Australia’s largest ever renewables tender — the 6 GW renewable electricity generation tender —commences today, 31 May 2024. Here is what you need to know to participate, including the tender timeline, eligibility and merit criteria.
This round of Capacity Investment Scheme (CIS) ftender, namely CIS Tender 1 – Generation in the NEM (Tender 1), seeks to deliver 6 GW of renewable electricity generation across the National Electricity Market (NEM).
Registration will close on 19 June 2024 and stage A project bids will close on 1 July 2024.
The federal government has selected AEMO Limited, and its independent subsidiary AEMO Services Limited, (together AEMO) as service providers to administer the CIS competitive tender processes, including to recommend bids to the Australian Government consistent with the tender guidelines.
Capacity allocation across the states
A minimum of 4.2 GW of the targeted 6 GW of generation capacity has been allocated to specific states that participate in the NEM, through the Australian Government’s Renewable Energy Transformation Agreements (RETAs), as follows:
| Jurisdiction | Minimum capacity allocated (GW) |
| NSW | 2.2* |
| Victoria | 1.4 |
| South Australia | 0.3 |
| Tasmania | 0.3 |
| Unallocated | 1.8 |
*Supported NSW capacity will be capped at 3.7 GW
The remaining 1.8 GW of generation capacity may be allocated to projects across the NEM, based on a successful merit assessment.
Timeline
The structure and timeline of Tender 1 are set out below:
| Stage | Indicative Timing |
| Commencement | |
| Registration opening date | 16 May 2024 |
| Stage A – Project Bid commencement date | 31 May 2024 |
| Stage A – Q&A process opens | 31 May 2024 |
| Registration closing date | 19 June 2024 at 5 pm AEST |
| Stage A – Project Bid | |
| Stage A – Project Bid closing date | 1 July 2024 at 5 pm AEST |
| Stage B – Financial Value Bid | |
| Stage B – Financial Value Bid invitation to submit and Q&A Process | August/September 2024 |
| Stage B – Financial Value Bid closing date | September/October 2024 |
| Stage C – Due Diligence and Recommendations | |
| Announcement of successful bids | December 2024 |
Tender criteria
Project bids will be competitively assessed by way of a merit assessment. Project bids need to first meet the proponent and project eligibility criteria, in order to be further considered for the merit assessment. The merit assessment will select projects that can demonstrate the highest levels of merit compared to other projects in the tender.
Projects will be assessed against seven (7) merit criteria across Stage A and Stage B, followed by Due Diligence and Recommendation to the Australian Government in Stage C.
The merit criteria for Stage A – Project Bid includes:
- Contribution to system reliability and system benefits;
- Project deliverability and timetable;
- Organisational capability to deliver the project; and
- First Nations and community engagement.
The merit criteria for Stage B – Financial Value Bid includes:
- Financial value;
- Commercial departures; and
- First Nations and social licence commitments.
As the CIS assessment will adopt a holistic approach, wind projects can be competitive as they can provide important whole of system benefits by generating electricity at all times of day, including during periods of peak demand.
Meanwhile, projects with generation profiles more closely correlated with higher electricity prices (i.e. receiving higher dispatch-weighted prices), like wind, would be expected to generate more project revenue, and thus may achieve a lower estimated total cost despite a higher floor.
The overall expected cost of supporting a project will be assessed based on a number of electricity market modelling scenarios and will include projections of the dispatch weighted price to be received by the project. Therefore, a project with a higher floor but also higher expected dispatch weighted prices may be forecast to require less support than a project with a lower floor but even lower dispatch weighted prices.
Key takeaways about the Tender 1 process
1. Target commercial operation date
The target commercial operation date (Target COD) of the project is not an eligibility criterion but will be merit assessed at Stage A. Projects with a Target COD of 31 December 2028 or earlier may be considered of higher merit.
2. Social licence commitments and First Nations engagement
Social licence commitments and First Nations engagements are a significant part of the merit assessment. They will be assessed at both Stage A and Stage B, weighing 25% at each stage. These commitments will become contractually binding and are subject to monitoring and enforcement conditions if a proponent is successful in the Tender 1 process.
3. Capacity Investment Scheme Agreement (CISA) for successful tenders
Successful tenders will be awarded a CISA, which is a contract between the project owner and the Australian Government. If a project’s revenue falls below an agreed floor, the CISA will provide revenue support, partially at 90%. In turn, if revenue exceeds an agreed ceiling, the CISA will also require projects to pay a percentage (50%) of revenue to the Australian Government. These payments are subject to an annual payment cap.
AEMO has issued the CIS NEM Generation Tender Information Pack, including the tender guidelines, First Nations and social licence market briefing note that addresses the social licence merit criteria, as well as additional information to assist proponents in preparing quality bids.
The Hamilton Locke New Energy team will follow up with updates on the CIS tenders in the coming weeks and months.
If you are unsure where your project stands, or to stay informed on the evolving challenges and opportunities in the renewable energy sector, please reach out to our experts Matt Baumgurtel and David O’Carroll.
