$1.8bn move to prevent energy shortfalls
Six batteries which could supply power to 430,000 households will be in operation by the end of 2025, as NSW battles warnings of energy shortfalls in its transition away from coal-fired power.
On Wednesday, the state and federal governments announced six batteries which will be able to store 1.075GW of renewable energy, or around eight per cent of the total amount needed during NSW’s peak demand periods in summer.
The $1.8bn project will be funded through the Commonwealth’s Capacity Investment Scheme, and is estimated to create about 400 jobs.
Contracts have been awarded to Akaysha Energy’s Orana Renewable Energy Zone battery in NSW’s central west, AGL Energy’s Liddell battery in Muswellbrook, Iberdrola Australia’s Smithfield Sydney battery, and three virtual power plants through Enel X Australia.
NSW Energy Minister Penny Sharpe said although the government would have to contend with a “reliability gap,” having the six projects in operation would help reduce the potential shortfalls as coal-fired power plants were retired from the grid.
“This program helps us with the most important challenges in the transition and that’s dealing with reliability as coal-fired power exits the system,” she said.
“Getting more renewables in batteries gives us the storage that allows us when we’re in peak demand to be able to get more energy into the grid.
“They also help us that when the wind isn’t blowing and the sun isn’t shining, they are able to keep that level amount of energy going to households.”
Federal Energy Minister Chris Bowen said the state and commonwealth governments would work “hand in glove” to help NSW reach its carbon reduction targets of cutting 50 per cent of emissions by 2030, and reaching net zero by 2050.
“These projects are critical for energy security in NSW and as we transition to a cheaper, cleaner energy system,” he said.
“We have no time to waste as coal-fired power stations retire. We must get more renewable energy into the grid – backed by storage and flexible demand – they keep the lights on and meet our next zero targets.”
The announcements come as the government is in negotiations with Origin Energy to potentially extend the operating life of the Eraring coal-fire plant in Lake Macquarie past its current forecasted closure in August 2025.
Ms Sharpe shut down questions around how discussions were progressing, and refused to say whether an announcement would be made before the end of the year.
Australian Energy Market Operator (AEMO) Services chair Paul Moy welcomed the next step, however, it’s unknown whether the impact of the six batteries will be assessed in its next energy reliability report.
In August, AEMO reported NSW is expected to experience energy shortfalls, including greater risks of blackouts, unless renewable energy generators come online.
“As one of the world’s fastest decarbonisation initiatives, the NSW energy transition has inevitable challenges, however these tenders demonstrate strong momentum and interest from the private sector to deliver this new generation of cleaner, more affordable and reliable energy infrastructure at rapid pace,” he said.
“Ultimately, this competition will help ensure financial value for the state’s energy consumers, which is the core of our mandate as the Roadmap’s Consumer Trustee.”