New South Wales officially opened its first auction for renewable energy and long-duration storage contracts on Tuesday, the beginning of a 10-year program which will see auctions held every six months.
NSW Energy Minister and Treasurer Matt Kean said the tenders, and the larger NSW Electricity Infrastructure Roadmap, have been designed to replace four of NSW’s remaining five coal power stations, which are scheduled to retire in the next 11 years.
Kean has previously said he expects all coal generators to exit the Australian market within the decade.
The first tender round, which remains open until Oct. 28, focuses on the Central-West Orana Renewable Energy Zone (REZ), in the region surrounding Dubbo in the state’s north-west.
The tender program is managed by AEMO Services, which noted in an email that “early registrations have demonstrated significant interest in the tender.”
AEMO Services also said it expects “nearly all” of the 3.6 GW of projects committed or anticipated since the enacting of the NSW Electricity Infrastructure Roadmap would be eligible to participate in the first tender round, suggesting a broader scope than simply the Central-West Orana REZ location.
“Many more projects have also sufficiently progressed through the development pipeline and are likely to be eligible,” AEMO Services added.
“We expect this will deliver strong competition in Tender 1, and competition will only further intensify as REZ access schemes are enlivened over the course of our 10-year tender plan.”
Bidding generation projects will be required to achieve commercial operation by January 2025, while long-duration storage projects have until the beginning of 2027. The tender pack also includes stipulations about community engagement and benefits, regional jobs and land use considerations.
Successful projects will be able to participate in the state’s “Long-Term Energy Service Agreements” scheme – a mechanism for the government to underwrite projects and provide financial security.
AEMO Services previously said the desired size of the round one tender would be 2,500 GWh for annual renewable generation and 600 MW of long-duration storage, though it noted at the time that more or less generation and storage will be considered if it is “in the long-term financial interests of NSW electricity consumers to do so.”
The NSW Electricity Infrastructure Roadmap is expected to attract $32 billion (USD 20.7 billion) in private capital and is an enormous undertaking, balancing the massive energy demands of the most populace state with a dramatic U-turn away from coal dependency towards integrated renewables in a tight timeframe.
The NSW roadmap largely hinges on the establishment of five renewable energy zones: Central-West Orana, New England, Illawarra, Hunter-Central Coast, and South-West.
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