13 November 2017
Australia's energy storage transition is on track to meet an important new milestone, with the CEFC announcing finance that includes the first unsubsidised large-scale grid-connected battery, alongside a greenfield wind development.
The CEFC has committed $150 million in debt finance to stage one of the Lincoln Gap wind farm, in South Australia's Port Augusta region. The CEFC financing facility includes finance towards a 10MW battery energy storage system, capable of producing up to 10MWh of fast response storage capacity.
The 212MW Lincoln Gap project, being developed by Nexif Energy Australia, will produce enough electricity to power around 155,000 homes. Stage One of the project is a $300 million, 126MW development.
"This project demonstrates how we can move to the next phase of the clean energy transition, delivering a cleaner, reliable and affordable energy supply, by incorporating the latest technology at the greenfield development stage to create a stronger, more integrated grid," CEFC wind sector lead Andrew Gardner said.
"Large-scale battery technology is developing rapidly, and we expect costs to fall significantly, as we have seen with wind and solar. This is the first development project in Australia which has been able to secure debt finance for a grid-connected large-scale battery component on a non-subsidised basis. It provides an important financing model for other developers and investors wanting to be at the forefront of closer integration of renewables into the grid."
Bloomberg New Energy Finance (BNEF) forecasts Australia will have more than 29,000MW of flexible capacity installed by 2040, including both large-scale and small-scale batteries and demand response capability. This growth will support better management of variable generation as lower cost renewables become an increasingly important part of the electricity mix.
The 10MW Lincoln Gap battery will complement other large-scale battery projects in South Australia, including the 30MW battery being built by ElectraNet on the York Peninsula and the 100MW Tesla battery being built by Neoen near Jamestown. Together, these projects will provide a significant amount of frequency response services to the South Australian grid.
The Lincoln Gap project is expected to be operational from mid-2018. It has secured two long term Large Scale Generation Certificate (LGC) agreements with ERM Power and a long-term electricity offtake agreement with Snowy Hydro. It will feed into the national electricity grid via the Electranet transmission network.
Zeki Akbas from Nexif Energy Australia said construction of the wind farm, 15 kilometres west of the Spencer Gulf town of Port Augusta, was expected to begin by the end of November.
"Nexif Energy has worked meticulously to develop a highly productive, innovative and practical renewable power model which is attractive to investors because of the real and sustainable benefits it will bring customers and communities," Mr Akbas said.
"We are pleased to include grid-scale battery storage
as an essential part of the wind farm investment and were happy to
receive strong support and encouragement from the CEFC as our
investment partner. With the scalable battery storage at Lincoln
Gap we will be able to offer more flexibility to the national grid
and improve the reliability of the system."
The project will feature the first turbines from Senvion's flagship 3.XM range to be installed in Australia. The Senvion 3.6M140 EBC turbine is designed for moderate and strong wind speeds to enable optimised load management even in challenging wind conditions.
Senvion Australia CEO and Managing Director Raymond Gilfedder said: "This is a significant milestone for Senvion and we are very excited about introducing the Senvion 3.6M140 turbine to Australia. This technology is very well suited to the Australian market, and will ensure that the wind farm will continue to be a high performing asset for the coming decades."
ERM Power Managing Director and CEO Jon Stretch said: "Reducing emissions from the electricity sector is an important part of a long-term plan to reduce greenhouse gas emissions, and ERM Power is committed to supporting the growth of renewable sources of energy in Australia. As well as supporting new sources of renewable energy, ERM Power champions the use of smart energy solutions which help customers reduce their consumption and enhance their sustainability goals."
Paul Broad, CEO of Snowy Hydro, said the company was pleased to support the development of the Lincoln Gap Wind Farm through signing a long-term electricity offtake agreement.
"This agreement expands Snowy Hydro's energy footprint in South Australia, now encompassing wind, solar and diesel peaking capabilities in the State," Mr Broad said.
The CEFC's South Australian investment follows its recent $94 million investment in Australia's first fully integrated wind, solar and battery project, at the Queensland Kennedy Energy Park.
Mr Gardner added: "Australia's energy mix requires higher levels of clean energy if we are to meet our Paris emissions reduction commitments. Harnessing flexible capacity, better demand management systems and increased storage capacity in renewable energy projects such as Lincoln Gap and Kennedy are an important contributor to building a stronger, more secure electricity system.
"We expect investors will be increasingly attracted to such large-scale hybrid renewable energy projects as the next wave of investment and technological innovation. By financing these integrated generation and storage projects, the CEFC is demonstrating how Australia can continue to increase our renewable energy capacity, while providing the important ancillary benefits necessary for grid stability and security."
Nexif Energy was established in August 2015 by Nexif, a Singapore-based independent power management company, and Denham Capital, a leading global energy-focused private equity firm with more than $8.4 billion of invested and committed capital across eight fund vehicles, to develop, finance, construct and opportunistically acquire conventional and renewable power generation assets across Australia and South East Asia. www.nexifenergy.com