Victoria and South Australia seek 2,400MWh of storage in fast-tracked capacity tender

Around 2,400 megawatt hours (MWh) of storage capacity is to be sought for Victoria and South Australia under the newly created Capacity Investment Scheme, adding to an existing tender that is currently being run in NSW.

The tender, which has been flagged for months but appears to have been fast-tracked, is designed to help the states fill in the reliability gaps for the impending retirement of the Yallourn coal fired generator in Victoria in 2028 and the Torrens Island B gas plant in South Australia in 2026.

The tender will target 600MW of dispatchible capacity with the equivalent of four hours storage. As gas plants are not eligible, it will almost certainly be met by big big batteries, or possibly some other storage technologies.

Pumped hydro is eligible, but it remains to be seen if any project can be built in time, given the delays and spiralling costs of projects like the Snowy 2.0 disaster, where costs have reportedly doubled to more than $12 billion.

“People will put in their bids and have sharp pencils,” federal climate and energy minister Chris Bowen told journalists on Wednesday.

“In New South Wales, you know, there’s been bids for pumped hydro, there’s been bids for batteries. And, you know, we’ll see what comes forward into Victoria and South Australia.”

A tender for 380MW of two hour storage in NSW was recently expanded to 930MW and two hours storage (1860 MWh) after a deal with the federal government in the first tender of the new CIS. That expanded tender is designed to help address potential reliability shortfalls from the planned closure of the Eraring coal plant.

In total, the CIS is designed to unlock 6GW, of 24GWh of dispatchable capacity across the main grid by the end of the decade, pulling in around $10 billion of investment.

Most of it will go to battery storage, with some likely for pumped hydro, or other technologies such as compressed air and solar thermal storage, if they can compete on costs and timelines.

“Today’s announcement will dramatically improve energy security with large-scale batteries and other zero-emission technology in Victoria and South Australia that can quickly dispatch cleaner, cheaper renewable energy when needed,” Bowen said in an earlier statement.

Victoria energy minister Lily D’Ambrosio said more renewable energy and storage capacity is needed to meet the state’s target of 95 per cent renewables by 2035. The state also has its own storage targets of 2.6 GW by 2030 and 6.3 GW by 2035. It has not yet stipulated the storage duration of those targets.

South Australia energy minister Tom Koutsantonis said the state will do “everything it can” to case manage and prepare approvals to expedite investment under this scheme. The state is also soon to announce the winners of its near $600 million hydrogen scheme, which includes a 200MW hydrogen power plant near Whyalla.

The new tender will open in September, and projects that have reached final investment decision since last December will be eligible for support.