NSW firming tender reaches almost 1 GW with federal scheme support

The Australian and New South Wales (NSW) governments have announced that the state’s existing plan to add a minimum 380 MW of firming capacity will be more than doubled through Commonwealth funding that will underwrite investment for an additional 550 MW of firmed capacity.

The partnership between NSW and the Commonwealth will boost the 380 MW of firmed capacity being sought in the NSW Electricity Infrastructure Roadmap’s firming tender to 930 MW to fill the gap that will be created by the impending closure of Australia’s ageing coal-fired power plants.

NSW Energy Minster Penny Sharpe said bids representing more than 3.3 GW total capacity have already been submitted to the tender round, meaning there is still a significant amount of firmed renewable projects ready to be unlocked by the announcement and support the grid over the long-term.

“The large number of proponents wanting to invest in NSW is a clear indication that we can transform our energy system and that any risks around grid reliability can be resolved by accelerating the development of a clean, reliable, consumer-focused energy system,” she said.

AEMO Services, which is administering the tender process in its capacity as NSW Consumer Trustee, is assessing the project applications to form a short list for the NSW tender. Shortlisted bidders will be invited to submit a financial value bid with the successful projects expected to be announced by the end of September.

The funds for the additional 550 MW of firmed capacity will come from the Capacity Investment Scheme (CIS), a new Commonwealth revenue underwriting mechanism aimed at unlocking an estimated $10 billion (USD 6.6 billion) in private and public sector investment in new dispatchable storage and generation.

Federal Energy Minister Chris Bowen, said the initiative will increase crucial investment in dispatchable renewable energy to improve the security and reliability of the grid as coal-fired power plants exit the energy market.

“Today’s announcement will drastically improve energy security with large-scale batteries and other zero-emission technology that can quickly dispatch cleaner, cheaper renewable energy when it’s needed,” he said, adding that a decade of “energy policy chaos” had resulted in 4 GW of dispatchable power generation capacity exiting the east coast grid, with only 1 GW to replace it, “leaving us extremely vulnerable to international shocks.”

Bowen said when expanded across the other states in the National Electricity Market, the CIS is expected to support the addition of 6 GW of firmed capacity.

The launch of the capacity scheme in NSW will be followed by similar auctions of firming capacity in South Australia and Victoria with those tenders expected to be announced by October.