The federal government has released a design paper for the Capacity Investment Scheme (CIS) 2025 Western Australia (WA) wholesale electricity market (WEM) tender, seeking feedback on how best to approach hybrid projects in the 2025 WEM Tender, opening mid-2025.
The tender is expected to target 1.5 GW of generation capacity and 0.4 GW of four-hour equivalent clean dispatchable capacity (1.6 GWh).
The first CIS tender in the WEM, which opened in July 2024, called the CIS Tender 2 – WEM Dispatchable, targeted 500 MW of four-hour equivalent dispatchable capacity and successful projects are scheduled to be announced in March 2025.
The Department of Climate Change, Energy, the Environment and Water (DCCEEW) is now exploring options for the inclusion of hybrid projects in the 2025 WEM tender.
Based on the approach to hybrid projects used in CIS national electricity market (NEM) Tenders 3 and 4, hybrid projects may have three options to bid.
These include as either a clean dispatchable capacity project with a non-assessed associated generation project, or a generation project with a non-assessed associated storage project, where associated projects are not be included in the assessment of the project’s bid and proponents would be under no obligation to deliver it under the terms of the CIS.
The third option is a bid that is assessed as a hybrid project, where both components of the project are assessed against the merit criteria, considering the associated project’s system benefits.
Under this option, a successful proponent would be required to deliver both components of the project under the terms of a CIS agreement (CISA).
However, only the primary project’s revenue would be included under the CISA net revenue calculation. For NEM Tenders 3 and 4, this option was only available for hybrid projects bidding as generation projects.
Proponents are invited to comment on how prevalent hybrid generation-storage projects anticipated to be in the WEM before 2030 will be, andm what might be an appropriate model for the inclusion of hybrids in the next tender.
The DCCEEW is also asking if an assessed hybrid option would be more appropriate in the generation or clean dispatchable capacity component of WEM CIS tenders.
Projects that combine multiple generation assets (e.g. wind and solar), or multiple energy storage assets (e.g. battery energy storage systems (BESS) and pumped hydro), that share a common connection point are not expected to be considered a hybrid project for the purposes of the CIS.
Instead, these projects will be treated as either a single generation or clean dispatchable projects for assessment and contracting.
Proponents may also submit bids in respect of expansion projects to existing storage or generation assets, or the addition of new storage or generation assets to existing facilities.
In July 2024 the federal government and WA government signed a Renewable Energy Transformation Agreement (RETA) to achieve shared objectives in the renewable energy transformation.
Under this RETA, the federal government committed to CIS allocations of a minimum of 6.5 TWh (estimated to be approximately 2 GW) of generation capacity and a minimum of 1.1 GW of four-hour equivalent clean dispatchable capacity (4.4 GWh), including the 500 MW targeted in CIS Tender 2 – WEM Dispatchable.
The WEM is part of the South West Interconnected System (SWIS), which supplies about 20 TWh of electricity per year to more than one million customers. A decade ago, 90% of electricity through the SWIS was supplied by burning coal and gas, where today wind and solar generation account for a approximately a third, peaking, at times, at 84%.
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