South Australia is accelerating its clean energy transition with the launch of its first Firm Energy Reliability Mechanism (FERM) tender this month, seeking 700MW of long-duration energy storage (LDES) to stabilize the grid as it approaches a 100% net renewables target by 2027.
The process, administered by ASL, reflects a pivotal shift toward market-backed reliability solutions as legacy thermal assets retire.
Under the FERM tender, bids will close in November, with successful projects expected to be announced by mid-2026. Developers must propose systems with at least 30MW capacity and eight hours of storage, clearly distinguishing this process from short-duration battery procurements that have dominated Australia’s energy storage landscape. The target timeline outlines 400MW operational by 2028, followed by 200MW by 2029 and a final 100MW by 2031—a phased rollout designed to maintain firm capacity as renewable penetration deepens.
The tender’s technology-neutral approach allows for competition between battery energy storage systems (BESS), gas peaking plants, and other firm capacity technologies capable of meeting duration and performance standards. However, the eight-hour storage requirement strongly favors long-duration systems—an area where lithium-ion faces growing cost and efficiency constraints. This opens the door for emerging alternatives such as electro-thermal, flow, or compressed air storage systems, technologies that could complement South Australia’s maturing battery fleet.
ASL’s appointment brings credibility to the process. Formerly AEMO Services, the organization has led competitive procurement programs for the Capacity Investment Scheme and New South Wales Renewable Energy Roadmap, setting precedents for integrating large-scale storage into market frameworks. Earlier this year, ASL oversaw a 1GW LDES tender in New South Wales, providing a procedural and technical template that is now being adapted to South Australia’s distinct market conditions.
The FERM framework addresses mounting reliability concerns in the National Electricity Market (NEM) as the retirement of coal and gas plants exposes shortfalls in dispatchable capacity. According to the Australian Energy Market Commission, reliability gaps are projected across several states by 2030 without accelerated deployment of firming assets. South Australia’s initiative—representing one of the largest state-level procurements of long-duration storage in Australia—signals how jurisdictions are moving from policy ambition to structured investment pathways.
The state’s existing infrastructure offers a strong foundation. The 238.5MW/477MWh Blyth battery and other utility-scale systems already provide fast frequency response and peak shaving, while new developments such as AGL’s 720MWh electro-thermal project indicate a diversification of storage technologies. By targeting storage durations exceeding standard lithium-ion systems, FERM could push developers toward hybrid or next-generation designs that enhance grid resilience during prolonged low-renewable periods.
Beyond technology, the FERM’s revenue-certainty model—combining competitive bidding with long-term capacity contracts—reflects a pragmatic approach to attracting private capital. The South Australian government’s consultations throughout the framework’s design phase underscored the need for investment-grade certainty to finance multi-decade assets. The resulting mechanism positions the state as a testing ground for scalable reliability procurement, balancing fiscal responsibility with energy security.
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