NSW plans new “firming” tenders to replace Eraring and support electrification and EV switch

The NSW Government says it has directed its newly created Consumer Trustee – a subsidiary of the market operator – to hold a tender for “firming capacity” to support the roll out of renewables in the state, and the switch to electrification and EVs.

The tender, the size and timing of which has not been finalised, will be separate and additional to the tenders announced last month designed to secure at least 1GW of wind, solar and long duration storage to kick-start its massive transition from a coal based grid to one dominated by renewables.

Treasurer and energy minister Matt Kean said in a statement on Monday morning that the new “firming” capacity would be needed to support forecasts of increased electricity demand, driven by the electrifications of homes and businesses, and the uptake of electric vehicles.

“NSW has the most ambitious renewable energy policy anywhere in the country, helping to replace ageing coal fired power stations and reach net zero emissions,” Kean said in the statement.

“Firming infrastructure is needed alongside renewable energy infrastructure to balance the grid, helping to keep the lights on when it isn’t sunny or windy, or when there is high demand.”

Kean said the “firming tender” will be open to all technology types, and it appears that the requirement to “have an emissions intensity lower than the most recent NSW grid average” means that gas – as well as batteries – will be eligible.

However, any new gas project must be able to achieve “net zero scope 1 emissions by 2035,” which may include offsets or green hydrogen, or similar.

The statement said Consumer Trustee, AEMO Services, will now prepare a report to determine the size and timing of the tenders. That report is expected to be delivered in November, with a first tender likely in the first half of 2023, with completion due to 2025, before Eraring is closed.

It noted that recent assessments by AEMO and the NSW government put the need for at least 350MW of firming infrastructure within the Sydney-Newcastle-Wollongong sub-region.

That report took into account the recently announced plan to close the state’s biggest coal generator, the 2.8GW Eraring facility, by 2025, or the announced Waratah super battery and Eraring battery designed to help replace that capacity.

“The updated report shows that additional action is necessary to ensure a reliable electricity supply following the potential early retirement of Eraring power station in 2025 in addition to the Waratah Super Battery because of increased electricity demand projected by AEMO under the ‘step-change’ scenario and updates to other inputs and assumptions,” a spokesman said.