Sat. May 28th, 2022

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AEMO Services has unveiled its proposed development path for New South Wales’ ambitious electricity roadmap, setting out a multi-decade-long transformation plan that will see renewable energy and storage replace the state’s aging coal fleet.

Earlier this year, the NSW government selected AEMO Services, a subsidiary of the market operator, to manage the delivery of their Electricity Infrastructure Roadmap, which targets 12GW of new wind and solar energy and a further 2GW of long-term energy storage.

On Tuesday, AEMO Services released the 2021 Infrastructure Investment Objectives (IIO) report, outlining its plan and rough supply schedule, which will support an estimated $ 32 billion in new electricity infrastructure.

Central to this plan are the long-term energy services (LTES) contracts for 33,600 GWh of annual electricity supplies by the end of 2029, along with contracts for 2GW of new energy storage capacity.

Tenders will be conducted twice a year and AEMO will look to gradually increase the amount of clean energy production available on the market over the next decade. It starts with a smaller pilot tender in the first half of 2022 before the first major tender later that year.

“Tenders for LTES agreements for production infrastructure projects are planned to take place semi-annually over the next ten years with an indicative targeted amount of 500 to 2,700 GWh of electricity per year to be delivered by projects from each tender until 2030,” the report say.

It says tenders will be held to ensure that new capacity is built well in advance of the expected closure of the state’s coal-fired power plants, most of which will close within the next 10 to 15 years.

AEMO will also account for the “supply chain”‘s capacity for commissioning new projects, and avoid the “lumpy” addition of new projects that would seek investment, go through a roller coaster of peaks and troughs.

NSW development path planned by AEMO Services.
NSW development path planned by AEMO Services.

“Given the maximally developed sustained capacity observed historically, this capacity is evolving more gradually than other modeled alternatives, minimizing the risk of supply chain disruptions and constraints over the next decade,” says the AEMO’s preferred path report.

“This development path incorporates an annual maximum build-up of VRE in New South Wales, capable of generating approximately 6,000 GWh per year until 2030. After 2030, this limit will be increased to 7,600 GWh per year, provided that the supply chain’s capacity is expanded within next ten years. “

“A key factor in the choice of development path was the significant uncertainty regarding the exact timing of future withdrawals of coal plants,” the report adds.

“Given this uncertainty and the potential price effects of such withdrawals, the development path does not seek to predict or respond to withdrawals. Rather, the development path indicates a proactive structure to ensure that the necessary infrastructure is in place to replace coal mines when they withdraw. back.”

This will mean that tenders securing hundreds of megawatts of new capacity will be signed every quarter for the next decade, with tenders timed to ensure that New South Wales has sufficient new generation capacity already in operation before the closure of four coal-fired power plants planned to retire over the next 15 years.

AEMO says it will be able to control this transition while maintaining high levels of reliability.

AEMO’s proposed plan shows that NSW stays well within the limits of reliability, while replacing coal production with renewable energy.

AEMO will run similar offerings, but at less regular intervals, to ensure 2GW of new energy storage capacity, which is long-term storage with the capacity to provide at least 8 hours of backup supply.

The tenders will help attract and manage the new wind, solar and storage projects that will participate in up to five dedicated renewable energy zones that will coordinate new generation projects with the necessary network infrastructure to ensure they can connect and supply power to online.

The new IIO report outlines AEMO’s initial reflections on when these investments should be made, and it seeks feedback from industry stakeholders on the original plan and its role as a ‘consumer trustee’.

NSW warehouse development process planned by AEMO Services.

AEMO Services says the plan will enable it to fulfill its role as a ‘consumer trustee’ and deliver an energy transformation plan that minimizes the cost and reliability risk for energy users.

“The role of the Consumer Trustee is to act in the long-term financial interests of NSW consumers,” said Paul Verschuer, CEO of AEMO Services.

“The IIO report through the chosen development path and associated tender plan helps provide security for investors and developers. LTESA and the tender design encourage competition to build the infrastructure.”

“Together, these will lower the cost of private investment and thereby deliver the benefits to NSW Consumers,” Verschuer added.

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