French clean energy developer Neoen plans to build the world's largest battery near Geelong, pitching it as the cheapest way to manage increased demand during "extreme" periods like summer, when the grid is under the most strain and at risk of blackout.
The $300 million battery will be capable of generating 600 megawatts of power – four times the size of Tesla's big battery at Neoen's Hornsdale Wind Farm in South Australia, or just less than half the maximum power output of the Yallourn coal-fired power station in Victoria's Latrobe Valley.
Batteries can generate large amounts of power for short periods, but are constrained by the amount of energy they can store, which determines the number of hours they can generate at maximum power.
Neoen did not reveal the proposed battery's energy storage, which is measured in megawatt hours, but analysts expect it to operate at a similar ratio to the Hornsdale battery, which generates 100MW and can store 129MWh.
"It's likely the battery will perform broadly in line with the ratio of the Tesla big battery," said Gero Farruggio from Rystad Energy.
Neoen's proposal to the Victorian government argues the battery, 13 kilometres from Geelong and an hour's drive from Melbourne, is the cheapest and quickest way to increase power grid reliability by acting as a back-up to the increasing supply from intermittent renewable power as ageing coal-fired plants unexpectedly break down and near retirement.
"The Victorian electricity sector is at risk of under-supply during extreme demand periods," the company wrote in its development proposal.
"Conventional generation and transmission are long-term projects, taking years or decades to deliver, and so are not reasonable alternatives for the short-term electricity shortfall.
“[Batteries] can reduce spot price volatility and protect the grid from network disturbances thus improving reliability and potentially reducing power costs for Victorians.”
In its first year of operation, the Hornsdale battery saved consumers more than $50 million, according to Neoen, the largest renewable energy owner and operator in Australia with 11 projects totalling more than 1 gigawatt either operating or under construction across four states.
The company is currently doubling the size of the battery paired with the adjacent Hornsdale Wind Farm.
Neoen's announcement comes as a swathe of new battery proposals hit the market and as the costs of building new batteries fall sharply and supplies of pumped hydro, transmission and gas generation soar.
Rystad Energy is tracking a total of 128 utility lithium ion batteries, from concept to operation, totalling 23.5 gigawatts of capacity, including a massive battery at Mike Cannon-Brookes' proposed Tennant Creek solar farm in the Northern Territory, analyst David Dixon says. A gigawatt (GW) is 1000 MW.
The projects are mainly concentrated in NSW and South Australia, but Queensland is catching up with one of the first power projects combining solar and wind generation with battery storage on the drawing boards. Major retailers are also stepping up, with AGL and Origin Energy also proposing big battery projects.
Capital expenditure costs
In a letter to interested parties, the Australian Energy Market Operator noted capital expenditure costs for large-scale batteries may be revised down by 30 to 40 per cent.
The national electricity operator radically changed many of its original capital expenditure assumptions in its draft report that maps the future shape of the market, known as the 20-year Integrated System Plan.
The capital cost of building pumped hydro projects is expected to increase by 50 per cent, and gas-powered generation capital costs will increase by 30 to 60 per cent.
“This magnitude of increase is aligned with experience in other major infrastructure projects, where it was noted that major infrastructure projects by their nature can experience capital cost increases over initial estimates during the implementation,” principal analyst Natasha Sinclair said in a letter to stakeholders on April 27.
Fetching latest articles