Australian 550MW long duration storage tender opens

AEMO Services, a subsidiary of the Australian Energy Market Operator, has opened the latest tender for generation and long duration storage under the NSW Electricity Infrastructure Roadmap.

The tender is seeking an indicative amount of 2500GWh (around 950MW) of generation and 550MW of long duration storage, however AEMO Services has discretion to award more or less if it is “in the long-term financial interest of NSW consumers to do so”.

AEMO Services said the three generation projects selected for the first tender round exceeded its indicative target by more than 400 MW. 

Successful projects are awarded long-term energy service agreements (LTESAs).

The LTESA contract gives the flexibility to the holder of the agreement for a period of up to 20 years. For generation projects, the LTESA “should be thought of as similar to an insurance policy – only exercised at times of unexpectedly low wholesale electricity prices”, a statement said. AEMO Services said the LTESA reduces investment risk, boosting supply while still incentivising projects to participate in contract markets (such as corporate power purchase agreements) or taking on merchant (spot price) risk. AEMO Services added that consumers benefit from increased supply and downward pressure on wholesale prices, while lowering their exposure to “directly paying for new generation and storage infrastructure”.

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