AEMO Services recently ran a tender process for Long-Term Energy Service Agreements (LTESA’s) and Renewable Energy Zone (REZ) Access Rights to support investment, construction and operation of renewable energy generation and long duration storage infrastructure in NSW.
AEMO Services shortlisted 16 projects totalling 4.3 GW of generation and storage in its first auction. AEMO Services is expected to go to tender for more supply and storage in the future as NSW undergoes the transition from coal fired generation to renewables.
To enable the transition from coal to renewables, investment in NSW is likely to be over $32B to allow renewables to fill the gap as the last 5 coal fired generators in the state retire over the next 10 years.
With 16 projects being selected from the first round, AEMO Services will continue to run 2 auctions per year until the end of 2030 to source 12GW of renewables and 2GW of storage to fill the shortfall.
While the generation and storage mix has not been released, it is likely it will be a mix of solar, wind for the generation and batteries and pump hydro will be selected to meet the eight hour storage solution.
Under the auction scheme the successful projects will essentially be underpinned by a long term energy service agreement to ensure the projects receive a minimum return on investment to allow them to get project finance.
The 16 projects have until the 10th February to submit the financial part of the bids to AEMO Services when they will be assessing each project against a set of criteria including technical capability, delivery timeline, cost and social licence. Unsuccessful projects can update their submissions and submit offers in future rounds. The next auction is likely to be in July 2023.
With companies striving to meet future sustainability targets the supply of projects has been tight. Hopefully following the close of the first auction and another round in 6 months we will start to see projects reaching financial close, construction and finally delivering renewable energy to the grid.