NSW Roadmap Investor Day

NSW Electricity Infrastructure Roadmap Investor Day

Thimo Mueller

Good morning everyone.

I’m Thimo Mueller, General Manager, Commercial at ASL.

Today is an important moment for the NSW Roadmap, for ASL, and for the market. Generation LTESAs are about to restart, with the first tender commencing imminently.

You’ve just heard from Melanie about the scale of what’s coming, and why it matters: the opportunity is immediate, the development pipeline is real, and the focus is now on turning that pipeline into built projects.

I want to focus on the how. Over the next 20 minutes, I’ll cover what’s new in the Generation LTESA relaunch, what a competitive bid looks like, and how an LTESA can help projects reach final investment decision.

My goal is that, by the end of this session, you’ll have a clear understanding of how an LTESA can practically support your project.

Let me start with the headline.

Generation LTESAs are back

For the past two years, Generation LTESAs have been paused—following the introduction of the Commonwealth’s Capacity Investment Scheme, to avoid overlapping mechanisms. With the NSW allocation expected to be fully subscribed through CIS Tender 7, the path forward is clear.

NSW Roadmap generation tenders are resuming—with ambition.

The 2025 IIO report sets an ambitious development pathway—a stretch target of 16 GW of new generation by 2030. It’s ambitious, and it needs to be, because it reflects the scale of what’s required to deliver what’s best for NSW electricity consumers.

In the coming weeks, ASL will open the first Generation LTESA tender in two years. It will also be our largest ever—2.5 GW.

That 2.5 GW figure is an indicative target—not a cap. If the market brings forward additional bids worth awarding, we can go beyond it.

In parallel, a separate tender seeking 12 GWh of long-duration storage will commence. This reflects the scale of the task ahead: the development pathway calls for 42 GWh of new long-duration storage by 2034, and this tender will be our largest to date.

What’s important here is that this is not simply a restart. It’s a relaunch designed for today’s market. We need to move quicker, and we need to be bolder.

Times have changed

When we last ran Generation LTESA tenders, the environment looked very different: corporate PPAs were more readily available, buyers were racing to meet 2025 sustainability targets, contract tenors were longer, business cases were stronger, and LGCs provided a meaningful additional revenue stream.

Generation LTESAs were often viewed as insurance—useful to have, but unlikely to be exercised. Pricing expectations were close to debt break-even.

That is not the environment we are operating in today. Many of you are dealing with stronger inflationary pressures, higher capital costs, tighter financing conditions, supply chain constraints, grid congestion and connection risk, and fewer long-term offtake opportunities.

At the same time, our ambition has increased: 82% renewables nationally by 2030, and a stretch target of 16 GW of new generation in NSW by 2030. The practical implication is clear—LTESAs priced at debt break-even will not deliver what NSW needs. LTESAs must be capable of supporting reasonable project returns.

We believe market conditions will improve—but we cannot wait. The good news is that policy support for the transition is strong. The Roadmap framework is in place, and the LTESA is a core part of that framework—designed to fill the financial gap, support projects in achieving FID, and sit comfortably alongside future wholesale market and offtake strategies.

NSW is a buyer of high-value projects

Our Investment Priorities, released earlier this year, focus on supporting high-value projects.

At its core, a high-value project is one that is very likely to be delivered on time and provides robust net financial benefits to NSW electricity customers.

In practical terms, to assess deliverability we look at:

1. Land ownership;
2. Planning approvals;
3. Community support and social licence;
4. Grid connection;
5. Access to capital (equity & debt); and
6. A project owner with demonstrated capability and track record.

Deliverability has a high weighting in our assessment. Projects that are further progressed across these factors tend to score more favourably.

Higher scores reflect higher value—and higher value translates to a higher willingness to pay.

We then consider the commercial bid parameters and compare them to the financial value we expect the project to provide. That value comes from a project’s ability to place downward pressure on wholesale electricity prices across a range of future market scenarios.

To receive an LTESA, a project’s value needs to be higher than its cost. And it’s important to remember: LTESAs are funded by electricity consumers, and we underwrite investment through LTESAs to benefit consumers.

We also expect consumers to benefit when prices are higher—because they have supported the project in the first place.

Ultimately, high-value projects perform strongly across all merit criteria—not just one or two.

When it comes to generation, a key driver of value is a diverse generation profile. For example, wind and hybrids can produce in non-solar hours—through the evening and overnight—reducing reliance on coal or gas.

For long-duration storage projects, our assessment has sharpened, with increased emphasis on reliability and system strength. We continue to prioritise high-value, cost-effective bids. High system value may come from location in strong parts of the network, longer duration, and the ability to provide critical system services—for instance, technologies such as pumped hydro that can act as system strength solutions and help defer or avoid further network costs while delivering broader benefits to NSW customers.

Wind projects

We know wind developers are facing real challenges right now: higher development and capital costs, longer lead times, planning complexity, the need for additional transmission infrastructure, and greater hurdles in earning social licence.

