The federal Labor government new battery storage tender includes several key changes, opening it up to smaller projects and encouraging facilities that can boost network capacity and offset the cost of new transmission.
A market briefing for the new tender – officially known as Tender 8 under the federal government’s Capacity Investment Scheme – was released on Monday, and will seek a total of 4 gigawatts and 16 gigawatt hours of battery storage capacity.
Priority will be given to projects that can be completed by end of December, 2030, so they can contribute to Labor’s target of reaching 82 per cent renewables by that time. To be eligible, the projects must not be identified as committed or existing in market operator’s generation Information publication as at October, 2024.
The most interesting variations are the decision to open the tender to projects smaller than 30 megawatts, to allow these projects to be aggregated in a single bid. They must, however, be a minimum of 5 MW.
The other significant change is to broaden the assessment criteria of the battery projects to a focus on unlocking network capacity and providing system services.
This includes batteries with grid forming inverters that can deliver system strength and inertia, remedial action schemes such as the System Integrity Protection Scheme secured by the Waratah, VBB and Hornsdale batteries, as well as voltage support and non-commercial time-shifting.
This appears to be a recognition that battery storage has a major role to play in offsetting the cost of new transmission, where prices have soared in the past few years, and to unlock capacity in existing network structure.
It also recognises the important role that battery storage, with grid forming inverters, can play in providing the key system services currently delivered by synchronous generators such as coal and gas-fired turbines.
ASL, which is managing the tender for the federal government, defines non-commercial time-shifting as projects that can absorb curtailed energy even when spot prices are relatively high.
The battery storage tender is one of four currently on the go as Labor ramps up efforts to meet the 82 per cent renewables target, which is looking increasingly harder to reach because of the slow pace of new commitments in wind and solar in 2025.
These tenders include the search for 5 GW of new wind and solar capacity in the NEM (tender 7), plus two tenders focused on the Western Australia market, one for battery storage (tender 6) and the other for wind and solar (tender 5).
All these new tenders will operate under a single stage process that are designed to fast-track the decision making and enable the projects to start earlier.
Battery projects that are also participating in the state-based firming tenders in NSW and South Australia are also able to participate in the federal tender, although a win in either state firming tender will exclude them from a contract in the CIS process.
The first major NEM-wide dispatchable tender – announced in September – secured 16 projects with a combined capacity of 4.13 GW and 15.37 GWh. All those projects must be completed by the end of 2029.
Registrations for tender 7, for 5 GW of wind and solar, will close on November 25, with bids due on December 9. Tender 8, for battery storage, will open in late November with bids due in February.
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