running start for the coming instalment.
“We spent more than 12 months in the lead-up to our first tender working closely with investors and proponents to streamline the process and design new products to incentivise the acceleration of their energy infrastructure projects,” he said.
“We’ll continue to build on that work and fine-tune our offering to make sure subsequent tenders enjoy the same success.”
Moy said the strong pool of projects which had been shortlisted on non-price criteria in the first tender but not yet demonstrated the same financial value to electricity consumers, would provide a solid base for the next tranche of bids with unsuccessful proponents from the inaugural tender encouraged to submit bids.
“We designed our tenders specifically to allow unsuccessful proponents to submit subsequent bids at minimal additional cost to them,” he said. “This provides benefits to both consumers and bidders and is a key features of our rolling 10-year competitive tender schedule.”
“The first tender also demonstrates the depth of the pipeline of projects that are well placed to re-submit high quality bids in this tender. We anticipate that many of these projects will be able to improve their bids and be successful.”
AEMO Services Acting Executive General Manager Graeme Edie said the two-stage process for this tender round will be similar to that employed in the inaugural round.
“The first stage will be an assessment against non-price criteria, such as community benefit and local employment,” he said. “The second stage is a financial value assessment for shortlisted projects, which determines the projects that best deliver in the long-term financial interests of NSW electricity consumers.”
Edie said successful projects will be awarded long-term energy service agreements (LTESAs) that provide a floor price for output, allowing for greater investment certainty for developers.
The first tender round delivered strike prices about 40% below the levelized cost of electricity which Edie said “demonstrates the market understands the advantages and value of the LTESA contract.”
“AEMO Services has designed and consulted on these innovative option contracts, and feedback received from the market is that they are highly sought-after,” he said. “We expect robust competition for them in this tender round, increasing over time as the tender plan progresses.”
This tender round is the second for generation and long-duration storage and the third in AEMO Services’ tender schedule. The state is also seeking offers for a minimum of 380 MW of shorter duration ‘firming capacity’ (at least two hours of storage) to supplement resources in major load areas ahead of the impending closure of the Eraring coal plant in late 2025.
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