NSW new gigawatt-scale renewables – AEMO tender
- May 22, 2023
- Posted by: Madrigal Admin
- Category: Tender News
As part of its long-term plan to transition from coal to clean energy, NSW is about to open its second gigawatt-scale wind, solar, and long-duration storage AEMO tender next week (Jun 2023). As reported by Giles Parkinson in the New Economy.
AEMO tender details
The tender, managed by AEMO (Australian Energy Market Operator) Services, will focus on securing approximately 1,000 MW of new wind and solar projects, coupled with up to 550MW of long-duration (at least eight hours) storage solutions.
First AEMO tender results
The outcome of the initial tender, unveiled earlier this month, surpassed government expectations. The bids received included exceptionally low prices, establishing a guaranteed floor price for new wind and solar projects. Additionally, the tender witnessed a ground-breaking victory for an eight-hour battery storage project.
Lower strike prices
In this second round, the industry will be observing whether the Long Term Services Agreements (LTESAs) strike prices decline further from the sub-$35/MWh achieved in the first solar tender and sub-$50/MWh for wind. These strike prices act as floor prices, providing revenue certainty to facilitate project financing.
Diverse project scope
The industry is keen on discovering the nature of the projects that will emerge the winners in the tender process. While the 720MW New England Solar Farm was among the winners in the previous round, a significant portion of its initial phase is already operational. The tender is open to all projects across the state that can connect to existing grid infrastructure, irrespective of their location within the renewable energy zones.
Storage tender potential
The storage tender segment holds particular interest with the participation of more eight-hour battery projects, alongside potential contenders such as pumped hydro and other long-duration storage options. The first tender saw a 50MW/400MWh battery project by German energy giant RWE win, but the number of other storage projects submitting financial bids remains undisclosed. The tender structure has faced criticism from pumped hydro developers.
Continuity for bidders
Unsuccessful proponents from the first tender are encouraged to submit subsequent bids at minimal additional cost. This approach benefits both consumers and bidders and is a key feature of the rolling 10-year competitive tender schedule.
AEMO tender targets
The tender aims to secure approximately 2500GWh of new generation (equivalent to around 950MW of wind or solar capacity) and 550MW of long-duration storage. The final allocation may vary based on tender outcomes.
Expansion and firming capacity
NSW is making significant strides in its renewables program with this being the third AEMO tender conducted. The state is also seeking offers for a minimum of 380MW of shorter duration “firming capacity” (at least two hours of storage) to supplement resources in major load areas following the closure of the Eraring coal plant in late 2025.