The New South Wales (NSW) government has set a long-term energy storage target of 28GWh by 2034 to prepare for the gradual retirement of coal-fired power generation and to support the state's largest electricity network. NSW has already established a target of achieving 16GWh of long-term energy storage by 2030, but to bridge the gap between wind and solar output and the shortfall with short-term storage, an additional target of 12GWh by 2034 has now been announced.
This 2034 target is significant because around that time, four coal-fired power units in the state are likely to be retired, although units at Bayswater and Mt Piper may continue to operate on a seasonal basis. However, more energy storage, as well as a larger scale of energy supply in the form of wind and solar, will be required.
Long-duration energy storage is more expensive than short-term storage technologies, and its full capacity is not frequently used. Despite the eight-hour duration requirement, pumped hydro technology finds the market particularly challenging. This technology struggles to compete with lithium batteries on price due to longer construction times, higher upfront capital costs, and less operational flexibility across multiple energy markets. Lithium battery projects have taken the spotlight, with three lithium battery projects—each with eight hours of storage—having secured underwriting agreements, namely Long-Term Energy Supply Agreements (LTESAs), in the auction. A compressed air energy storage facility in Broken Hill also won an LTESA contract.
The NSW government proposed in November last year that its then-proposed Energy Services Company might play a role in reducing the risks of pumped hydro projects in some way. Specific operational details have not yet been announced.
Furthermore, the NSW government announced on February 21, 2024, that it would retain the eight-hour definition of Long-Duration Energy Storage (LDES) in the Energy Infrastructure Act and additionally procure 12GWh of LDES capacity. It also called for the Australian Energy Market Operator (AEMO) to further consider the full range of benefits of LDES, reflecting the Clean Energy Council's long-standing advocacy for enhancing the security and reliability of the energy system.
NSW has also opened the largest energy storage tender in history, seeking new projects to improve power reliability. According to a statement released by the NSW government, long-duration energy storage projects can apply for financial support under the new tender, which can support projects up to 1 gigawatt that can each release at least eight hours of energy into the NSW grid. The state government calculates that the energy stored by 1 gigawatt of eight-hour long-duration energy storage is equivalent to the daily energy consumption of approximately 505,000 households.
These projects will help ensure a stable and reliable energy supply around the clock. They will play a significant role in the NSW government's transition to renewable energy, bringing reliable and affordable electricity to homes and businesses and further reducing carbon emissions.
