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Battery storage eligible in New South Wales tender for firming resources

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The Australian state of New South Wales is tendering for firming resources that can dispatch energy to the grid for two hours or more, with battery storage among the eligible technologies.

The tender is also expected to contract for long-duration energy storage (LDES) with dispatch capability of at least eight hours, in later procurements.

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The competitive tender is being administrated by AEMO Services, the independent subsidiary of the Australian Energy Market Operator (AEMO) that performs key services to maintain the functioning of the National Electricity Market (NEM) that AEMO oversees.

The second in a series of tenders that AEMO Services has been appointed to run as Consumer Trustee for New South Wales (NSW), the competitive solicitation will award long-term energy service agreements (LTESA) for firming infrastructure.

Three separate products will be competed for:

  1. Firming LTESAs for resources with dispatch at registered capacity for 2-hour duration or longer. Resources are being sought specifically in the sub-region of Sydney-Newcastle-Wollongong. AEMO Services seeks 380MW for firming LTESAs, which must be in service before December 2025.
  2. Long-duration storage (LDS) LTESAs: While tender size is yet to be determined and will be decided based on outcomes of the firming tender round, AEMO Services will seek long-duration resources with at least 8-hour continuous dispatch at registered capacity. Resources will be sought in all regions of NSW.
  3. Generation LTESAs for resources with a generation capacity of at least 30MW per unit, AEMO Services will seek 2,500GWh throughout all NSW.

The intention is to establish sufficient energy supply for the state in time for the 2025-2026 timeline when demand is projected to start edging out firm capacity available for meeting NSW’s Energy Security Target.

AEMO Services has invited stakeholders to provide feedback and comments on draft term sheets it has published for firming LTESAs as well as demand response and other aspects of the tender. Feedback should be sent by 25 November.

For the firming tender, any resource that qualifies as a Scheduled Generator under market rules is eligible. That includes battery storage, diesel generators, thermal storage, gas peaker plants, biomass and wholesale demand response assets.

Battery storage projects must be capable of discharging for two 1-hour cycles with charging in between.

LTESAs are designed to provide financial incentives to invest in assets that will help meet the long-term needs of electricity customers in NSW. AEMO is responsible for scheduling all firm infrastructure under National Electricity Rules.

Tendering will take place in Q2 2023.  

As reported by our colleagues at PV Tech yesterday, New South Wales is currently also tendering for large-scale renewable energy and energy storage resources to feed Renewable Energy Zones (REZs) included in a state energy transition roadmap.

The state government said this week that it has received bids for over 5.5GW of wind and solar generation projects and over 2.5GW of long-duration energy storage.

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