Registrations open for 600 MW storage underwriting scheme in SA and Victoria

Following the launch of the first Capacity Investment Scheme tender in New South Wales earlier this year, the South Australian, Victorian and federal governments have today come together to announce the opening of registrations for projects in the two southern states.

The program is open to utility-scale long-duration storage projects, including batteries, hydrogen and pumped hydro. Projects must be at least 30 MW in size and capable of storing energy for a minimum of two hours. 

In total, the tender is looking to underwrite 600 MW of storage capacity. During a press conference on Wednesday afternoon, Chris Bowen, Australia’s Minister for Climate Change and Energy, clarified the scheme is seeking 200 MW in Victoria, 200 MW in South Australia, and “200 megawatts up for the best bids across both jurisdictions.”

“Of course, South Australia and Victoria are very closely linked grids, and it makes sense to do this together,” he added.

The Australian Energy Market Operator’s AEMO Services will conduct the two-stage tender process. Announcements about finalised approved projects are expected to be made by early next year, according to Bowen.

Australia’s Capacity Investment Scheme (CIS) was signed off by the Commonwealth, and all state and territory governments in December 2022. The underwriting scheme will essentially see the federal government pay revenue shortfalls based on a pre-agreed floor, guaranteeing storage projects baseline income. If revenues exceed an agreed price ceiling, the government will take a share of profits. That is, the program seeks to guarantee investment certainly for storage projects which has historically impeded the progress of such projects.

From today, storage projects in South Australia and Victoria can register with AEMO Services to be part of the scheme and are invited to provide basic project details. Projects can then submit a bid with AEMO Services once tenders officially open shortly, and AEMO Services will then ensure the projects are technically and financially sound.

Following that, the best projects will be invited to submit a full application, which will involve providing a revenue floor to support projects through times of low revenue. 

If a project is successful, it will get an agreement that lasts up to 15 years, called a Capacity Investment Scheme Agreement.

Back in August when the tender was first announced, the governments noted projects which had reached Final Investment Decision (FID) after the Capacity Investment Scheme was announced in December 2022 would also be eligible for support.

With New South Wales, Victoria and South Australia now folded in, the Capacity Investment Scheme will eventually be expanded to other parts of Australia.