State Energy Minister Penny Sharpe outlined the plan at the Australian Financial Review's Energy and Climate Summit in Sydney. The tender targets 1,500 megawatts to bolster reliability as aging coal plants retire, and the setup points to natural gas peaking units providing most of that capacity.
Per the bid documents, projects must add net energy and be capable of delivering at least eight hours of supply. That requirement knocks out most storage technologies. This round also excludes batteries and other storage outright.
Capacity auctions decide what a grid actually gets built. Market Briefs covers energy policy free every weekday.
Earlier this year, after the main grid operator warned New South Wales could face reliability risks if a major coal plant shut on the original schedule, Origin Energy Ltd. pushed back the closure timeline for Australia's largest coal-fired power station, setting a new target of 2029 - a delay of nearly two years. Since then, the state has awarded several tenders for backup electricity, and in those rounds natural gas has been beaten by other technologies, largely battery storage. "We've got good renewables, we've got good batteries, we've got good long duration storage, but the reality is that we have times over a longer period of time that we need that backup," Sharpe said. "We're building the airplane as it's flying, and we can't afford to have loss of reliability."
Here is the bottom line: New South Wales is running a 1,500 megawatt tender that excludes batteries and other storage, expects most capacity from natural gas peakers, and requires bidders to supply for at least eight hours and be net energy contributors. If you follow the energy transition, watch how developers respond to those rules and how future rounds treat competing technologies.
Favouring gas over storage shapes emissions and bills for a decade. Join Market Briefs free and follow the outcome.
