Can you run a grid on promises?

A scrum of companies and consortia have promised to build nearly 10GW of new battery storage in Australia. It’s a staggering number: more than 30 times the size of the current operational fleet. But there’s a catch. To date no one is making good on their promises unless they have secured a big chunk of government funding. Big batteries seem only viable if someone else helps pay for them.

Currently in Australia there is around 265MW of battery storage installed and another 350MW under construction (if you generously count the 300MW Victorian big battery in that figure). Beyond the real world is the promised land, or rather, the land of promises: a staggering 9.7GW of new big battery dreams across 40 potential battery projects that have been proposed, promised, announced, dropped to the media and had their tyres kicked. It’s almost as if the proponents were trying to outbid each other to get the attention of state governments, like a big battery beauty contest.

The biggest and most famous installed battery is the 150MW Hornsdale Power reserve which was built in South Australia 2017 as part of the political repair job following the state-wide system black a year earlier.

At the time the project hosts Neoen got around 40 per cent of the capital cost of the battery underwritten by the South Australian Government. A further 50 MW expansion was supported by $15 million more from the SA Government and $8 million kicked in from ARENA. A battery so nice, governments paid for it twice.

All the big batteries currently installed have received between 26 and 60 per cent of their capital costs from government funding. While the perception is of batteries working hand in glove with renewable generation to soak up oversupply and keep the lights on at night, the primary role, and revenue, of big batteries to date has been mostly technical. The 300MW Victorian Big Battery is being funded by the Andrews Government as a regulated asset to augment transmission connection with NSW, not to firm and support renewables.

The 50MW Wallgrove battery being built in Western Sydney by Transgrid is also a technical play, focussed on providing synthetic inertia and frequency control services to help maintain power quality.

The emerging trend with big batteries is that proponents might talk a big game, but struggle to deliver. AGL has proposed 1,000MW of batteries across four projects in three states. Its 100MW Wandoan South Battery in Queensland was announced at the start of 2020 and was originally tagged to start construction mid last year. It announced financial close in December and is still waiting to get going. Other battery projects at Liddell, Torrens Island and Loy Yang appear even more speculative.

Not to be outdone, Origin has talked up 730MW of batteries across four projects projects. Neoen, who appears to have the best government relations team in the race, also has the biggest ambition: 2960MW of storage across five mega-projects. But wait, there’s more. Solar-Q has pitched three massive 1000MW projects, then last month new entrant CEP Energy (with Former NSW Premier Morris Iemma as Chair) announced it planned on building a 1200MW battery at Kurri Kurri in NSW, maybe across the road from the proposed Snowy Hydro gas generator.

It seems like it’s all happening with big batteries, but nothing is happening. Grabbing headlines and media profiling is one thing, but the scale of unfulfilled battery promises suggests there remains a big gap between talk and reality.

Given that each subsequent battery negatively impacts the viability of future investments, you might think that there would be a strong incentive to get these big projects away. To dominate the battery market and warn off competitors. That doesn’t appear to be the case to date. Maybe what they are really positioning for is  government support, the magic ingredient that, to date, appears critical to getting the next battery across the line.