AEMO Services, which is administering the tender process in its capacity as New South Wales (NSW) Consumer Trustee, has announced the number of bidders participating in its third tender to secure renewable projects to transform its coal-reliant energy system have significantly exceeded indicative targets for both generation and long-duration storage.
The tender was targeting 950 MW of generation and 550 MW of long-duration (at least eight hours) storage, but AEMO Services said it received offers totalling 3.1 GW of new generation capacity and 1.6 GW of long-duration storage.
AEMO Services Chair Paul Moy said the result reflects the scale of investor interest in the NSW energy transition and demonstrates the appeal of the long-term energy service agreements (LTESAs) that the state government is offering as it seeks to implement its Electricity Infrastructure Roadmap.
Successful projects will be awarded LTESAs that provide a floor price for output, which Moy said allows for greater investment certainty for developers.
“The strong support is further evidence that the long-term energy service agreements provided through our tender process addresses a key market risk that might otherwise delay or discourage investors from participating in the transition,” he said.
“Combined, the bids for generation represent a total capacity of 3.1 GW, against an indicative target of 950 MW for this tender, and bids for long-duration storage represent a total capacity of 1.6 GW, against a target of up to 550 MW.”
Moy said more than half of the projects in the current tender round were submitted in the first tender round, the results of which were announced in May.
“We designed our processes to minimise time and effort for repeat bidders, allowing participants to sharpen their pencils and return with an improved proposition,” he said.
“At the same time, it’s a positive sign that a number of new entrants have engaged with the process, demonstrating confidence in our systems and product and an evolving pipeline of projects.”
This tender round is the second for generation and long-duration storage and the third in a rolling schedule that will continue over the next 10 years. The state is also seeking offers for a minimum of 380 MW of shorter duration firming capacity (at least two hours of storage) as it rolls out its energy transition strategy.
The roadmap 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 to replace ageing coal-fired power stations. All of NSW’s remaining coal-fired power stations are slated to close by 2040 at the latest, with Origin’s 2,880 MW Eraring power station in the Hunter region the next to go with its close scheduled for August 2025.
AEMO Services Executive General Manager Paul Verschuer said the competing bids in this tender round will now undergo an assessment.
“If we aren’t satisfied that there are enough competing projects we can alter our plan accordingly and tender for a higher volume in future rounds,” he said. “Likewise, if we do see sufficient value we can increase the amount of energy supported.”
“In our first tender, this approach produced a line-up of successful projects willing to build the necessary energy generating infrastructure, while putting much less consumer money at risk than traditional CFD’s (contracts for difference) by contracting LTESA strike prices 40% below the levelised cost of energy.”
Successful proponents from this tender round are expected to be announced by the end of 2023.
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