Storage tender for 2.4 GWh announced for Victoria and SA


The tender will target 600 MW of dispatchable capacity with the equivalent of four-hours of duration, or 2.4 GWh, across Victoria and South Australia.

The bids are among the first to be launched as part of the federal government’s Capacity Investment Scheme unveiled last year. The scheme will underwrite new zero-emissions storage in Australia, including big batteries, hydrogen, and pumped hydro, to incentivise and accelerate projects as coal plants rapidly retire. Essentially the scheme will see the federal government pay revenue shortfalls based on a pre-agreed floor value, guaranteeing projects baseline income. If revenues exceed an agreed price ceiling, the government will take a share of profits.

In terms of the Victorian and South Australian bids, the Australian Energy Market Operator (AEMO) will conduct the two-stage tender process. In a joint release, the federal, South Australian and Victorian governments noted the draft term sheets and detailed tender timelines will be released in the coming weeks, with registration for the tender to open in September.

Projects that have reached Final Investment Decision since the Capacity Investment Scheme, or CIS, was announced in December 2022 are also eligible for support, the governments noted. 

Projects will be assessed on their ability to support reliability at the lowest cost while ensuring increased capacity is delivered in both jurisdictions. The announcement also pointed out the states are interconnected, meaning both jurisdictions will benefit from storage on either side of the border.

The Victorian and South Australian tender appears to have been fast tracked, with the federal government formerly flagging announcement dates in October.

This tender is additional to an expanded tender currently running in New South Wales (NSW). In June, it was announced that a partnership between NSW and the Commonwealth governments would boost a 380 MW firming tender, organised as part of the NSW Electricity Infrastructure Roadmap, to 930 MW. The more than doubling of the tender target came as a result of Commonwealth Capacity Investment Scheme funding, underwriting an additional 550 MW of firmed capacity for NSW.

Overall, the Capacity Investment Scheme is seekingto unlock an estimated $10 billion (USD 6.6 billion) in private and public sector investment in new dispatchable storage and generation across Australia.

The national rollout of the Capacity Investment Scheme in 2024 will include further auctions in Victoria and South Australia.

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