RWE will proceed with an 8-hour duration large-scale battery storage project in New South Wales (NSW), while a tender for more long-duration resources has launched in the state.
The German energy company announced today that it has taken its Final Investment Decision (FID) on the 50MW/400MWh battery energy storage system (BESS) project, adjacent to RWE’s existing 249MWac Limondale Solar Farm, about 16km from the nearest town, Balranald.
The FID comes after RWE won out in the New South Wales government’s first tender for long-duration energy storage (LDES) and was awarded a Long-Term Energy Service Agreement just over a year ago.
The competitive solicitation was administered by AEMO Services, an arm of the Australian Energy Market Operator (AEMO). AEMO Services is running biannual tenders on behalf of the NSW state in a 10-year plan under the NSW Electricity Infrastructure Roadmap, with developers competing for generation and storage projects as well as access rights to the state’s five planned Renewable Energy Zones (REZs).
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The Limondale BESS will be sited inside one of those, the NSW South West REZ, and will connect to transmission lines via existing substation infrastructure.
REZ developments in several Australian states will each host multiple gigawatts of wind and solar, along with battery storage and potentially other technologies such as green hydrogen.
Tesla Megapack lithium-ion (Li-ion) BESS solutions will be used at Limondale. Construction is expected to begin in the second half of 2024, for commissioning late next year.
Australian renewable energy and infrastructure contractor Beon Energy Solutions will provide balance of plant (BOP) equipment.
Ongoing NSW tenders for long-duration resources, REZ access rights
As detailed in the Energy-Storage.news Premium article published after the contract award, RWE’s LTESA with NSW has a 14-year term.
The state will underwrite the developer’s revenues for the project, paying out to RWE when market-based revenues are low, and RWE will pay the balance back to the state when revenues go above an agreed ceiling.
While, as RWE pointed out, the project will be Australia’s first-ever 8-hour duration Li-ion battery storage project, NSW has just launched its next tender for LDES.
Tender Round 5 under the NSW Electricity Infrastructure Roadmap opened last week (22 May). AEMO Services has sized the LDES portion of the tender at an indicative 1GW of project bids, along with up to 3.98GW of access rights for the South West REZ.
The tenders come in growing recognition of the fact that while longer durations of energy storage will be needed to fill in gaps when solar PV and wind resources are not generating for the grid, current market structures do not incentivise building long-duration storage plants.
At the Energy Storage Summit Australia, hosted last week in Sydney by our publisher Solar Media, many of the speakers—including former Australian prime minister Malcolm Turnbull—agreed that while Li-ion BESS projects with shorter durations, typically 1-hour and 2-hour, can make decent returns from opportunities in the National Electricity Market (NEM), market reforms or supportive policies are needed to create a business case for long-duration storage.
On a related note, Australia’s new National Battery Strategy, aimed at making the country competitive in battery and battery materials value chains through manufacturing, processing and extraction, envisages supporting short-, medium- and long-duration storage technologies.
