Increasing interest in Australia's renewable energy market has led to the Australian Energy Market Operator (AEMO) Services securing major oversubscription for its 3rd tender round under the New South Wales (NSW) Electricity Infrastructure Roadmap with 3.1 GW renewable energy generation bids coming in.
The original tender for the Long-Term Energy Service Agreement (LTESA) offered 950 MW for wind and solar generation and long duration storage (LDS) capacity of 550 MW to be contracted as pumped hydro and battery storage. Bids for the LDS category add up to 1.6 GW instead (see NSW Launches RE & Storage Tender).
Additionally, there were several repeat bidders since over half of the projects in this round were submitted in tender 1. AEMO Services Chair Paul Moy said, "We designed our processes to minimize time and effort for repeat bidders – allowing participants to sharpen their pencils and return with an improved proposition."
He credits the 'insurance' provided by the LTESA as the reason behind the strong investor interest. According to Moy, "The insurance nature of the LTESA means that the cost to consumers will materialize only in circumstances where projects are struggling to cover their debt service costs."
The list of winning projects under round 3 are to be announced by the end of 2023 after the bids offered are evaluated for non-price criteria and bringing the most value for the consumers.
The government agency may tender a higher volume in the future rounds of its 10-year schedule of rolling tenders to incentivize $32 billion in private capital, to transition the Australian state away from coal-fired generation (see NSW Launches Maiden Auction For RE & Storage).
The maiden tender round was completed in May 2023 wherein AEMO Services selected 1.395 GW of renewable energy generation projects, including 1.12 GW solar and 50 MW/400 MWh battery energy storage system (BESS) (see Australia Completes 1st Roadmap Tender Process). It was followed by a firming infrastructure tender round which is ongoing.