DCEEEW releases Western Australia 2000MWh CIS tender framework

The projects would be connected to the state-owned South West Interconnected System (SWIS) and participate in the Western Australia Wholesale Electricity Market (WEM).

Bid registration will close in early August. The deadline for submitting bids for the project is mid-August, and successful bidders will be invited to submit bids for a financial value in the second stage of the process between September and November. Successful bids will be announced in February 2025.

The state is not connected to other major Australian urban centres in the south and east of the country that are part of the National Electricity Market (NEM), although both markets are managed by the Australian Electricity Market Operator (AEMO).

The 24-page document was published by the operator’s services division, AEMO Services, on behalf of the federal Department of Climate Change, Energy, Environment and Water (DCCEEW), which is coordinating the implementation with Australian energy departments.

The government “had to intervene and do something” in the case of CIS

A total of 32 GW of new renewable energy capacity is sought within the CIS, including variable renewable energy (VRE) resources and 9 GW of dispatchable capacity supported by energy storage.

The aim of the programme is to support Australia’s policy of achieving 82% of electricity from renewable sources by 2030, while enabling the retirement of coal-fired power stations.

It all started with a pilot tender launched in New South Wales (NSW) last year, in line with the NSW Electricity Roadmap, which had already sought Long Term Service Agreements (LTSAs) with developers ahead of the establishment of the CIS from late 2022.

The joint tender for Victoria and South Australia was launched in December last year, with Federal Energy Minister Chris Bowen announcing that the Western Australian tender would launch in April mid-2024. Each of the tenders so far has been outbid, with 40GW of bids received from solar PV and wind developers for the 6GW of capacity tendered, sister site Photovoltaic technology in May.

CIS was created to help investors and developers in the renewable energy and energy storage sectors manage downside risk, said Salim Mazouz, head of the energy division at DCEEW News from Energy-Storage.

The program offers developers revenue insurance, according to set “floor and ceiling” prices, which DCEEW describes as a long-term revenue safety net. At the same time, projects that earn revenue in the commercial market above the set ceiling price pay the difference back to the state.

“Basically, we found that both for storage and renewables, there is a high level of uncertainty in the market right now,” said Mazouz, head of policy and engagement for the CIS Office at DCEEW.

“We wanted to provide investors with some downside protection, so we designed the Performance Power Investment Program to ensure that, for example, debt had a greater chance of being used in the context of this type of investment, because increasingly equity holders were finding it difficult to get coverage for debt because of the level of risk.”

In an interview for Energy-Storage.news Premiumwhich will be published in full in the coming days, Mazouz said that given that Australia’s energy market and energy policy have been through a lot of changes in the past, DCEEW needs to “intervene and make something happen”.

Mazouz also provided some details and thoughts on the scheme’s design in an opening presentation at the Energy Storage Summit Australia 2024, held in Sydney, NSW, in May and hosted by our publisher Solar Media. The summit returns to Sydney in March next year.