South Australia opens tender for eight-hour batteries and peaking gas to support push to 100 pct renewables

South Australia, the world’s most advanced renewable grid, has formally opened a new tender designed to attract long duration big batteries and flexible gas generators to boost its grid resilience as it heads towards the official government target of 100 per cent net renewables.

The state is seeking around 700 megawatts (MW) in a tender called the Firm Energy Reliability Mechanism (The FERM), and energy minister Tom Koutsantonis says he expects a mix of battery storage and gas turbines.

South Australia, which currently sources a world-leading 75 per cent of its annual electricity demand from wind and solar alone, and aims to reach 100 per cent “net” renewables by the end of 2027.

It has a large and growing fleet of big battery projects, having installed the world’s very first large scale battery at Hornsdale in 2017, with eight now in operation and another dozen under construction, commissioning, or already contracted.

Most of these batteries have around two hours of storage, with some of the most recent projects proposing four hours of storage. The state now wants to use this tender double that storage capacity to reach further into the evening peaks.

It is also seeking more gas turbines because those built decades ago to back up its former fleet of coal fired power generators are now ageing and in need of replacement.

“The Malinauskas Government recognises the importance of ensuring secure, reliable and resilient electricity supply for South Australia, at least cost to consumers,” Koutsantonis said in a statement.

“All around the world, fossil fuel generators are exiting electricity grids, and these are commercial realities we have been preparing for.

“South Australia was one of the first jurisdictions in the world to identify the opportunity early to harness our abundant natural resources to get ahead of these realities.

“Now we are again looking to the future with an innovative energy policy that creates certainty for both consumers and generators.”

The scheme will write contracts with eligible existing and new long-duration firm capacity power generators, effectively underwriting a portion of their revenue to create financial certainty for market proponents outside of sporadic and infrequent high price events.

The government says that the availability of this firming generation will be critical for maintaining the reliability of SA’s electricity system.

South Australia recently announced an contract with AGL to keep open two units at Torrens B because of delays in the completion of the Project EnergyConnect transmission link to NSW – a project that Koutsantonis is not a big fan of. The details of the contract have not been released.

Koutsantonis says the FERM scheme will help protect South Australian consumers against potential National Energy Market-wide price and reliability risks in future years as coal-fired power stations in NSW and Victoria are retired.

“Long-duration dispatchable capacity remains vital to system stability, particularly during periods of peak demand,” he said. “This call for tenders seeks to attract a combination of storage and generation projects that support system security and reliability while helping put downward pressure on wholesale prices.”

Bids close for the tender on November 28, with the winners to be announced in March or April next year.

See Renew Economy’s Big Battery Storage Map of Australia for more information.

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