The New South Wales government says it has been swamped by bid proposals from wind, solar and storage developers in the first of a series of tenders marking the state’s planned exit from coal generation.
NSW has the biggest coal fleet in the country – more than 10GW – but expects most, if not all, of them to be closed within a decade and has set out detailed 10-year infrastructure plan to ensure enough new renewable and storage capacity is in place.
The first of these tenders has attracted more than 5.5GW of wind and solar projects and more than 2.5GW of long duration storage – around six times the amount sought in the first tender.
NSW Energy Minister Matt Kean says the level of interest is an outstanding result for the government’s long-term plan to modernise the NSW electricity system.
“This is an overwhelming response from the market and a strong endorsement of the Roadmap’s vision for the NSW electricity system,” Kean said in a statement.
“Russia’s illegal invasion of Ukraine and the resulting global energy crisis has added extra impetus to modernise our electricity system.
“The need for new sources of electricity generation that are not tied to the volatility of global commodity prices has never been greater.
“The best way to provide structural, long-term relief from high electricity bills is to drive in new supply and put downward pressure on energy prices at the source, which is exactly what our Roadmap is doing.”
The first tender is seeking around 950MW of wind and solar – depending on the technology mix – and 600MW of long duration storage, defined as a minimum eight hours of storage.
This is expected to be mostly pumped hydro, but the initial offers also included lithium-ion batteries, hydrogen fuel cells and compressed air storage (most likely from the recently proposed Broken Hill project).
A second tender next year will seek similar amounts of wind and solar, and also more than 380MW of short duration “firming capacity”, most likely battery storage. Tenders will be held twice a year for the next 10 years.
The bids for the first tender will now be assessed by the NSW Consumer Trustee, AEMO Services, a specially-formed subsidiary of the Australian Energy Market Operator.
The initial criteria is based community engagement, regional economic development and land-use opportunities, although price and grid benefits will count in the final assessment in the projects shortlisted in December.
AEMO Services’ Executive General Manager Paul Verschuer said as part of the next stage in the tender process, projects would be shortlisted according to a set of merit criteria which evaluate the deliverability of the project, the quality of the proponent and social licence, before being assessed for financial value.
“We recognise there is an increasing need for additional energy generation and storage,” AEMO Services’ Executive General Manager Paul Verschuer said.
“Our tenders are designed to drive competition from projects that are able to deliver that energy in the interests of NSW electricity consumers.
“We have a strict mandate to only recommend those projects that can demonstrate value to host communities and financial value to consumers, and in order to be successful bids will need to reflect that.”
Successful projects will be awarded long-term energy service agreements, underwriting the delivery of built energy resources that will benefit the long-term interests of the State’s electricity consumers. Winners are expected to be announced in April.
“These tenders have been specifically designed to identify the best projects to bring quality energy to market in the earliest possible timeframe,” Kean said.
“The level of investment we are facilitating in the NSW energy system is unprecedented, which is why these tenders will run every six months for at least the next 10 years.”
