Australian Renewable Energy Agency to Fund Construction of 8 Grid-Forming Batteries

A worker checks the fence for the compound housing the Hornsdale Power Reserve, featuring the world's largest lithium ion battery made by Tesla, during the official launch near the South Australian town of Jamestown, in Australia, Dec. 1, 2017. David Gray/Reuters

The Australian Renewable Energy Agency (ARENA) announced Saturday that it would fund the construction of eight large-scale batteries that will boost the country’s grid-forming storage capacity tenfold.

Federal Minister for Climate Change and Energy, Chris Bowen, said that ARENA would allocate $176 million to the projects, which are expected to cost $2.7 billion.

Each battery will range from 200 to 400 megawatts and will be built with advanced inverters. They will be built in Victoria, New South Wales, Queensland, and South Australia.

ARENA stated that the combined 2.0-gigawatt capacity is enough to power the entire Tasmania state for more than three hours using stored renewable electricity.

“With projects stretching from Queensland’s tropical north to the edge of the Southern Ocean in Victoria, the batteries will span the length of the [National Electricity Market]–Australia’s main electricity grid that supplies most of the country,” it said in a statement.

One of them, the Victorian Big Battery, has been operational since last year and is receiving funding for a retrofit to upgrade the system with grid-forming capability. The remaining seven batteries are expected to be operational by 2025.

“Once built, these eight batteries will represent a tenfold increase in grid-forming battery storage capacity across the grid,” the agency added.

ARENA chief executive officer, Darren Miller, said the new batteries could underpin the transition to renewable energy “with inverter technology that can maintain grid stability without fossil fuels.”

“Battery storage is an essential technology in the transition to renewable energy, allowing us to smooth out variable generation and store electricity for when it’s needed,” Miller said in a statement.

The projects are funded through ARENA’s Large Scale Battery Storage funding round. The program was launched with a $100 million funding pool last year, which has since been expanded to $176 million, partly funded by the government’s 2022 budget.

Renewable Energy Investment Scheme

The Australian government previously received approval from state and territory governments to establish a scheme that will drive investment into renewable dispatch capacity.

“This new revenue underwriting mechanism will unlock around $10 billion (U.S. $6.8 billion) of investment in clean dispatchable power to support reliability and security as the energy market undergoes its biggest transformation since the industrial revolution,” Bowen said on Dec. 8.

The scheme aims at ensuring households and businesses can reliably have renewable energy available when required. Bowen said that coal and gas will not be eligible to receive any of the investment funding.

Australia’s coal-fire power stations are reaching the end of their life cycles while the building of new plants are receiving significant opposition. Companies are also under increasing pressure to close plants earlier.

The Australian Competition and Consumer Commission (ACCC) earlier warned that the current high cost of gas and coal may remain elevated for another two years.

“Based on market pricing as at Oct. 31, 2022, while commodity prices are expected to come down from recent high levels by the end of 2022, they are forecast to remain above pre-2022 levels, reducing through 2023 and 2024,” it said in the most recent inquiry into the National Electricity Market report (pdf).

ACCC Commissioner Anna Brakey noted that high wholesale electricity prices have forced six retailers to exit the market this year, while others urged customers to switch retailers or refuse to take on new customers.

Wholesale spot electricity prices on average almost quadrupled across the national energy market over the year to September (pdf), from $$58 per megawatt an hour in 2021 to $216 per megawatt an hour in 2022.

Rebecca Zhu contributed to this report.