South Australia is taking another decisive step toward its 100% net renewable energy target by 2027, unveiling its first-ever Firm Energy Reliability Mechanism (FERM) tender for 700MW of long-duration energy storage (LDES). The move signals a critical shift from short-term grid balancing toward structural, long-duration reliability—cementing the state’s role as one of the world’s most ambitious clean energy testbeds.
A Structural Approach to Reliability
Under the FERM framework, the South Australian government aims to secure up to 700MW of long-duration capacity, blending battery energy storage systems (BESS), gas generation, and other firm technologies capable of providing at least eight hours of continuous discharge. The tender—administered by ASL, formerly AEMO Services—opened in October, with bids due in November and successful projects expected to be announced in April or May 2026.
The staged deployment targets 400MW operational by late 2028, followed by 200MW in 2029 and a final 100MW by 2031. By mandating a minimum 30MW project size and long-duration capability, South Australia is setting the bar high—favoring technologies capable of supporting the grid through extended periods of low renewable output rather than short-term frequency stabilization alone.
This strategy is not simply about adding more storage; it’s about reshaping the backbone of the power system. As wind and solar penetration deepen, firming capacity becomes the essential buffer that allows renewables to deliver dispatchable power on demand.
Leveraging Experience from National Precedents
ASL’s appointment brings continuity and expertise. The organization has managed large-scale renewable procurements under Australia’s Capacity Investment Scheme and New South Wales Renewable Energy Infrastructure Roadmap. Lessons learned from the 1GW long-duration energy storage tender in New South Wales earlier this year are informing the South Australian approach—streamlining evaluation criteria, project financing structures, and commercial arrangements to attract credible private investment.
By using a technology-neutral procurement model, the FERM tender opens the door to a variety of solutions, from advanced lithium-ion and flow batteries to thermal storage, compressed air, and pumped hydro. This inclusivity reflects a maturing understanding of the storage landscape—one where resilience, not chemistry, defines success.
South Australia’s Storage Ecosystem Matures
South Australia already boasts some of the world’s most recognized grid-scale storage systems. The Blyth battery (238.5MW/477MWh) and the Hornsdale Power Reserve, once the world’s largest lithium-ion battery, have provided valuable operational insights into how C&I ESS and large-scale systems can stabilize an increasingly renewable grid.
But the next wave of investment looks beyond the familiar. AGL’s recent acquisition of a 720MWh electro-thermal energy storage project marks a turning point for non-lithium technologies. These long-duration systems—capable of storing energy for several hours or even days—address a core challenge of renewable integration: how to bridge multi-hour gaps when wind and solar production drop simultaneously.
This diversification is vital for Australia’s broader energy transition, especially as aging thermal plants retire and the National Electricity Market (NEM) grapples with emerging reliability gaps across multiple states.
Financing Certainty for Long-Duration Assets
The FERM framework provides what has long been missing in many energy storage markets: bankability. Successful projects will secure capacity commitments—a form of long-term revenue guarantee—providing developers with predictable cash flow and investors with reduced risk exposure.
This approach mirrors international best practices, such as the UK’s Capacity Market and California’s Resource Adequacy framework, both designed to ensure that firm capacity remains available even as renewables dominate generation portfolios. By combining competitive tendering with financial certainty, South Australia is effectively creating an investment-grade pathway for long-duration storage deployment.
A Global Signal for the C&I Storage Market
While large-scale grid storage often captures headlines, the implications extend deep into the commercial and industrial (C&I) energy storage sector. As policy frameworks like FERM normalize long-duration procurement, downstream markets—from manufacturing hubs to mining operations—gain confidence to invest in their own battery energy storage systems (BESS) and C&I ESS solutions.
South Australia’s policy design could therefore become a model for other jurisdictions seeking to align private capital with public reliability goals. For European energy professionals, the tender offers a glimpse into how targeted, long-term contracting can accelerate the commercial maturity of new storage technologies—without distorting market dynamics.
The Bigger Picture
In essence, South Australia’s 700MW FERM tender represents more than just another procurement round. It is a structural reform of how reliability is valued and delivered in high-renewable grids. By embedding long-duration storage into the core of its energy architecture, the state is demonstrating that reliability and decarbonization are not competing objectives—they are mutually reinforcing pillars of the same future.
As Europe and other regions grapple with similar challenges—volatile renewable output, grid inertia loss, and shifting market incentives—South Australia’s model may well emerge as one of the most instructive case studies in designing a renewable grid that never sleeps.
