What if Australia could display the largest grid-scale battery in the world in two years from now? The company CEP Energy decided to take that gamble, and unveiled, on February 5th, its plans for constructing a battery of up to 1.2 GW capacity. With this announcement, Australia is hitting a milestone in its metamorphosis towards a clean energy economy.
With a cost of $2,4 billion, this 1.2 GW mega-battery will challenge the dominance of the Moss Landing storage facility, located in California, which is currently the biggest in the world. Not only will it have a 4 times higher storage capacity than the Moss Landing one, the CEP battery is meant to be the main component of a 2 GW set of batteries installed throughout the country. PV solar will likely be the lion share of power supplied to it.
The renewable energy fund CEP Energy rapidly became a key player in the Australian energy sector. Advertising low-carbon electricity, CEP Energy plans to deploy an extensive grid infrastructure, in which storage facilities will be the main axis.
In parallel, the company intends to further develop the Virtual Power Plants (VPP) it specializes in: these are cloud-based systems aggregating diverse power generators across the country and connecting them to batteries. Many of them already exist in Australia, but CEP seeks to give them an industrial dimension. The fund recently signed a deal with the construction company Pelligra giving it access to 10 million square meters on roofs to install solar panels. This combination of solar farms with the use of new batteries will enable CEP to sell its renewable energy directly to industrial consumers.
“CEP’s grid-scale battery network is part of our dual-track strategy to generate and store clean, reliable and cost-effective electricity for Australian businesses, and make excess power available to the national grid to firm up the increase in renewable generation”, CEO of the company Peter Wright commented in a statement, cited by PV-Magazine.
From a coal-hub to a renewables epicenter
This gigantic project will be realized in New South Wales - a region historically known for its coal-mining activities. However, a large number of wind and solar projects is quickly transforming the province into becoming a renewables hub. New South Wales (NSW) is also a strategic area for renewables deployment, as several coal-fired plants are awaiting closure in the upcoming decade, casting doubt on the stability of electricity supply to the manufacturing industries located in the area.
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The CEP’s announcement goes in line with the broader commitment of New South Wales to enhance its renewable power generation capacity, at a time when the share of renewables in the electricity mix is already close to 16%.
It also provides an alternative solution for storage to pumped-hydro, which currently is the leading energy storage technology, with an investment amounting to 50 million dollars according to the NSW Electricity Infrastructure roadmap.
New South Wales vs. Federal government
Although this new battery project brings an array of benefits for the country - such as combining its decarbonization strategy with developing local jobs - it seems to diverge with the federal government’s stance. In fact, Prime Minister Scott Morrison has been more inclined to prioritize gas to replace the coal-fired Liddell power plant by 2023.
This contrast finds an explanation in the political field: the CEO of CEP Energy Morris Iemma is a former Labor party politician, and was the 40th Premier of New-South Wales. Iemma is known for pursuing a more progressive clean energy agenda, whereas Morrison’s Liberal Party has been advocating for a more conservative “gas-fired recovery”.
A boom of batteries on global markets?
Decreasing battery costs are a key incentive that drives the attractiveness of investment in energy storage. A Bloomberg NEF report predicted that prices for lithium-ion batteries will reach record-low levels of $100/ MWh at the horizon 2024, boosted by electric vehicle developments.
While China has for long dominated the whole value chain of storage technologies, the current Australian trends suggests that it might be time for a change. Indeed, CEP's new project is only one of a series of new storage projects started in Australia over the past years, such as the Tesla battery that made the headlines back in 2017. And it might not be a coincidence that one of the board members of CEP - Jan Muller - is a former Tesla executive.
CEP is far from being the only major energy storage developer. French battery giant Neoen has also embarked on a battery adventure in South Wales: in August 2020, it announced its intention to build a new battery of up to 1,8 GW capacity.
This surge in battery investment is a crucial element in managing the intermittency of solar power, which is making up for an increasingly large part of the Australian energy mix.
Despite the popularity of renewable energy and the recent energy storage developments, natural gas fired plants will be much-needed in the foreseeable future to guarantee grid stability in Australia.
By Tatiana Serova for Oilprice.com
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