Victoria has taken energy matters into its own hands and approved a 300MW battery, to ease the way for generation from wind and solar projects into the grid.

The project will be delivered and owned by Neoen, the French energy company that built and owns the 150MW Hornsdale Power Reserve big battery in South Australia, using Tesla’s Megapack technology.

Neoen has been awarded a 250MW grid services contract by the Australian Energy Market Operator and the facility will be located next to Moorabool Terminal Station in Geelong, connected to network partner AusNet Services.

Wind projects to the west and solar farms to the north of the facility will be prime beneficiaries of its services.

The Victorian Big Battery will unlock up to 250MW of peak capacity on the existing Victoria-NSW interconnector over the next decade of Australian summers and prove itself as “a true enabler in a very strategic location,” said Neoen Australia managing director Louis de Sambucy.

A basic function will be to store wind and solar energy at times it is surplus to demand and discharge when it is needed, although that’s the tip of the iceberg in terms of the work it can do for its owners and for the network.

“A battery is making more than almost 3,000 decisions a day, optimising every parameter of the network,” de Sambucy said. “There are many different configurations that are interesting.”

De Sambucy would not comment on the price of the battery during a media conference call but said the cost per megawatt had fallen 10-15%, without specifically stating over what period.

“Definitely the cost is going down compared with the projects we were doing just two years ago,” he said.

On call

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. 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.

The Victorian Big Battery, “roughly the size of a typical gas turbine”, according to Tesla’s Robyn Denholm, will help to modernise and stabilise the grid in Victoria and will be instrumental in helping the state reach its objective of 50% renewables by 2030.

“Globally, we’re seeing that batteries are really the key for allowing renewable energies to replace gas and coal generation, to lower prices and improve grid reliability,” Denholm said.

The System Integrity Protection Scheme contract with AEMO undertaken on behalf of the Victorian Government will run until 2032 and is evidence that the cost of storage has entered a range where investment decisions will be triggered.

“It was only a few years ago that people thought big batteries were something that was probably 15 years away,” said Victorian Minister for Energy, Environment and Climate Change Lily D’Ambrosio. “But that’s not the case at all.

“We need a number of tools in our toolkit to ensure we have a well-managed transition,” she said. “Yes, we need more renewable energy – absolutely – but we also need to ensure we have the technologies in place to make sure we have a smooth transition away from coal thermal generation, particularly in Victoria.”

The minister said she hopes the investment decision will send a signal around the world that large-scale lithium-ion storage is a mature technology.

Living with coal

Victoria’s ageing coal fleet is “a fact of life”, she said, rather than “an ideological observation”. As these large, lumbering assets age they can be expected to become more stressed during critical heat periods. “And we’ve had a number of summers, unfortunately, where we’ve seen that happen.”

The Geelong battery will allow more energy to flow across the Victoria-NSW interconnector during such times, she said. Victoria has commissioned a service through AEMO for additional supply between November 1 and March 31 each year. The value of the contract is about $84 million over 11 years, she said. “With the effects on wholesale prices, why wouldn’t you do it?” Minister D’Ambrosio said. “There are net benefits for Victorians in terms of wholesale prices. Everybody wins from this project.”

Independent analysis shows that for every $1 invested the battery will deliver more than $2 in benefits to Victorian households and businesses.

The battery is expected to be operational by the end of 2021.