Firming infrastructure: frequently asked questions

Electricity facilities that can generate and or deliver electricity to the market when demand is high or when renewable energy is not meeting demand are known as firming infrastructure.

Demand response is where energy consumers (usually businesses that use a lot of energy), reduce their use of electricity from the NSW grid to free up electricity during periods of high demand. Energy users can help to free up grid capacity by switching to batteries or back-up generation, or by shifting their high energy use to a different time to reduce demand for energy at peak times.

Consumers contracted under a Demand Response Long-Term Energy Service Agreement (LTESA) are paid to reduce their loads on the NSW grid. The timing and amount of reduction is managed through the Wholesale Demand Response mechanism.

The EPA’s guide applies to facilities that are contracted under a firming infrastructure LTESA with the Scheme Financial Vehicle.

The guide does not apply to:

• battery energy storage systems that are contracted under a firming infrastructure LTESA; and
• LTES operators who have entered into Demand Response LTESAs.

The SFV is a company established and administered by the financial trustee under the Electricity Infrastructure Investment Act 2020, section 62. The SFV establishes and maintains the Electricity Infrastructure Fund and enters into LTESAs with Firming Infrastructure operators.

The EPA’s role as regulator under Part 12 of the Electricity Infrastructure Investment Regulation 2021 is to determine if firming infrastructure operators need to purchase and surrender offset units to meet their greenhouse gas emissions obligations under the regulation. If they do, the EPA also determines the number of credits required.

You can use the methodology outlined in the EPA’s guide (also in the Electricity Infrastructure Investment Regulation 2021) to calculate if you need to purchase and surrender offset units.

It is also part of the EPA’s role to calculate offset requirements and to inform firming infrastructure operators if they need to purchase and surrender offsets. Before 2036, the EPA will do this by comparing a firming infrastructure’s emissions intensity against that of the NSW grid.

Yes. To calculate the NSW grid emissions intensity, the EPA uses the Australian and New Zealand Standard Industrial Classification (ANZSIC) code 261 “Electricity generation”. This code includes the following ANZSIC classes:

• 2611 - Fossil fuel electricity generation
• 2612 - Hydro-electricity generation
• 2619 - Other electricity generation.

The definition of 'Other' electricity generation includes renewables such as solar, tidal, wind etc.

The emissions intensity for battery firming infrastructure is taken to be zero under clause 67 of the Electricity Infrastructure Investment Regulation 2021. Battery facilities store electricity for future use, they do not generate electricity or emissions.

No. Only carbon credit units from projects located in NSW can be purchased and surrendered. This means they must be Australian carbon credit units (ACCUs) for eligible offset projects in NSW.

In this case, the EPA is responsible for ensuring that suitable offset units are obtained and surrendered. The costs will be recovered from the operator with the residual offset obligation. The EPA will advise the operator of the total cost, including an administration fee.

If the costs of securing the offsets (excluding the set administration fee) are less than the amount paid by the firming infrastructure operator, the operator will receive a refund. If the cost is more than the amount paid by the operator, the operator will be required to pay the difference.

The EPA’s calculation methodology is prescribed in the Electricity Infrastructure Investment Regulation 2021. If you disagree with the EPA’s calculations, you must notify the EPA as soon as possible, explain why you disagree and provide alternate calculations supported by evidence.