Bowen launches new wind and solar tender in state happy to write contracts to help replace coal

Federal energy minister Chris Bowen has launched the latest tender under his flagship Capacity Investment Scheme, seeking another 1.8 megawatt of new wind and solar capacity for a state determined to close the last of its coal fired generators in three years time.

Labor’s CIS has struggled to gain traction in the country’s main grid because of the lack of contracts being written for large scale renewables, particularly wind, although it can claim to some success with the more easily deployed standalone batteries and solar and battery hybrids.

Western Australian is perhaps the one state where the CIS scheme is working well, at least for large scale wind, largely because of the additional long term off-take agreements being written by the state-owned utility Synergy.

The state is now in a rush to ensure enough new capacity to replace the last of the state owned coal generators that are due to shut by the end of 2029 and has recently announced PPAs with four major wind projects totalling more than one gigawatt of capacity.

The new tender comes just a few months after the results of the last generation tender in W.A. was revealed, with the winners including six wind projects and one solar and battery hybrid that totalled 1.886 gigawatts of capacity

Two of those wind projects – Waddi and Narrogin – are already under construction, while the extension of the Warradarge wind farm and the new Kings Rock wind farm are also under construction. In the north of the state, on a separate grid, Fortescue’s Nullagine wind project is also being built.

Bowen says the new tender, known as Tender 11, will also be the first to require participation in the government’s new Developer Rating Scheme (DRS), which is designed to provide landholders and local communities greater transparency about the track record, capability and conduct of renewable energy developers and transmission companies.

Proponents must have commenced the DRS assessment process to apply for the new tender.

“Western Australia needs more power as its economy and population grow, and this tender will bring forward another 1.8 GW of new generation to help deliver it,” Bowen said in a statement.

“We’re also lifting the bar for developers – if you want Commonwealth backing through this tender, you need to show you’re serious about working properly with communities and landholders.

 “More renewable generation means more reliable supply and more competition, helping put downward pressure on power prices for WA households and businesses.”

The Federal government is currently holding two different tenders – for generation and dispatchable capacity (tenders 9 and 10) in the National Electricity Market, the results of which will be announced later this year, when it will also launch tenders 12 and 13, seeking yet more generation and dispatchable capacity.

NSW is currently holding a separate tender, for a further 2.5 GW, focusing largely on its need for wind capacity, and has tweaked the tender design to reward projects that are ready for construction and have a clear line of sight to financial close.

So far only a handful of new wind projects are under construction in the NEM, and only two – Palmer and Carmody’s Hill in South Australia – with the support of the CIS, even though 31 different wind projects have won the opportunity to strike underwriting agreements.

The main problem has been the lack of buyers. The main privately owned utilities have sat on their hands, despite the impending closures of some of their coal fired power stations, arguing that wind power is too expensive.

However, the drought could soon be broken following the decision by the state and federal governments to provide $2.5 billion over 10 years to support the Tomago aluminium smelters’s transition from coal to renewables, and the growing interest in data centres, who will be required to sign contracts with new wind and solar projects to match their demand.

W.A. projects is also assisted by the presence of a capacity market, which adds a revenue stream not available in the NEM, as well as the influence of Synergy, the state owned retailer and generator.

“Western Australia’s market works very differently to the east coast, so we have a separate auction to cater for that different Western Australian need,” Bowen said at a press conference on Tuesday morning in Perth.

“Now, that auction process has been a good one, and I’m sure we’ll get a very strong pipeline of investment coming through in that auction, as we have in previous.”

The role of the W.A. state government contrasts with that of the LNP government in Queensland, which also owns most of the state’s electricity utilities, but which has ripped up renewable targets, put a stop to a number of new projects and refuses to join the federal push for data centres to be powered by renewables.

In Victoria, where the next big coal fired generator is due to retire in 2028 (Yallourn), the Coalition parties have threatened to stop at least one major transmission project should it win power at November’s state election, throwing another spanner into that state’s plans to reach 95 per cent renewables by 2035.

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