AEMO Services’ NSW Long Duration Storage tender awards more than 1GW and 13GWh

27 February 2025

AEMO Services has announced that three projects have been successful in its latest NSW Roadmap competitive tender for long duration storage, nearly tripling the energy storage capacity so far supported by the scheme.

The successful projects are made up of two batteries and, for the first time, a pumped hydro project, with a combined capacity totalling 1.03 gigawatts (GW) and 13.79 gigawatt hours (GWh) of energy storage – exceeding the tender's indicative target of 1GW.

AEMO Services Executive General Manager Nevenka Codevelle said that the result demonstrated confidence from investors and developers in AEMO Services’ NSW tender plan, as well as the Long-Term Energy Service Agreement (LTESA) contract.

“The long duration storage capacity supported through this tender is the largest to date, and we’re seeing strong competition and innovation in how project proponents are bidding – meaning we’ve been able to support more projects with increasing value to NSW electricity consumers.”

LTESAs are innovative contracts designed to spur investment and lower the cost of project financing, bringing forward new energy infrastructure investment while limiting cost exposure to NSW electricity customers.

The successful projects are each able to continuously dispatch power for at least 8 hours at their registered capacity, with the pumped hydro facility capable of dispatching its stored energy over about 15 hours. This provides reliability and system strength benefits for the energy system as well as putting downward pressure on wholesale market prices and a reduction in renewable generation curtailment.

Ms Codevelle said the successful projects stood out for the value they provide relative to their expected cost.

"The projects we selected used the LTESA to top-up their forecast revenues, with the LTESA expected to be underwriting payments up to the minimum gap required to enable investment.

“Some of the successful proponents offered more favourable commercial terms than the pro-forma contract, such as a reduced contract term or nominal fixed prices. This flexible use of the LTESA is something we are continuing to see develop over the course of the tender program.”

Successful projects were evaluated against both non-financial and financial merit criteria, including social licence initiatives, project delivery capability, and market benefits. The tender assessment demonstrated that the benefits to NSW electricity consumers outweighed the expected costs of support.

Ms Codevelle said that the outcome sent a clear signal of AEMO Services’ willingness to select projects throughout various stages of development, including earlier stage projects.

"Some of the successful projects do have longer lead times or are in an earlier stage of their development cycle. Under the NSW legislation, we have the flexibility to pursue those earlier stage opportunities where it supports meeting the state’s future energy needs and is in the interest of consumers.”

The outcome progresses NSW significantly towards its long duration storage targets.

Following the tender, the state will have contracted 40% of its 2030 power capacity target of 2GW and more than 65% of its 2034 energy storage target of 28GWh.

"We're now looking ahead to our next long duration storage tender for assets that commit to be operational by 2034, scheduled to open before 30 June 2025," Ms Codevelle said.

"In particular, we’re encouraging short lead-time projects to come forward to help us meet our 2030 target."

-ENDS-

 

For more information

E ASLmedia@aemoservices.com.au | Thomas Aubert: 0403 706 438

About AEMO Services

AEMO Services is a subsidiary of AEMO with an independent Board, purpose built to help transform Australia’s energy system. Our work helps accelerate project plans into new energy infrastructure, in a way that delivers value for energy consumers and host communities alike.

The NSW Government appointed AEMO Services as the independent Consumer Trustee, to protect the long-term financial interests of NSW electricity consumers. This responsibility is at the core of everything we do under the NSW Electricity Roadmap.

AEMO Services is a key partner in the implementation of the Roadmap. We are trusted to plan, partner and progress long-term investment to help transform the energy sector.

Our Infrastructure Investment Objectives (IIO) Report identifies the timing and scale for renewable energy generation and storage investment. We incentivise these new investments through tenders for LTESAs. Through our rolling schedule of competitive tenders and coordinated investment planning, we act in the long-term financial interests of NSW electricity consumers to support a future system that delivers quality energy, where and when it is needed.