The Albanese and Minns Governments are improving energy security and reliability across NSW by attracting investment in the cheapest form of reliable energy - firmed renewables.
The Capacity Investment Scheme is a national framework to increase new dispatchable renewable capacity and ensure reliability and affordability in Australia's rapidly changing energy market.
The partnership between NSW and the Commonwealth announced today, will deliver almost 1 gigawatt of additional dispatchable capacity, eliminating the forecast shortfall in 2028-2029 flagged by the Australian Energy Market Operator (AEMO).
The Commonwealth's Capacity Investment Scheme (CIS) will more than double the 380 megawatt (MW) of firmed capacity to 930MW in the NSW Energy Roadmap's firming tender, through Commonwealth funding that will underwrite investment for up to an additional 550MW of firmed capacity.
Bids representing more than 3.3 gigawatt (GW) total capacity have already been submitted to the NSW 380MW firming tender round, meaning there is still a significant amount of firmed renewable projects ready to be unlocked by today's announcement and support the grid over the long-term.
The NSW CIS will support grid-scale dispatchable generation and storage such as batteries, pumped hydro or other dispatchable capacity.
Minister for Climate Change and Energy Chris Bowen said the scheme would increase crucial investment in dispatchable renewable energy to improve the security and reliability of the NSW grid, as well as put downward pressure on prices.
"Today's announcement will drastically improve energy security with large-scale batteries and other zero-emission technology that can quickly dispatch cleaner, cheaper renewable energy when it's needed, like when the sun isn't shining and the wind isn't blowing.
"The federal Liberals and Nationals decade of energy policy chaos saw 4GW of dispatchable generation leave the east coast grid with only 1GW to replace it, leaving us extremely vulnerable to international shocks."
NSW Energy Minster Penny Sharpe said, "The large number of proponents wanting to invest in NSW is a clear indication that we can transform our energy system and that any risks around grid reliability can be resolved by accelerating the development of a clean, reliable, consumer-focused energy system."
Further information:
- AEMO Services is conducting the tender independently as the NSW Consumer Trustee. It has rigorously assessed all proponent bids to form a shortlist, which will be invited to submit a financial value bid with final tender outcomes to be announced by the end of September 2023.
- AEMO Services will provide further information to tender participants over the next few weeks to enable them to prepare for the next stage of the tender.
Future CIS tenders:
- The overall Capacity Investment Scheme will unlock around $10 billion of investment and add 6GW to support grid reliability and security.
- Any eligible projects that have reached Final Investment Decision since the CIS was initially announced in December 2022 are eligible for support under the CIS, to avoid any delay in investment.
- The next CIS auction will be in South Australia and Victoria, and will be announced by October 2023.
- The Department of Climate Change, Energy, Environment and Water will be conducting further industry consultation on the scope and design of the national scheme over the coming weeks.
