Energy storage: Australia to launch large bids

According to foreign media reports, the Australian government will launch a large-scale energy storage system bidding plan this year. The plan will be promoted nationwide.

Australia’s Minister of Energy, Chris Bowen, recently gave a speech where he discussed competitive bidding with state energy ministers. At a national smart energy conference in Sydney, Bowen introduced climate actions and clean energy policies developed by the Australian Labor Party government in less than a year.

These include confirming the commitment to the Paris Agreement, reforming safeguard mechanisms (a plan to set a cap on Australia’s greenhouse gas emissions), developing a national electric vehicle strategy, and aiming for renewable energy to make up over 82% of Australia’s power structure by 2030.

The Australian Labor Party, led by current Prime Minister Anthony Albanese, focused on climate issues in its campaign, which seemed to resonate with Australian voters in the 2022 election. This gave the new government a mandate to reverse the more conservative path taken by the Liberal-National coalition, which had governed for nine years.

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Ensure necessary investment in energy storage systems

Two factors will have the most direct and transformative impact on the Australian energy storage industry: a $20 billion transmission network rewiring and overhaul bidding plan, and a capacity investment mechanism.

The transmission network rewiring and overhaul plan involves upgrading and extending Australia’s transmission lines. Allowing closer interconnection between state power grids means sharing the benefits of renewable energy generation and enabling energy storage systems to play a larger role in the National Electricity Market (NEM).

Australia’s Department of Energy will also directly support Tasmania’s “Battery Project,” which will deploy gigawatt-scale pumped hydro energy storage (PHES) facilities, battery storage systems, and renewable energy generation facilities, then connect them to the NEM through undersea cables to Victoria.

Meanwhile, the capacity investment mechanism is essentially a revenue underwriting program for large-scale dispatchable renewable energy through bidding. Last year, ministers from various states and regions met to discuss the plan and reached a principled agreement for implementation.

Bowen said in his speech that capacity investment mechanism bidding will become Australia’s de facto energy storage deployment target, as storage systems are the main driving force for integrating renewable energy power into the grid.

Bowen said, “By insisting that investments under the capacity investment plan will be renewable and dispatchable, we ensure that energy storage systems and renewable energy generation facilities receive investment.”

Bowen added that more details will be announced in the next national budget on May 9, saying he had “very productive conversations” with energy ministers from states and regions.

He said a key component of the plan is that it will be led by state-level leaders who will decide on storage deployment levels. This plan has been praised by Dr. Bruce Mountain, an expert in Victoria’s energy policy center. In fact, Victoria itself has already set energy storage deployment targets.

As the bidding plan rolls out nationwide, Australia’s Department of Energy has now reached agreements with various states on how it will operate. Bowen claimed that the first auction activities will begin later this year.

He said, “I look forward to providing further updates, and there will be significant measures in the budget to support this. This is absolutely crucial, as it will unleash billions of dollars in renewable energy investment, providing more power.”