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RWE wins government contract for eight-hour lithium BESS in New South Wales, Australia


The clean energy development arm of German utility company RWE has been awarded a long-term contract for a 50MW/400+MWh battery storage project in New South Wales, Australia.

RWE won with its bid in a competitive solicitation, the results of which were announced today (2 May). Tendered for by AEMO Services on behalf of the state government, contracts for a total 1.4GW of resources have been awarded.

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Through the tender, projects that “comprehensively demonstrated their financial value to NSW electricity consumers and benefits to their host communities,” were selected, according to AEMO Services general manager Paul Verschuer.

Alongside the long-duration energy storage (LDES) project, which will have a discharge duration of at least eight hours, AEMO Services picked out three other winners, all generation projects. The procurements are part of a biannual series of tenders taking place over 10 years through the New South Wales state Roadmap for energy transition.

They represent a total investment value of AU$2.5 billion (US$1.67 billion), and long-term energy service agreement (LTSA) contracts have been awarded that bring developers revenue certainty, while coming in at strike prices 40% lower than the levelised cost of energy (LCOE) and below that of procurements through Contracts for Difference (CfD) auctions, Verschuer said.

They include Coppabella Wind Farm, a 275MW project proposed by Goldwind, and two solar projects from ACEN Australia, a subsidiary of Philippine power generation group ACEN. Both solar PV plants are sizeable: Stubbo Solar Farm will be 400MW, the other the 720MW New England Solar Farm.

The two ACEN Australia solar projects and the RWE battery energy storage system (BESS) will be sited in Renewable Energy Zones (REZ) being set up by the state of New South Wales (NSW).

NSW has a total of five REZ sites in development – these will be very large-scale, mixed renewables and storage technology hubs that the government describes as similar in scope to modern-day versions of traditional centralised power station sites.

In the case of RWE’s project, Limondale BESS, it will be in the NSW South West REZ, while Stubbo Solar Farm is in the Central-West Orana REZ and New England Solar Farm in the New England REZ.

Generation capacity awarded in the tender is expected to come online in 2025-2026. AEMO Services had targeted the procurement of around 950MW of capacity, and around 2,500GWh of annually contracted capacity supplied to the state, but due to the “highly successful” outcome instead chose the 1.4GW of awarded projects which from the solar PV and wind facilities will supply 4,009GWh to the grid each year.

Latest long-duration project to pick lithium

An RWE spokesperson told the company has selected lithium-ion battery technology for its Limondale BESS, and was awarded a 14-year LTESA contract.

The spokesperson said the NSW government will top up financial support to the project when market-based revenues are low, while RWE is contracted to share revenues with the state government when they are high.

Land has been secured as well as development approvals, while a grid connection enquiry has been lodged. RWE is working towards obtaining a grid connection agreement in the first half of 2024, the spokesperson said.

The project will be constructed adjacent to RWE’s existing 249MW Limondale Solar Farm in Balranald, New South Wales, which went online in 2021.

It’s the latest in a series of large-scale lithium-ion BESS projects which have been announced with durations much longer than the typical 4-hour duration mark often considered the upper limit at which lithium batteries are economically competitive.

Most recently, in April a 15-year power purchase agreement (PPA) was signed by California community choice aggregator (CCA) energy supplier with NextEra Energy for a 75MW BESS project in that state’s Riverside County. That’s actually the third lithium project so far with 8-hours duration contracted for by California CCA entities.

In February, developer Fotowatio Renewable Ventures (FRV) submitted an environmental impact assessment (EIA) for a large-scale solar-plus-storage project in Chile that would feature an eight-hour system.

There has long been a debate over whether lithium will continue to be the technology set of choice as project durations get longer and longer. What’s perhaps interesting to note is that while these and a number of other projects has reported on will use long-duration lithium technology to service long-term contracts, rather than providing merchant revenues for asset owners and developers.

Incidentally, our sister site PV Tech just reported RWE’s most recent quarterly results, finding the company held an improved financial position despite recent decreases in EBITDA from its onshore wind and solar PV businesses.’ publisher Solar Media will host the 1st Energy Storage Summit Asia, 11-12 July 2023 in Singapore. The event will help give clarity on this nascent, yet quickly growing market, bringing together a community of credible independent generators, policymakers, banks, funds, off-takers and technology providers. For more information, go to the website.

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