The Federal Government-owned Clean Energy Finance Corporation (CEFC) is providing $160 million for the construction of Neoen’s 300MW/450MWh Victorian Big Battery (VBB).
The VBB is set to help strengthen grid security, drive down power prices and support the integration of more renewable energy into the grid.
CEFC CEO, Ian Learmonth, said, “Energy storage supports cost effective, reliable, clean electricity and is a key component of Australia’s transition to a low emissions economy.
“This project is a world-class example of how utility scale batteries can help electricity networks support a higher penetration of renewable energy.
“The VBB will improve grid security by providing extra capacity during the peak summer months.
“It will also contribute to the dispatchable resources needed to underpin the increasing share of renewable energy that will make up Australia’s future energy mix.”
Under the System Integrity Protection Scheme (SIPS) contract Neoen has signed with AEMO, the VBB will unlock up to an additional 250MW of peak capacity on the existing Victoria to New South Wales Interconnector. The extra power flowing between the states during the peak summer season will deliver support to the grid at critical times.
Independent analysis by PWC found that the SIPS process could deliver total benefits of more than $220 million to Victorian consumers in the next eleven years, including savings on power bills.
If gross savings and AEMO costs for the battery are passed on to consumers, the Portland aluminium smelter stands to save about $1 million a year on its electricity bills, while the average industrial Victorian electricity consumer could save about $280,000 a year.
Federal Minister for Energy and Emissions Reduction, Angus Taylor, said the project would give Victorians confidence in their state’s energy system.
“All Australians need access to reliable and affordable power, which is why the Morrison Government is focused on keeping the grid secure,” Mr Taylor said.
“After the challenges of COVID-19, this is more important now than ever to support jobs, families and businesses in Victoria.
“We are working to ensure electricity prices do not hold Victorian industry back and this project is crucial to that objective.
“Investments in batteries can help stabilise our grid at a time of record investment in renewables.
“We will also need investment in longer duration firming and storage like the Snowy 2.0 project.”
Long-duration energy storage is a priority technology under Australia’s Technology Investment Roadmap.
The Technology Investment Roadmap outlines five priority technologies and economic stretch goals to make new technologies as cost-effective as existing technologies.
This includes getting long duration energy storage (6-8 hours or more) dispatched at less than $100 per MWh. This will enable reliable, firmed wind and solar at prices around the average wholesale electricity price of today.
Getting the technologies of the future right will support 130,000 jobs by 2030, and avoid in the order of 250 million tonnes of emissions by 2040.
Lily D’Ambrosio MP, Victorian Minister for Energy, Environment and Climate Change, said, “The Victorian Big Battery is an important part of the largest modernisation of the grid in our state’s history.
“It will create jobs and drive down energy prices, while supporting our transition to renewable energy.”
Xavier Barbaro, Neoen’s Chairman and Chief Executive Officer, said, “We are thrilled to be building our second big battery in Australia.
“The Victorian Big Battery once again demonstrates the value of innovative solutions that Neoen is proud to be pioneering.
“At 300MW, it will be one of the largest batteries in the world, taking our total capacity in operation or under construction in Australia to over 1.8GW, and bringing us one step closer to our global target of 5GW by the end of 2021.”
The CEFC senior debt facility will finance the design, construction and operation of the Victorian Big Battery.
Neoen, one of the world’s leading independent producers of exclusively renewable energy, will own and operate the VBB, which will be powered by Tesla Megapack batteries.
The project will create more than 80 jobs during construction and support various ongoing positions once operational.
The VBB will be one of the largest energy storage facilities in the world with construction already underway, the project is on track to be delivered before the next Australian summer.