Australian energy storage tender attracts 19 GW of proposals

From pv magazine Australia

Australian Federal Energy Minister Chris Bowen said the market response for the first large-scale auction of dispatchable capacity in the nation's new CIS was “massively oversubscribed” with 19,000 MW of projects submitted.

The Victoria and South Australia tender was seeking bids for energy generation and storage projects with up to 600 MW / 2,400 MWh of dispatchable capacity that will be operational before the end of 2027.

The projects, to have a minimum capacity of 30 MW and a minimum storage duration of two hours, must either store electricity purchased from the National Electricity Market (NEM), or from a fuel source that is an eligible renewable energy source, including solar, wind and hydro.

“The market response for this was huge. Massively oversubscribed,” Bowen said. “We wanted 600 MW of new dispatchable capacity. We received bids for 19,000 MW, 32 times more than what we asked for.”

Bowen said successful applicants in the Victorian-South Australian tender have now been shortlisted by AEMO Services, which is administering the national CIS tender process.

The total tender allocation for each state is 800 MWh plus an additional 800 MWh is up for grabs, based on the assessed merit of projects.

“Under the ‘merit criteria’ we’ve designed, auctions will be won by projects that build reliability in our grid and strengthen local supply chains, promoting an efficient energy system,” Bowen said.

The Victorian-South Australian tender marks the beginning of a three-year national bidding schedule with competitive tenders to be held approximately every six months through to the end of 2027.

The objective is to deliver 9 GW of dispatchable capacity and 23 GW of variable capacity nationwide by 2030. Successful projects will be awarded a “contract for difference” that provides for partial revenue support from the Commonwealth where a project’s net revenue falls below an agreed floor, and an obligation that proponents pay a percentage of net revenues to the Commonwealth where net revenue exceed an agreed ceiling across a year.

The next tender to be conducted as part of the CIS, seeking 6 GW of new solar and wind projects, will be launched later this month.

Bowen said the tender will be the first national tender and will include specific allocations for three states.

At least 2.2 GW of new renewable energy supply has been allocated to New South Wales and 300 MW will be dedicated to projects delivered in South Australia. An additional 500 MW will be delivered in Western Australia.

“Constructive discussions will continue with the other states and territories as well,” Bowen said, noting that in the two years since 2022, renewable generation in the NEM has gone up by over 15,000 GWh, an increase of about 25%. “We’re negotiating these agreements with the states to ensure we are working together on two things: improved delivery of new renewables projects and ensuring reliability throughout the transition.”