The NSW government and the Australian Energy Market Operator have decided to ramp up the size of its first landmark tender for wind, solar and storage project following the flagged early closure of the Eraring coal fired power station.
The news was released amid a host of other changes that form part of the NSW response to the early Eraring shut-down, and the possibility that the entire fleet of coal generators in the country’s most dependent state could exit the market within a decade.
Origin Energy announced in March that it intended to close the 2.8GW Eraring coal generator in 2025, rather than 2032 as previously advised.
It was later revealed that Origin had held close talks about the matter with both the state government and AEMO, but all parties decided to keep the federal energy minister Angus Taylor out of the loop.
It was a humiliating experience for Taylor that underlined the widespread distrust of the minister in the industry. He responded this week by attempting to force coal plant owners to give five years notice of a closure, rather than a three and a half year closure.
NSW, meanwhile, has been working to fast-track the framework of its renewable infrastructure plan, particularly the framing of the two key components of its renewable energy zone architecture, so-called “access rights” and “long term service agreements (LTES).”
In an email to stakeholders sent late Thursday, the state government and AEMO, which is acting as “consumer trustee”, said the size of the generation component of the planned first auction had been increased to 2,500GWh.
The first tender will focus on the Central West Orana renewable energy zone, one of at least five REZs planned by the state government.
It recently announced plans to boost transmission capacity that would allow the amount of renewables to be boosted nearly four-fold to 11gW, instead of the 3GW originally planned.
“The NSW Consumer Trustee now expects to run the first tender for LTES agreements in respect of generation infrastructure projects in Q4 2022 and at an increased indicative size of 2,500 GWh p.a,” it said.
“The Q4 2022 tender is now expected to include the initial tender for LTES agreements in respect of long-duration storage infrastructure as well. The expected indicative size continues to be 600MW.”
Plans for a pilot tender have been canned, and instead the government and AEMO will undertake a series of market briefings. They had received feedback that the pilot tender would not be big enough to be meaningful.
ITK analyst David Leitch said the wind projects considered front runners for the first auction included Epuron’s Burrendong wind farm, which could be as big as 650MW, Powar’s’ 1GW Liverpool Range wind farm, and Iberdrola’s Flyers Creek wind project.
“The Orana REZ area benefits from low transmission build costs due to the existing network nearby,” Leitch wrote in a note to clients. “The next few years will see rapid and competitive development in this zone.”
The NSW government said the size of the first tender may change, depending on market conditions and opportunities close to the time.
It also noted that investment in NSW was continuing “at a pace”, with some 3.6 GW of new investment committed and anticipated since the roadmap was enacted.
“Almost all of this new investment is likely to be able to participate in the enlarged Q4 tender, driving competition and value for consumers,” it noted.
“The NSW Consumer Trustee welcomes participation for Long-term Energy Service Agreements (LTESAs) from projects across NSW, including those outside of the Central-West Orana Renewable Energy Zone (CWO REZ) seeking to connect to existing transmission infrastructure.
“Access Rights will also be offered and are likely to be limited to projects within the CWO REZ for this specific tender.
“The tenders conducted by the NSW Consumer Trustee are the only way projects can be awarded an LTESA, Access Right or both products. Projects needing both products must seek these through a single competitive tender.”
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