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Monday, 6 May 2024
Mr Simon Duggan
Deputy Secretary
Department of Climate Change, Energy, the Environment and Water
Dear Mr Duggan,
Atmos Renewables and Nomad Energy have recently joined forces in the West Australian energy market and are committed to accelerating the decarbonisation of the South West Interconnected
System (SWIS) as rapidly as possible while maintaining a secure and reliable supply of electricity for customers.
Our current WA pipeline consists of approximately 2GW of new renewable generation and clean dispatchable battery energy storage projects, with the joint ventures’ first project (Merredin Big
Battery) being awarded full development approval by the Regional Development Approval Panel in April of this year.
We welcome the opportunity to comment on the WA Design Paper – Capacity Investment
Scheme (WA Design Paper).
Our comments on the WA Design Paper are outlined below.
Eligibility and Merit Criteria
The Design Paper (section 3.6) sets out the proposed CIS Tender Merit assessment and whilst we understand and agree that the CIS tender submission should be split into two stages (A &
B), we strongly urge that those merit conditions suggested in Stage A do not end up precluding projects which offer geographical diversity, system strength, and ultimately lower cost to consumers for the end products being sought: renewable energy, dispatchable green energy and system strength and reliability.
We strongly agree with a projects’ technical and commercial viability being at the forefront of
Stage A’s merit criteria, however, given the intent of the CIS is to facilitate project finance, we believe that seeking detailed procurement and financing documentation at this stage is likely to be challenging for many – proponents who have materially engaged with tier 1 OEMs and can
Nomad Energy Pty Ltd Atmos Renewables
Suite 5, 6 Short St, Fremantle 123 Pitt Street, Sydney, NSW
WA, 6160, Australia 2000, Australia
demonstrate adequate balance sheets necessary to leverage senior debt should be sufficient evidence to progress to Stage B.
Delays to Commercial Operation of CISA Awarded Projects
Whilst we understand and agree with the logic concerning eligible projects also being awarded capacity under the Reserve Capacity Mechanism (RCM), the RCM is a highly involved process and the potential for delays and the impacts on CISA awarded projects who lose or have capacity withdrawn or altered are not currently clear.
We would advocate consideration being granted to projects to be able to operate in the WEM and not lose their CISA if they are able to participate in future RCM rounds. In particular, we recommend that:
• if the commercial operation date of the project is after the RCM year, the project can operate
outside the RCM (including providing ancillary services such as regulation raise / lower or
contingency raise / lower or RoCoF).
Grid Connection Merit Eligibility
The WA Design Paper states that eligible projects include those that have made progress towards obtaining connection approval (including projects which have received a response to a connection enquiry): see para 3.5.3 on page 17.
We would support a higher eligibility / merit rating being applied to those projects who could demonstrate either geographical advantages in terms of their location on the SWIS, or more tangible progress in terms of progress through the Western Power connection process than merely receipt of a response to a connection enquiry. A connection enquiry response is the very first step in the grid connection process and if proponents were unable to demonstrate more material progress with Western Power then it raises the question of whether such projects can meet the necessary deadlines, and furthermore, whether such projects could be awarded CISA contracts only to drop out at a later stage due to grid connection delays.
At the very minimum we would strongly support projects only being considered who have submitted a full grid connection application and received a deemed complete letter from
Western Power – in our view a connection enquiry submission and subsequent Western Power response is no indication of project maturity.
Exclusion of NCESS Awarded Projects
We note the current exclusion of projects who have been awarded NCESS contracts and are strongly supportive of this stance, especially for the initial CIS tender targeted at 500MW of new four hour battery energy storage projects.
Those SWIS projects who have recently been awarded NCESS contracts have already reached or are very soon to reach financial close. Enabling of project financing for new investments is the ultimate objective of the CIS, it is evident that projects with NCESS contracts (960MW have already announced financial close) are able to reach a final investment decision without further
financial support or underwriting and as such should be excluded from the CIS, furthermore the stated Commonwealth target of releasing new investment for up to 500MW of new clean dispatchable projects could be watered down if CISA contracts are awarded to those already committed with NCESS contracts in place.
Projects less than 30MW
We note the current exclusion of sub-30MW projects and are supportive of this benchmark.
With one of the key objectives of the CIS being enabling project financing for eligible, merit worthy projects, those projects which would have limited impact on the wider objective should be excluded from the tender process.
Atmos Renewables and Nomad Energy welcome further engagement from the Commonwealth
Government and DCCEEW. Further queries can be directed to Allison Hawke
(info@atmosrenewables.com.au) or Guy Beesley (info@nomadenergy.com.au).
Sincerely, Sincerely,
Nigel Baker Guy Beesley
CEO Managing Director
Atmos Renewables Nomad Energy
