NSW opens registrations for first big renewables and storage tender

The New South Wales government has formally owned registrations for the first of many big renewable and storage tenders that will replace the bulk, if not all, its coal fired generators over the coming decade.

The first tender – to be managed by AEMO Services, will seek 2,500GWh of new wind and solar, which is the equivalent of around 1GW of new capacity, depending on the technology mix, plus around 600MW of long duration storage.

The tender will start on October 4 and finish on October 28, with financial offers due in late January and  the winning bidders announced in late March. The new generation needs to be up and running by 2025, which is a fairly strict timetable, particularly for big projects, while the long duration storage is expected on line by 2027.

NSW has outlined the country’s most detailed renewable infrastructure roadmap – largely based around the creation of renewable energy zones – that seeks to ensure enough renewable and storage are in place before the big coal generators are closed.

The first of the coal closures will be completed early next year with the shut down of the final units at Liddell, and the next one will be the biggest, with the 2.8GW Eraring coal generator – the largest in the country – currently scheduled to close from August, 2025.

Vales Point is expected to close in 2029, and under some scenarios being developed by the market operator, the state’s remaining coal generators – Bayswater and Mt Piper – could be gone by 2032.

NSW has created at least five renewable energy zones, which have each been swamped with interest from potential project developers. The first to go to tender is the Central West Orana zone around Bathurst, but there are others in New England, the Hunter Valley, the Illawarra, and the south west.

And there is growing interest in offshore wind, both as part of new renewable energy zones, and part of the areas to be opened up by the federal government. NSW is reportedly considering an offshore wind target, similar to that announced by the Victoria state government.

The actual tenders are enormously complex and involve access rights to the grid – to reduce the risk of congestion and constraints, one of the main bug-bears of recent investments – and a scheme that acts as an underwriting agreement for the project.

The latter, known as LTESA’s, or Long Term Energy Service Agreement, is designed to protect projects from low spot prices, and help make them “bankable” i.e. to reduce risk and make the investments more attractive to bankers.

The bidding process also includes strict criteria on regional jobs, land use issues, and community engagement.