Structuring Government Tenders for Long-Duration Energy Storage
1. Clear and Flexible Duration Categories
- Separate Resource Duration Categories: Similar to NYSERDA’s approach, tenders can include separate categories for different storage durations (e.g., 4 hours, 8 hours, 24 hours) to cater to various needs and technologies.
- Flexibility: Allow bidders to propose different storage durations based on project specifics, ensuring compatibility with grid requirements.
2. Long-Term Contracts
- Long-Term Financing: Encourage bidders to secure long-term contracts that provide financial stability and viability. Financers often require long-term commitments before funding construction.
- Stable Revenue Streams: Ensure that contracts provide stable revenue streams to support the development and operation of LDES projects.
3. Incentives and Funding
- Direct Financial Incentives: Offer direct funding or grants (similar to the US government’s $350 million initiative) to support initial project development costs.
- Tax Incentives: Provide tax credits or exemptions to reduce operational costs and improve profitability for LDES projects.
4. Market Reforms and Procurement Mechanisms
- Cost-Effective Procurement: Implement procurement mechanisms that are cost-effective and favor efficient technologies, as highlighted in the NY Energy Storage Roadmap.
- Market Reforms: Support reforms that create a favorable market environment for LDES, including policies that recognize the value of long-duration storage.
5. Technology Neutrality and Innovation
- Technology-Neutral Bidding: Allow bidding from various LDES technologies (e.g., pumped hydro, compressed air, hydrogen) without favoring one over another.
- Innovation Incentives: Offer additional incentives for innovative projects that can enhance efficiency, cost-effectiveness, or scalability.
6. Transparency and Consultation
- Stakeholder Engagement: Conduct thorough consultations with stakeholders (industry, consumers, environmental groups) to ensure tenders meet diverse needs and are feasible.
- Clarity in Tender Documents: Ensure that tender documents are clear, detailed, and accessible to all potential bidders, reducing barriers to participation.
Implementing these strategies can help create a supportive framework that encourages the development and deployment of long-duration energy storage projects.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-can-government-tenders-be-structured-to-better-support-long-duration-energy-storage/
