Australia: ASL unveils dual-track LTESA strategy as solar-battery hybrids reshape NSW energy market

The consultation paper released by ASL states that the organisation has observed a market transformation since commencing Generation LTESA tenders in 2022, with developers moving away from standalone solar projects toward solar-hybrid configurations.

This shift reflects the ability of battery storage to enhance the value of solar generation for both investors and consumers by enabling energy dispatch during periods of higher prices.

“ASL recognises that since the development of our Long Term Energy Service Agreements, market conditions and technologies have evolved, with a noticeable shift toward solar hybrid projects,” said ASL CEO Nevenka Codevelle.

“These projects generally offer a shorter time to market, and we recognise their potential to help meet our 2030 infrastructure investment objectives.”

The proposed Hybrid Generation LTESA would require projects to register as Integrated Resource Providers and be classified as scheduled bi-directional units with a single Dispatch Unit Identifier (DUID).

This configuration necessitates DC-coupled hybrid systems, which ASL notes have become the preferred design approach for solar-hybrid projects due to capital efficiency and operational simplicity.

This perspective is shared by Neha Sinha, product manager for energy storage systems at Wärtsilä Energy Storage, who told ESN Premium last year that DC-coupling will be “essential” for Australia’s solar future.

Two product options under consideration

The first option, termed “Fixed Shape-Fixed Volume,” would require proponents to bid against predetermined time-of-day profiles provided by ASL.

The product offers three potential shapes: evening peak (16:00-21:00), morning peak (06:00-09:00), or overnight (21:00-06:00). Settlement would occur against the fixed shape regardless of actual energy dispatch, with payments subject to a symmetrical annual payment cap that would serve as a competitive bid variable.

Under this structure, the Scheme Financial Vehicle would calculate monthly payments as the difference between the fixed price and spot price multiplied by the fixed volume during contracted hours, with a zero-dollar spot price floor applied.

ASL said this product aims to incentivise shifting generation from midday solar production periods to peak demand times when wholesale electricity prices are higher.

The second option, “Generation-following with Price Risk Share,” would settle against net exports while incorporating a price risk sharing mechanism.

This approach would calculate payments based on 50% of the difference between the fixed price and the project’s dispatch-weighted average price, multiplied by the notional quantity. The dispatch-weighted average price would be calculated using net exports, defined as the difference between exports and imports.

This design considers both the charging and discharging operations of the battery component, with the intention of encouraging additional storage cycles when market conditions are favourable.

When projects import energy from the grid to charge batteries, the settlement mechanism accounts for these operations in the overall revenue calculation.

Both proposed products would maintain a maximum contract term of 20 years and include provisions for green rights and environmental products earned during generation and dispatch.

The products would also incorporate repayment mechanisms aligned with other Generation LTESA products, though these may be refined before the next tender.

ASL expects the modified Hybrid Generation LTESA to be available for the next NSW Roadmap Generation Tender scheduled for Q2 2026, targeting 2.5GW.

Proponents would select which Generation LTESA product to bid for, with all projects assessed collectively based on merit, defined as value relative to costs, including non-financial benefits.

The consultation paper notes that while hybrid projects bidding for the new product may have higher LTESA fixed prices compared to hybrid projects using the existing Generation LTESA, they should achieve similar or more competitive forecast costs due to the settlement mechanism, which considers higher-priced periods.

The consultation period runs until 16 February 2026, with ASL seeking market feedback on commercial terms, product design features, and potential barriers to investment. All stakeholders are invited to provide feedback through the consultation process.

Investment priorities focus on high-value projects

The 2026 NSW Consumer Trustee Investment Priorities, released alongside the consultation, set out a strong focus on high-value generation, firming and long-duration storage projects that can bid for an LTESA while providing value to consumers and ensuring projects are commercially viable and deliverable.

The Investment Priorities reinforce ASL’s commitment to using LTESAs to accelerate project delivery and support high-quality projects, including those facing challenges such as near-term curtailment, generator-specific network upgrades, or challenging connection costs.

“To provide a clear signal to the market, we’ve released our first Consumer Trustee Investment Priorities, outlining the types of projects we want to see in this year’s NSW tenders – projects that can deliver long-term value for consumers,” Codevelle said.

The consultation reflects ASL’s experience with hybrid projects in previous tender rounds.

The organisation has already contracted with hybrid projects through the existing Generation LTESA with optional hybrid drafting, including a Distribution Network Service Provider-connected solar and lithium-ion BESS hybrid project in NSW Roadmap Tender Round 4.

The Energy Storage Summit Australia 2026 will be returning to Sydney on 18-19 March 2026. To secure your tickets and learn more about the event, please visit the official website.