The federal Labor government has begun the roll-out of the new Capacity Investment Scheme, starting with the state of NSW where a tender for battery storage and other “firm” technologies has been more than doubled to fill a gap created by planned coal plant closures.
The federal and NSW Labor governments have decided to increase a tender of “firm capacity” from 380MW to 930MW, and should have no shortage of takers given that more than 3.3GW of proposals – mostly for big batteries – were received in the first stage of the tender.
The funds for the additional capacity will come from the federal government.
Federal energy and climate change minister Chris Bowen also revealed on Thursday that the states of Victoria and South Australia will hold their first auctions under the Capacity Investment Mechanism in October.
Bowen expects the scheme to unlock 6GW of firm capacity, and up to $10 billion of new investment, to help fill the gaps of coal and gas closures across the country’s main grid.
The auctions will be available for any project that have reached Final Investment Decision since the CIS was initially announced in December 2022, to avoid any delay in investment.
Bowen says the deal with the NSW government will eliminate the forecast shortfall in 2028/29 flagged by the Australian Energy Market Operator (AEMO) following the anticipated closures of Eraring in 2025 and Vales Point in 2028/9.
“Today’s announcement will drastically improve energy security with large-scale batteries and other zero-emission technology that can quickly dispatch cleaner, cheaper renewable energy when it’s needed, like when the sun isn’t shining and the wind isn’t blowing,” Bowen said in a statement.
The announcement came on the same day as the Clean Energy Finance Corp invested $100 million in the $1 billion Waratah Super Battery being built by global funds giant BlackRock at the shuttered Munmorah coal plant and which will act as a sort of giant “shock absorber” for the grid.
The NSW tender for at least 380MW of two hours firming capacity was expected to be dominated by battery storage and demand management, which was included in a major auction for the first time. Fossil fuels were eliminated by strict emissions criteria.
“The large number of proponents wanting to invest in NSW is a clear indication that we can transform our energy system and that any risks around grid reliability can be resolved by accelerating the development of a clean, reliable, consumer-focused energy system,” state energy minister Penny Sharpe said:
Shortlisted bidders in the NSW tender will be asked to submit a financial value bid in coming weeks, with the result of the expanded tender to be announced by the end of September.
The tender for short term firming to help fill the gap created by the closure of Eraring in 2025 and other coal generators was held in addition to the tenders for new wind, solar and long duration storage as part of the NSW infrastructure roadmap.
The first of those tenders has already selected 1.3GW of new wind and solar capacity, and the country’s first eight hour battery to be built in western NSW by German energy giant RWE.
A second auction for another 1GW of wind and solar capacity, and a further 550MW of long duration storage (at least eight hours) has begun.
See also:
BlackRock raises more than $500m for massive Waratah “shock absorber” battery
Origin to trial 12-hour redox flow battery at site of Australia’s biggest coal generator
RenewEconomy’s Big Battery Storage Map of Australia