Our view is clear: wind is indispensable to NSW’s future energy mix. It will be a key pillar in meeting future energy needs and placing downward pressure on prices.

However, wind build-out to date has been slower than forecast. That means every additional wind project can deliver high marginal benefit for consumers and the system—and this is reflected in our assessment.

That’s why we expect wind projects to remain competitive in our tenders, even with higher costs. We’re starting to see momentum returning to the sector, and we want to support that. The LTESA can’t resolve every challenge—but it can provide revenue certainty to help projects reach FID. Bidding competitively, in a way that enables delivery, is exactly how we expect the market to use the LTESA.

Hybrid projects

The other technology I want to highlight is hybrid projects. The shift towards hybrids—particularly solar plus storage—has been strong.

We estimate there are more than 40 GW of hybrid projects in the NSW pipeline, with the majority yet to reach financial close. In response, we’ve developed a Hybrid Generation LTESA, which will be available in the upcoming tender. Feedback on our product design paper was strong and consistent, with a clear need for a variant designed specifically for hybrid projects.

The Hybrid Generation LTESA will launch alongside the existing Generation LTESA in Roadmap Tender 8. It’s designed to deliver new energy into the system—new megawatt-hours of electricity generated—not just capacity.

Hybrid proponents can choose which product—Generation or Hybrid LTESA—best suits their project, with all bids assessed together on merit and on a level playing field.

To access the Hybrid LTESA, a project’s generation capacity must be equal to or greater than its storage capacity, and projects must include storage with a minimum four-hour duration at COD. Both AC- and DC-coupled hybrids can be accommodated—something we heard clearly during consultation.

A key feature of the Hybrid LTESA is 50 per cent risk sharing on both the upside and downside. This balances risk between projects and consumers, reducing the cost of capital while maintaining consumer protection. To reflect operational behaviour, settlement is based on sent-out net exports at the point of connection—aligning with the design intent of firming generation output and enabling more green MWh. Given the greater ability to shape output, the Hybrid LTESA treats negative-price intervals differently: during negative pricing, the settled quantity is set to zero, whether the project is importing or exporting. This ensures the LTESA does not work against spot price signals.

Commercial updates

Given Tender 8 marks the relaunch of the Generation LTESA, I want to briefly touch on some of the changes we’ve made to our existing contracts—reflecting market feedback and evolving needs.

In the Generation LTESA, we’ve reduced the option term from two years to one. This gives proponents greater flexibility to pursue market contracts or capture merchant upside. We’ve also reduced the revenue sharing percentage above the threshold that must be repaid in non-exercise years, from 75% to 50%—and we expect proponents to reflect these changes through more competitive bid variables.

Across both Generation and long-duration storage, we’ve also changed how early termination payments are calculated. The adjusted methodology retains incentives for operators to keep their LTESA in place, while limiting liabilities. Later today, we’ll publish a market briefing and supporting fact sheets that set out these updates in more detail.

Bidding for an LTESA

Given the pause in Generation LTESA tenders, there are a few points I want to highlight to round this out.

First: timing. You don’t need everything locked down when you bid—but you do need to submit a financially binding bid. LTESA prices are locked in for 20 years for generation and up to 40 years for long-duration storage. In most cases, proponents bid before FID, because the LTESA is designed to help you get there.

Second: capital and offtakes. Projects are getting bigger and, even with high gearing, substantial equity is required. Competitive bids demonstrate a credible pathway to capital, and the LTESA can provide confidence to both debt and equity providers.

On offtakes: you don’t need one in place to bid, but you do need a clear revenue strategy. Stronger bids often involve projects that already have an offtake, or a clear pathway to securing one, or a willingness to take greater merchant exposure. We also recognise that, in the current environment, attractive offtake opportunities often don’t emerge until closer to FID—or even COD. In that context, projects can use the revenue certainty from the LTESA as the primary revenue source to help reach FID, with revenues optimised over time, including after COD, as reliance on the LTESA scales back.

Third: LTESA pricing. I’m going to be very explicit here to avoid any misunderstanding. Bidding competitively does not mean bidding unrealistically low. It means bidding just enough to get the project built.

We expect proponents to bid competitively to secure the support needed to reach FID. Higher-cost projects can still succeed where the benefits to consumers justify the support required. For example, generator-specific network upgrades or near-term curtailment can be reflected through sculpted pricing—higher prices in the near term, reducing later when curtailment is expected to be lower. Our assessment considers these higher costs against the benefit to consumers of bringing generation online sooner.

Conclusion

Let me close with three key messages from today.

First, NSW means business when it comes to renewable energy generation and long-duration storage projects—the opportunity is now. Second, we are looking for real projects, not paper projects: projects that can credibly convert from development into delivered infrastructure. Third, we expect proponents to bid competitively by requesting the support needed to reach FID and deliver the project. This is not a price shoot-out—we will pay more for higher quality and higher value.

Thank you for your attention. I’m happy to take questions. The transcript of my speech, as well as any responses to questions, will be published on our tender website.

ENDS