AEMO receives 3.1GW of power generation applicants in latest round of NSW energy tenders

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A 70MW solar project in New South Wales. Image Nextracker.

The Australian Energy Market Operator (AEMO)’s subsidiary, AEMO Services, has reported that companies have submitted bids for 3.1GW of power generation in the state of New South Wales (NSW), more than three times the target of 950MW put forward in the initial tender.

AEMO Services is responsible for managing tenders for long-term energy service agreements (LTESA) and access to renewable energy zone access rights in NSW, and the body’s leaders were encouraged by the repeated interest in new state power projects demonstrated by the private sector.

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“The strong support is further evidence that the LTESA provided through our tender process addresses a key market risk that might otherwise delay or discourage investors from participating in the transition,” said Paul Moy, chair of AEMO Services.

“We designed our processes to minimise time and effort for repeat bidders, allowing participants to sharpen their pencils and return with an improved proposition,” added Moy. “At the same time, it’s a positive sign that a number of new entrants have engaged with the process, demonstrating confidence in our systems and product and an evolving pipeline of projects.”

While AEMO Services did not specify which companies nor projects were involved in this round of the tendering process, it did note that, in addition to the power generation projects submitted, a number of groups proposed storage projects. As in the case of power generation, the submitted capacity far exceeded expectations, with investors proposing 1.6GW of new storage projects, compared to a target of just 550MW.

It is likely that many, if not all, of these power generation projects will use renewable power, considering both the clean energy goals of the NSW government and recent precedent.

In 2020, the state government released its Electricity Infrastructure Roadmap, a 20-year plan to support 12GW of new electricity generation and 2GW of new storage solutions, backed by the private sector. This year, the government has operated three power tenders under this programme, covering energy infrastructure, power generation and long-term energy storage, and today’s news regards projects submitted under the third round of tenders.

The first of this year’s tenders concluded in May, which saw AEMO award tenders to 1.12GW of solar capacity, alongside the 50MW/400MWh Limondale battery energy storage system, as NSW looks to increase its renewable generation capacity.

“We have the flexibility to only select the projects that represent the best value to consumers,” said AEMO Services’ executive general manager Paul Verschuer. “If we aren’t satisfied that there are enough competing projects we can alter our plan accordingly and tender for a higher volume in future rounds.”

“The competing bids will now undergo an assessment for non-price criteria such as deliverability, and benefits to local communities and First Nations people, after which we’ll assess them closely to determine the most valuable projects for consumers,” added Verschuer. AEMO Services plans to announce successful bids under this tender by the end of this year.

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