NSW's Record Renewable Energy Tender: Your Key Questions Answered

New South Wales has officially announced its largest-ever renewable energy tender, paired with long-duration storage, as a critical step to replace aging coal plants, maintain grid reliability, and drive down electricity costs. This historic initiative marks a major shift in the state's energy landscape. Below, we break down the most important aspects of this landmark tender.

1. What exactly is the new renewable energy tender?

The New South Wales government has launched its biggest renewable energy tender to date, seeking proposals for large-scale wind, solar, and long-duration storage projects. This tender is part of the state's Electricity Infrastructure Roadmap, which aims to ensure a reliable and affordable transition from coal-fired power. The tender will procure both generation and storage capacity, with the goal of replacing the energy currently supplied by retiring coal plants. Successful projects will be awarded contracts under the state's Long-Term Energy Service Agreements (LTESAs), which provide revenue certainty for developers while protecting consumers from price volatility.

NSW's Record Renewable Energy Tender: Your Key Questions Answered — Source: reneweconomy.com.au

2. Why is this tender considered so crucial for NSW?

New South Wales is facing the impending retirement of several coal-fired power stations, including the Liddell and Eraring plants. Without timely replacements, the state risks supply shortages and price spikes, which could undermine both household budgets and business competitiveness. The tender is designed to "keep the lights on" by ensuring enough new renewable generation comes online before coal exits the grid. It also addresses the need for firm dispatchable power through long-duration storage, which can store solar and wind energy for release during peak demand or when the sun isn't shining and the wind isn't blowing. This dual approach supports grid stability and paves the way for a cleaner, more self-sufficient energy system.

3. How big is this tender compared to previous ones?

This tender is the largest ever held in New South Wales. It seeks to procure at least 12 gigawatts (GW) of new renewable generation capacity and 2 GW of long-duration storage (such as pumped hydro or grid-scale batteries). To put that in perspective, 12 GW is roughly equivalent to the capacity of six large coal-fired power stations. The scale reflects the urgency of replacing coal assets and meeting the state's target of net-zero emissions by 2050. The tender also represents a significant ramp-up from previous rounds, which focused on smaller amounts of renewable capacity. This ambitious scope aims to attract major investment and accelerate the clean energy transition.

4. What role does long-duration storage play in the tender?

Long-duration storage is a cornerstone of this tender. Unlike short-duration batteries (typically 1–4 hours), long-duration systems can discharge electricity for 8 hours or more. This capability is essential for managing the variability of renewable sources. Example projects include pumped hydro schemes like Snowy 2.0 (though not directly part of this tender) and large-scale lithium-ion or flow batteries. By pairing storage with new wind and solar farms, the tender ensures that clean energy can be dispatched when needed, replacing the steady output of coal plants. This helps stabilise the grid, avoid blackouts, and reduce reliance on expensive gas peaker plants, ultimately contributing to lower consumer bills.

5. How will the tender help push down electricity prices?

The tender aims to reduce electricity prices through several mechanisms. First, by flooding the market with low-cost renewable energy, it puts downward pressure on wholesale power prices. Second, the Long-Term Energy Service Agreements provide a fixed revenue floor for generators, which reduces the risk premium investors demand. This lowers the overall cost of capital, making projects cheaper to build and operate—savings that are passed on to consumers. Third, competitive bidding among developers encourages cost innovation and drives down tender prices. Finally, by avoiding the fuel costs associated with coal and gas (which are subject to global price fluctuations), renewable energy offers more stable, predictable pricing. Over time, these factors combine to lower household and business electricity bills.

6. When will the new renewable projects start operating?

The timeline for projects under this tender will vary depending on their type and complexity. The government expects successful projects to begin construction within 12–18 months of being awarded contracts, with the first new generation coming online around 2026–2027. Long-duration storage projects, such as pumped hydro, may take longer—typically 5–7 years—so those are targeted for operation by 2029–2030. The tender includes strict deadlines and milestones to ensure projects are delivered on time. This phased approach aims to align the retirement of existing coal plants with the arrival of reliable renewable capacity, preventing gaps in supply. Delays are possible, but the government has designed financial incentives to encourage timely delivery.

For more details on the NSW Electricity Infrastructure Roadmap, visit the official NSW Energy website.