The Victorian Government and renewable energy company Neoen have unveiled plans to build a 300MW battery, which will be the biggest in the Southern Hemisphere.
Neoen will build the battery now that it has been awarded a 250MW grid services contract with the Australian Energy Market Operator (AEMO), in a competitive tender initiated by the Victorian Government.
The battery storage facility will be located next to Moorabool Terminal Station in Geelong, Victoria. It will be delivered in collaboration with Tesla, using its Megapack technology, and network partner AusNet Services.
With climate change resulting in hotter summers, demand for electricity is rising at peak times. At the same time, Victoria’s ageing coal-fired generators are becoming increasingly unreliable, creating a need for additional capacity to safeguard the state’s power supply.
This System Integrity Protection Scheme (SIPS) contract with AEMO will run until 2032, and is the result of the SIPS 2020 procurement process initiated by the Victorian Government.
Louis de Sambucy, Neoen Australia Managing Director, said, “We are delighted to have won the SIPS contract and would like to thank AEMO and the Victorian Government for placing their trust in us.
“We are looking forward to working once again with Tesla and AusNet to deliver this world-leading battery storage facility over the coming months.
“We are extremely proud to be launching a project of this scale and innovation in support of Victoria’s clean energy transition.”
Tony Narvaez, AusNet Services Managing Director, said, “AusNet Services is proud to be the network partner with Neoen and Tesla on this world-leading project. Large-scale energy storage is an important component in the transition to a renewable future, while helping to maintain network stability and energy security for Victoria.”
The battery will unlock up to an additional 250MW of peak capacity on the existing Victoria to New South Wales Interconnector (VNI) over the next decade of Australian summers.
Under the contract, the battery will provide an automatic response in the event of an unexpected network outage, providing AEMO with an additional means of ensuring grid stability.
Batteries are well suited to perform this service because they can respond in a fraction of a second. The battery will also participate in the National Electricity Market and support increased penetration of renewables in Victoria through network services such as fast frequency control.
Audrey Zibelman, AEMO CEO, said, “AEMO’s competitive procurement and evaluation process attracted significant interest.
“Neoen’s solution, developed with Tesla and AusNet Services, on a unit-cost basis, was a significantly more cost competitive and attractive market response than other recent major battery developments in Australia.”
The Victorian Big Battery will help to modernise and stabilise the grid in Victoria and will be instrumental in helping the state reach its objective of 50 per cent renewables by 2030.
The Hon Lily D’Ambrosio MP, Victorian Minister for Energy, Environment and Climate Change, said, “By securing one of the biggest batteries in the world, Victoria is taking a decisive step away from coal-fired power and embracing new technologies that will unlock more renewable energy than ever before.”
Independent analysis shows that every $1 invested the battery will deliver more than $2 in benefits to Victorian households and businesses.
The savings that big batteries can provide to energy consumers are now well-established, with independent reviews demonstrating that Neoen’s Hornsdale Power Reserve has delivered more than $150 million in savings in its first two years of operation.
Environment Victoria CEO, Jono La Nauze, said, “At 300MW, it’s twice the size of the Tesla big battery in South Australia. This is a game changer for Victoria’s transition from old coal-burning power stations to clean energy.
“This big battery gets us halfway to the storage target we need to prepare for the closure of Yallourn power station.
“A RepuTex report, commissioned by Environment Victoria, found Victoria can avoid impacts on price or reliability from Yallourn’s closure if we add 600MW of large-scale storage in advance, combined with new renewables projects.
“It’s great to see the Andrews Government preparing for the closure of Victoria’s ageing coal power stations, which are the state’s biggest climate polluters and have become increasingly unreliable in summer months.
“This announcement is another example of how the energy transition will bring jobs to regional areas. We’re looking forward to seeing more job-creating climate solutions included in the Victorian budget in November.”
Where possible, local suppliers will be contracted, with AusNet already having sourced the project’s power transformers from Melbourne-based Wilson Transformer Company.
Local community building and education initiatives will also be supported across the project’s lifetime through a Community Benefit Fund.
Criticism from the AEC
The Australian Energy Council (AEC) voiced its concern about the Victorian Government’s plan to develop a large-scale battery in Geelong, stating that without independent regulation of costs it is a ‘bad idea’.
The AEC’s Chief Executive, Sarah McNamara, said it is unclear how costs will be passed on to end users, or if any detailed cost-benefit analysis has been undertaken.
“The AEC supports private investment in response to market signals, however this battery will be funded by Victorian consumers whether or not it proves useful,” Ms McNamara said.
“It is being developed under new legislation that allows the Victorian Minister to direct such developments outside the national planning and regulatory framework.
“It will also impact private investment decisions made in good faith within that framework.
“Every decision like this unavoidably affects market investments so careful individual assessments should be carried out at arm’s length from political decisions.
“This is critical to ensure not just the timing, but also the cost-effectiveness for customers who have to pay for new investments, as well as providing a predictable framework for generation investors.
“This is why we do not support the Victorian approach.
“While it is clear this battery will participate in the energy market, it is not clear who will make decisions on when or how it will be used, which will unavoidably affect other market participants.”
The AEC said that AEMO has neither identified a shortfall in Victorian supply for 2021-22, nor has it identified a need for this battery in its national Integrated System Plan.
Economic boost for the Geelong region
The battery, which is targeted to be operational by the end of 2021, will create more than 85 local jobs and deliver over $200 million in investment into the Geelong region.
Member for Lara, John Eren, said, “I am proud that Moorabool will host Australia’s largest battery. Not only will it support local jobs and investment, but it makes an important contribution to Victoria’s clean energy future.”
Member for Bellarine, Lisa Neville, said, “Victoria is embracing new technologies that will unlock more renewable energy projects than ever before.”
These sentiments were echoed by Member for Geelong, Christine Couzens.
“This is a massive win for Geelong. It creates local jobs, while securing our role in the renewables revolution,” Ms Couzens said.
Member for Western Victoria, Gayle Tierney, said, “New energy technologies such as the Victorian Big Battery will play a central role in our state’s economic recovery, and our region has the skills and expertise to deliver for Victoria.”
Member for South Barwon, Darren Cheeseman, also welcomed the announcement, saying, “The Geelong region is kicking goals in the transition to clean energy.
“The Victorian Big Battery will cover an area the size of GMHBA Stadium and create enough jobs for more than four football teams.”