NSW tender targets 600 MW of storage and 380 MW of firming capacity

The New South Wales (NSW) government has confirmed it will be seeking at least 600 MW of long duration storage and 380 MW of firming capacity, as well as 2,500 GWh of annual generation, equivalent to 950 MW of new generation in a competitive tender set to commence early next year.

AEMO Services, serving as the NSW Consumer Trustee, said it has been directed by the NSW Energy Minister to conduct a competitive tender for long-term energy services agreements (LTESAs) for firming infrastructure under the NSW Electricity Infrastructure Roadmap.

An independent subsidiary of the Australian Energy Market Operator (AEMO), AEMO Services said details of the eligibility criteria for the firming tender, including duration, will be released before the end of the year but it is anticipated that firming infrastructure in the Sydney, Newcastle, Wollongong sub-region will be eligible to participate.

The tender, the second in a rolling schedule that will continue over the next 10 years, is expected to commence in the second quarter of 2023 with the firming infrastructure LTESAs operational by summer 2025-26.

AEMO Services executive general manager Paul Verschuer said the timing of the firming tender had been driven by Origin Energy’s announcement earlier this year that the 2,880 MW Eraring power station at Lake Macquarie in the NSW Hunter region will be closed in August 2025, seven years earlier than previously scheduled.

“A key element of the NSW Electricity Infrastructure Roadmap is its flexibility and adaptability in response to changes in energy supply and demand, and this is a clear example of where it’s bringing forward additional capacity in response to an identified need,” Verschuer said.

“A firming capacity gap was identified in the May 2022 Energy Security Target Monitor Report, and new modelling was commissioned to determine the extent of the requirement, which is now reflected in the tender.”

The firming tender is designed to select projects capable of delivering new large-scale energy infrastructure as the NSW government looks to implement its Electricity Infrastructure Roadmap.

The Roadmap, launched in 2020, sets out a path to bring at least 12 GW of renewable energy generation capacity and 2 GW of long-duration storage online by 2030 as the state prepares for the exit of its coal-fired generators.

Verschuer said the firming LTESA would be similar to the agreements offered in the inaugural tender for generation and long duration storage, currently underway. While the second tender does not affect the first tender – which is seeking 2,500 GWh of annual generation and 600 MW of long-duration storage – the size of the generation and storage tenders may be altered dependent on the outcome of the inaugural tender process.

Detailed design of the second tender, including draft term sheets, is expected to be released before the end of the year.

“The mechanisms of the NSW Electricity Infrastructure Roadmap recognise the dynamic operating environment of the energy transition, the benefits of the amazing innovation, and we realise how important it is to be responsive to changing needs in the marketplace and amongst investors and project proponents,” Verschuer said.

“We’re confident that the flexibility provided by the Roadmap will continue to provide us with the right tools to ensure the reliability, affordability and sustainability of electricity for NSW consumers.”

The push to establish new long duration storage and additional firming capacity comes as the state government strives to get ahead of the retirement of coal-fired generators.

All of NSW’s five operating coal-fired power stations are due to close by 2040 at the latest, with AGL’s Liddell plant in the Hunter the first go with a scheduled close in 2023.

Delta Electricity ‘s Vales Point plant is due to be decommissioned in 2029. AGL’s Bayswater coal-fired power plant is set to close “no later than” 2033 while EnergyAustralia’s Mount Piper plant near Lithgow is scheduled to shut in 2040.

The NSW government has already announced plans to build the Waratah Super Battery, a 700 MW/1,400 MWh facility that will allow consumers in the state’s main load centres access to more energy from existing electricity generators while maintaining network security.

Origin Energy has also secured planning approval for a 700 MW/2,800 MWh grid-connected battery to be developed at the site of its Eraring power station in the Hunter Valley.