Capacity Investment Scheme to power NSW energy

The 5 MW Peak Hill Solar Farm in central-west NSW. Image credit: Ingka Group

The federal and state governments of New South Wales are working together to enhance energy security and reliability across the state by implementing the Capacity Investment Scheme (CIS), a national framework for increasing new dispatchable renewable capacity. 

The Australian Energy Market Operator (AEMO) had predicted a shortage in 2028–2029; however, the agreement between NSW and the Commonwealth, announced Thursday, would provide almost one gigawatt of additional dispatchable capacity, eradicating that problem.

Through federal financing that will guarantee investment for up to an extra 550MW of firmed capacity, the CIS will more than double the 380MW of firmed capacity to 930MW in the NSW Energy Roadmap’s firming procurement.

In particular, bids of more than 3.3 gigatonnes (GW) have already been submitted to the NSW 380MW firming tender cycle, indicating that there is still a large number of firmed renewable projects waiting to be freed by today’s news and assist the grid in the long run.

The NSW CIS will also support grid-scale dispatchable generating and storage technologies such as batteries, pumped hydro, and other dispatchable capacities.

The initiative, according to Federal Minister for Climate Change and Energy Chris Bowen, would raise critical investment in dispatchable renewable energy to improve the security and dependability of the New South Wales grid while also putting downward pressure on pricing.

“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,” Minister Bowen said.

He added, “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.”

New South Wales Minister for Energy, Penny Sharpe, said, “The large number of proponents wanting to invest in New South Wales 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.”

In its capacity as the NSW Consumer Trustee, AEMO Services is managing the tender independently. The results of the final tender will be made public by the end of September 2023 after all proponent offers have been thoroughly evaluated to create a shortlist.

AEMO Services will send further information to tender participants in the coming weeks to enable them to prepare for the next stage of the tender.