South Australia Advances Plans for Long-Duration Energy Storage with New Consultation Round

The South Australian government has initiated a consultation process for its upcoming long-duration energy storage (LDES) tender, aiming to identify projects capable of delivering a minimum of 30MW capacity and at least 8 hours of continuous energy discharge.

This initiative marks the second stage in the rollout of the state’s Firm Energy Reliability Mechanism — a framework designed to ensure dependable electricity supply as renewable energy sources take on a larger role in the power mix.

Strengthening Grid Resilience Amid Renewable Growth

With the continued expansion of variable renewable energy technologies, the need for firming capacity to stabilize the grid has become more pressing. According to the newly released consultation paper, the proposed mechanism will support dispatchable, long-duration capacity to help balance intermittent generation.

The government is setting a multi-year target for LDES deployment, with details expected in the near future. The program is intended to support grid operators and storage providers by ensuring financial viability through revenue underwriting. When market revenues fall short, the mechanism will offer top-up payments to help these systems cover operational costs and achieve sustainable returns.

In return for this financial backing, participating LDES assets must be available for dispatch throughout the year and meet performance benchmarks set by the state.

Meeting South Australia’s Energy Storage Needs

The state’s 2024 Electricity Development Plan forecasts that approximately 2,400MW of long-duration storage capacity will be needed over the next five years to maintain system reliability, particularly as aging gas and coal power stations are phased out.

Despite impressive achievements in renewable adoption — including a full week powered entirely by renewables between August 26 and September 1 — South Australia recognizes that energy storage will be critical to a secure energy transition.

Both rooftop and large-scale solar have contributed significantly to the state’s clean energy portfolio, but the intermittency of renewables underscores the need for dispatchable, long-duration storage systems.

Industry Support and Stakeholder Insights

The proposed Firm Energy Reliability Mechanism has received broad support from stakeholders, including the Clean Energy Council, which views the initiative as a vital step toward accelerating storage deployment. However, the Council also emphasized the importance of transparent market signals and clearly defined contractual terms that avoid disrupting existing market dynamics or dampening investor confidence.

Feedback collected during the consultation highlights three recurring themes:

1. Affordability and Efficiency – Stakeholders urge that the program should deliver reliability at the lowest possible cost, minimizing both immediate and long-term financial impacts.

2. Market Participation and Liquidity – There are concerns that revenue underwriting mechanisms and the way net revenues are calculated could deter participation by affecting liquidity in energy markets.

3. Policy and Market Alignment – Stakeholders recommend aligning the mechanism with broader market reforms, such as the National Electricity Market (NEM) Review and the Orderly Exit Management Framework (OEMF), to prevent regulatory overlap or confusion.

Consultation Details

The consultation process invites feedback from industry players, investors, and the public. Full details about the Firm Energy Reliability Mechanism and its implementation strategy are available on the South Australian government’s official website.

The submission period will remain open until midnight on July 14, 2025.