King & Wood Mallesons (KWM) is delighted to have advised AEMO Services on the first tender for Long-Term Energy Service Agreements (LTESAs) under the NSW Electricity Infrastructure Roadmap.
AEMO Services has announced today the award of contracts under Tender Round 1 for 1,395 MW of renewable generation. This exceeds the 950 MW target for this tender and represents $2.5 billion in investment. This is the first tender in a series of tenders up to 2030, which is projected to underpin a ~$32billion wave of private capital investment to transition the NSW electricity system from coal fired generation. The NSW Roadmap is a comprehensive plan to facilitate the new transmission, generation, storage and firming assets required for a predominantly renewables based system.
The KWM team was led by Partners, Vishal Ahuja and Rod Smythe, and was supported by Senior Associate, David Ellis and Associate, Tiffany Yang on the LTESA contracts and Special Counsel, Jennifer Bell and Senior Associate, Anthony Di Gregorio on the tender process.
Commenting on the deal, Vishal Ahuja said:
“Congratulations to AEMO Services - this is a cutting-edge tender and a fantastic result for NSW electricity customers. The first step is always the hardest and getting the first tender away while achieving attractive pricing and maintaining a focus on social licence augers well for the rest of the tender program. We think it speaks to the opportunity which currently presents all players – for rethinking markets and models as part of delivering Australia’s transition to a clean energy future”.
An innovative aspect of the transaction was the implementation of option contracts which offer the rights to access minimum cash flows for a storage or generation project over a long period of time. This product is expected to result in a significant reduction in costs to consumer and minimise the impacts of government intervention in the market.
The LTESA program forms part of the NSW Government’s Electricity Infrastructure Roadmap and ongoing tenders will be highly coordinated with the rollout of Renewable Energy Zones and access rights for them.
Further commenting on the deal, Rod Smythe said:
“We’re delighted to have worked with AEMO Services to help deliver the implementation of option contracts which will improve Australia’s clean electricity generation”.
KWM continues to collaborate on some of Australia’s most significant energy transactions. Recent deals include Canberra’s Big Battery, Nabors Energy Transition Corp.’s ~$US586m cross-border merger and Transgrid’s $385m federal underwrite – all projects which play a key role in contributing to a clean energy future.
