The auction will be the first since federal and state ministers agreed to work together in an expanded Capacity Investment Scheme that will now see 23 GW of renewables and 9 GW of storage (36 GWh) contracted over the next four years.
The expanded CIS is now the central policy mechanism to accelerate the roll out of wind, solar and storage across Australia to try and meet the country’s 82 per cent renewable energy target for 2030.
Meeting that target requires a near doubling of current rates of large scale installation, and the launch of the expanded CIS comes as the federal Coalition vows to do all it can to stop the roll out of renewables, keep coal fired power stations open and wait for nuclear.
The biggest beneficiary of the first big CIS tender is NSW, arguably faces the biggest challenge in getting enough capacity to replace its ageing fleet of coal fired power stations, although this tender will not likely impact discussions around the timing of the Eraring coal generator.
NSW will account for at least 2.2 GW of the 6GW capacity on offer in May, while another 300 MW is reserved for South Australia, which already leads the country with a 75 per cent share of wind and solar in its grid over the last 12 months.
NSW will continue with its latest generation auction, known as Tender 4, which is seeking around 1 GW of new wind and solar capacity, and the results should be announced in June. Future generation tenders will be subsumed into the federal scheme.
It means that more than 3 GW of generation capacity will be now contracted and underwritten in NSW this year, and the bulk of that capacity will be made under the CIS scheme, meaning it will be the federal taxpayer rather than the state taxpayers, who will bear the cost.
“This is a significant win for NSW electricity consumers, with the Commonwealth supporting our biggest round of generation projects yet to deliver low-cost, reliable energy to homes and businesses,” NSW energy minister Penny Sharpe said in a statement.
“NSW is leading the nation when it comes to delivering the energy transition. We’re already about half-way to meeting our generation target, and a quarter of the way to meeting our storage target.”
There were no comments offered on the status of the Eraring closure, currently set by owners Origin Energy for August, 2025.
Origin itself has bought a bunch of different large scale wind and solar projects but none will be built before the planned Eraring closure. There is growing expectation that at least some of the Eraring units may be kept open for another summer or two to avoid the risk of any shortfalls and reduce the risk of price spikes.
NSW will continue with its planned long duration storage tender, which will likely seek around 1 GW of new capacity with at least eight hours of storage, and which have to date featured several big battery projects and a compressed air storage facility near Broken Hill.
It is also opening up bids for access rights to the first of its planned renewable energy zones, the Central West Orana zone.
Federal energy minister Chris Bowen noted the CIS is also being extended to Western Australia, which is targeting 500MW of dispatchable power through storage for renewables in a tender that will start mid year.
A first CIS tender, seeking 600 MW of dispatchable capacity (battery storage with an average of four hours storage), was launched late last year, and that process is ongoing. It is expected that the next major tender will combine both generation and dispatchable capacity, and will draw on the lessons learned from the first offerings.
The CIS is designed to offer long-term underwriting agreements for an agreed revenue ‘floor’ and ‘ceiling’. If the market price drops below the floor, then the government tops up the funds. If the market price exceeds the ceiling, then the excess profits are returned to the government.
Bowen says a detailed market briefing outlining the process for the 6 GW generation tender will be released in early May. Tender rounds will run in the NEM approximately every six months until 2027.
“We are getting on with the job of delivering practical solutions to keep the lights on for households and businesses using the cheapest, cleanest form of power – reliable renewable energy,” Bowen said in a statement.
?“The rain doesn’t always fall, but we always have water on tap because we store it for when we need it – our energy plan does just the same thing for reliable renewables.
?“Our plan is delivering the certainty and confidence the market needs to deliver the energy we need, when we need it.
?”This is in stark contrast to the Coalition’s risky reactor plan which won’t do a thing to plug the electricity gap as 90 per cent of the existing coal fleet retires over the next ten years.”
Current tenders underway:
NSW tender 4: Around 1 GW of wind and solar capacity.
CIS dispatchable tender: 600 MW of capacity (average four hours storage), with 200 MW for Victoria, 200 MW for South Australia, and 200 MW for either state depending on best offers.
CIS 6 GW tender: Around 6 GW of wind and solar capacity, with minimum 2.2GW reserved for NSW and 300 MW for Victoria.
Upcoming:
NSW LDES tender: New tender to be launched in next three months focusing on long duration storage.
CIS WA dispatchable tender: 500 MW of dispatchable renewable capacity due to be launched mid year.
