After winning a competitive selection process, Tesla will supply 40 of its Megapack utility-scale battery energy storage systems (BESS) to a project by Australian renewable energy developer Genex Power.
Genex Power said last week that a supply agreement has been signed with Tesla Motors Australia for the developer’s 50MW / 100MWh Bouldercombe Battery Project (BBP) after the competitive solicitation closed in August 2020.
Warrantied for 20 years, the all-in-one integrated lithium-ion battery Megapacks will be shipped fully assembly and factory tested from the Tesla Gigafactory in Nevada, USA, to the project in Queensland, northeastern Australia.
Genex still has to take the project to financial close, but with a site secured and grid connection to the Powerlink Queensland transmission network expected to be confirmed in the fourth quarter of this calendar year, the company said the Tesla supply deal moves the project closer to that step.
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Genex and Tesla have been working closely with the developer’s grid connection consultants to secure that grid connection, which was finalised and recently submitted and is now awaiting the network operator’s green light.
Genex is also in advanced negotiations for an off-take deal with a partner and it wants to conclude brokering that contract in tandem with closing the financing and taking a Final Investment Decision “in the coming months,” it said, in either the last three months of 2021 or the first quarter of 2022.
The project will be Genex’s first standalone BESS project, connected to a nearby Powerlink Queensland substation and it has received development approval from the local Rockhamption Regional Council.
Batteries fast becoming integral part of Australia’s energy sector
The business case for battery storage in Australia is based on merchant opportunities, largely for providing frequency control ancillary services (FCAS) with a smaller portion of revenues coming from energy arbitrage and other streams. This has made it lucrative but relatively tricky to attract investment for some projects due to a lack of visibility on long-term finances.
However, there are multiple gigawatts of BESS in development or already in construction and recent changes to the NEM structure such as the introduction of five-minute settlement (5MS) and forthcoming adaptations to frequency regulation markets to reward faster-responding assets like batteries are expected to continue improving the investment case.
Genex is perhaps best known for being behind Australia’s first new pumped hydro energy storage project to be constructed in nearly 40 years. Its 250MW Kidston Pumped Hydro project reached financial close in May and is part of the company’s Kidston Clean Energy Hub development, which will include utility-scale solar (50MW and 270MW on two sites) and wind (150MW) deployed with the pumped hydro at an abandoned historic gold mining township.
The 50MW solar plant at the Kidston site is already commissioned and generating power for the National Electricity Market (NEM), while the rest is under construction or development. Genex has also recently completed a 50MW solar PV plant, Jemalong, in New South Wales.
Genex said it selected Tesla as an equipment supplier and system integrator due to the US company’s experience in the Australian energy storage market already, its “strong technical and commercial offering” and also Tesla’s Autobidder market dispatch digital technology.
Tesla was the supplier and integrator for Hornsdale Power Reserve in South Australia, so far the biggest grid-scale battery project in Australia. Owner and developer Neoen said Hornsdale is estimated to have saved around AU$150 million (US$108.98 million) off the cost of delivering grid-balancing services in the NEM since 2018.
Neoen and Tesla are also working together on the Victorian Big Battery, a 300MW / 450MWh project in Victoria, which is nearing its commissioning phase ahead of the Australian summer.
A few days ago, Tesla’s biggest Megapack battery supply contract to date was announced, a 2GW / 6GWh master supply agreement for US renewable energy company Arevon. Those Megapacks will be delivered at nine projects around California that are targeting 2022 and 2023 completion dates.
In the second quarter of 2021, Tesla installed 1,274MWh of energy storage, more than three times the 419MWh of the same quarter in 2020. During an earnings call in July, CEO Elon Musk said the Megapack is largely sold out through 2023.
