The federal government of Australia has launched the latest tender in its Capacity Investment Scheme (CIS) initiative, with the National Electricity Market (NEM) – Generation Tender 4 now open for registrations. This tender seeks an indicative target of 6 GW of renewable energy generation as part of the government’s broader CIS policy, which aims to achieve 32 GW of additional generation and dispatchable capacity by 2030 to support the nation’s clean energy transition. This initiative brings the total capacity under contract or in the market to 18 GW.
Capacity Allocation
In this round, New South Wales (NSW) will be allocated 2.2 GW of the capacity, while Victoria is set to secure 1.4 GW. South Australia and Tasmania have each been assigned 300 MW, leaving 1.8 GW of capacity available for allocation from eligible projects across all NEM jurisdictions.
Timeline for Bids
Project bids for CIS Tender 4 are expected to open on December 13, with first-stage bids closing on February 18, 2025. Shortlisted projects will be invited to submit financial offers by May, with announcements regarding successful projects likely to occur in October.
Long-Term Revenue Agreements
Successful projects will be offered long-term revenue agreements, effectively underwriting the projects against an agreed revenue ‘floor’ and ‘ceiling.’ Under the contract for difference auction, if a project’s revenue exceeds the net revenue ceiling, the owner will pay the Commonwealth an agreed percentage of the revenue. Conversely, if revenue falls below a set amount, the Commonwealth will compensate the proponent.
Future Competitive Tenders
The CIS regime is designed to deliver 32 GW of capacity, comprising 23 GW of renewable energy generation and 9 GW of dispatchable storage, supporting the government’s target of 82% renewable electricity by 2030 and replacing aging coal power generation. Competitive tenders are expected to occur approximately every six months for the NEM and annually in the Western Australian Wholesale Electricity Market (WEM) until the end of 2026.
The first national tender, which also sought 6 GW of new solar and wind projects, attracted over 40 GW of renewable project proposals. Winning bids from this tender are expected to be announced next month, and projects that were unsuccessful in CIS Tender 1 will have the opportunity to participate in CIS Tender 4. Successful projects from CIS Tender 2, which seeks 500 MW / 2,000 MWh of dispatchable capacity for the WEM, are expected to be announced in March 2025. Tender 3, which opened earlier this month, is seeking 4 GW of four-hour equivalent dispatchable capacity for the NEM, with first-stage bids closing in February and successful projects to be announced late next year.
Sources
- Australian Government – Capacity Investment Scheme
- National Electricity Market – Tender Information
- Renewable Energy Target – Australian Energy Regulator
