Thimo Mueller’s keynote speech at the 2025 Australian Clean Energy Summit

01 August 2025

Thimo Mueller delivered the keynote speech at the 2025 Australian Clean Energy Summit panel forum titled Dunkelflautes and energy droughts: The role of pumped hydro and long duration storage in energy supply.  You might be wondering what Dunkelflautes mean—it means “dark lull”, describing prolonged periods of low wind and solar output.   

Thimo then joined industry leaders working across large-duration energy storage to discuss the changing reliability risk profile of the power system, including the impacts of variability and seasonality. Discussions covered established and emerging LDES technologies, key policy reforms and market developments needed to accelerate LDES uptake leaders in a panel discussion  

You can view a copy of Thimo’s speech below, and a copy of the presentation here.  

Speech

Good afternoon, everyone  

I would like to begin by acknowledging the traditional custodians on whose lands we meet today and extend my respect to any First Nations people here with us.  

I’m going to talk about how NSW has created a market for LDS investment and about the value of LDS, especially in Dunkelflaute situations. 

First a little bit about ASL. ASL was formed to help governments transform Australia’s energy system. 

Initially, established as Consumer Trustee under the NSW Government’s Electricity Infrastructure Roadmap, we have since evolved and now deliver tenders nationally, for example under the Commonwealth Capacity Investment Scheme. 

Both the Roadmap and CIS schemes have been boosted this week, with Minister Bowen announcing the CIS has been expanded by 8 GW increasing the overall target from 32 GW to 40 GW.  
For NSW Minister Sharpe has announced a new firming tender, which will be run by ASL to mitigate the risk of a forecast near term reliability gap in NSW.  

ASL’s focus is to bridge ambition and action and support the investment Australia needs now and into the future. 

What does this mean in practice? 

In the case of LDS, the NSW Government recognised that LDS in addition to renewables is required to replace the ageing coal fleet at the lowest cost to electricity consumers. 

The challenge is we know LDS needs to be in place before coal retires. However, the economic value of LDS is not fully realised due to the operation of existing coal assets masking its real value. 

NSW has sought to address this challenge by: 

• Introducing a long-term target for LDS,  
• Developing a mechanism to solve the missing money problem which is done through ASL’s LDS Long Term Energy Service Agreement—the LTESA, and  
• Providing a 10-year tender plan which provides investors with the certainty they need.  

In running our first LDS tender, we were unsure whether there was a sufficient market in NSW and whether we would receive any competitive bids at all.  

It ended up being a successful tender which resulted in ASL awarding our first 8-hour battery.  

This first tender created an important signal in the market that generated interest for battery projects in our second LDS tender.  

As a result, we awarded LTESAs two more battery projects; we also awarded an LTESA to Hydrostor’s compressed air storage project. 

From our first tender, LDS technologies continued to emerge and in our third tender round we awarded our first LTESA to one large Pumped Hydro project and two 8-hour batteries. 

So far, we have run 3 successful LDS tenders and awarded LTESAs to projects with 1.6GW and more than 18GWh of storage which confirms there is a market for LDS investment. We are now seeing the benefits of our long-term approach.  

Our fourth LDS tender round is currently live, seeking 1GW/8GWh and we expect to announce results in December/January. 

While we have not achieved our targets yet and having an LTESA will not always be enough for a project to be built, we have demonstrated how governments and developers can deliver investments that wouldn’t otherwise happen. 

I would like to highlight a few aspects of our LDS tenders: 

• They are technology agnostic, and the primary consideration is value to consumers which includes value to the electricity system.  
• Our tender assessment considers a scenario with early coal retirements. This really shows the value of LDS. Recently, we published a market briefing note that outlines how we undertake our financial value and system benefits assessment. This can be found on our website.  
• The assessment and recommendations are independent from government and ensure the long-term financial interests of NSW electricity customers are considered.  
• The LDS LTESA is a highly flexible underwriting instrument which allows the project to seek revenues across multiple existing and potential future markets. 
• It is also designed to integrate with contract markets. Projects can enter into physical or virtual tolling agreements, capacity swaps, provide firming services or sell time-limited caps. 

As a result, we believe that LDS LTESAs are future proof and can be compatible with new market designs, such as those contemplated by the NEM Review. This provides additional investment certainty for developers and their projects.  

Now a quick look into the future—what is the value of LDS in a Dunkelflaute scenario 10 years from today? 

To answer this question, we did some modeling — which is of course what we do in the energy industry. 

However, our ASL modelling team took a step further adopting an innovative approach that looked beyond our sector and worked with climate risk experts. 

They used climate model projections rather than historical weather data. This provides two advantages: 

• The ability to capture the potential impact of climate change, and 
• The ability to project a larger sample of possible weather patterns, and therefore more accurately understand the probability distribution of extreme Dunkelflaute scenarios under climate model projections rather than using historical weather data. 

What they found under 280 climate modelling scenarios was that frequency of solar lulls decreasing while frequency of wind lulls remains constant and that 1 in 2 lulls have a 4-day duration, but lulls can last up to 12 days. 

The charts behind me on the screen compare a week with average conditions with (to the chart on the top) with a Dunkelflaute week, (to the chart on bottom).  

What you can see is that while charging activity is reduced, even during Dunkelflaute events we will have intervals with surplus generation that can be stored in LDS assets and discharged when there’s less renewable energy production in the system. 

Hydro and batteries for example show higher discharging activity in a Dunkeflaute week, noting that these are placeholders for any competitive LDS technologies that will become available  

You can find much more detail in the next Infrastructure Investment Objectives Report that ASL plans to publish in mid-August. 

The IIO Report will also contain an updated tender plan for LDS which we expect will provide investors with further confidence in the need for LDS projects in NSW. 

Thank you and back to you, Helen.