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Lyon plans battery tender for $1.88bn solar plus storage projects

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lyon solar storage

The highly ambitious solar and battery storage developer Lyon Group has unveiled yet another big project, this time a $660 million solar plus storage project in Victoria, adding to its growing portfolio in South Australia and Queensland.

The latest plan for a 250MW large-scale solar plant, paired with 80MW/160MWh of battery storage at Nowingi in north-western Victoria, takes its total pipeline to more than 1700MW of solar and 1000MW of storage.

But in a new twist Lyon has announced that it is planning a tender for contracts to cover the 640MWh of storage capacity at its most advanced projects in Victoria, South Australia (Riverland) and Queensland (Cape York).

Lyon Group’s David Green said the tender would be open for electricity retailers and generators, large electricity users, and other sector participants for a range of services including price arbitrage, load shifting, ramp control, frequency control and network control that he values at a total of $220 million.

“Lyon will enter into commercial contracts for real services provided by physical assets,” Green said in a statement. “This is not a theoretical exercise.”

He describes the tender exercise as a “world first” and was in response to many enquiries from retailers and others about the sort of services and pricing that would be offered from the projects. Lyon decided that they would go out and seek what was wanted and what people would pay for it.

Several companies have announced plans for large-scale solar and storage facilities in Australia, including Zen Energy, Reach Energy and Carnegie Clean Energy, but none come close to the scale that Lyon has announced.

However, none of the projects have commenced production to date, although Green insists that all three projects will begin construction this year – Nowingi and Riverland as early as September. It is backed by Japanese trading giant Mitsubishi and US investor Magnetar Capital.

Lyon says all three projects, totalling nearly $2 billion, will be 100 per cent equity financed, and Green said that the results of the tender would help decide the final design and configuration of the projects.  It is using battery systems integrator AES.

Lyon also joins a host of battery storage tenders, including those being run by South Australia and Victoria, both of which are designed to be built by this coming summer.

Victoria’s two 20MW battery storage projects, totalling around 100MWh, are also slated for western Victoria, where it faces grid issues as it seeks more than 5,000MW of new wind and solar to meet its 40 per cent renewable energy target by 2025. That tender closed last week.

The South Australia government currently has a tender out for 100MW and up to 200MWh of battery storage, although Lyon says it has not entered those tenders.

The move also comes as the Finkel Review recommends storage be front and centre of Australia’s energy security concerns, although his recommendation that all new wind and solar farms be paired with storage and/or firming capacity has drawn criticism for being overkill.

It is not clear that the Coalition government will adopt Finkel’s recommendations, or to what state that storage will be mandated, although Green has said, unsurprisingly, that he is a supporter.

yon victoriaGreen is confident that Nowingi will begin construction “in the coming months” and will employ 250 at that stage. The other solar storage projects within the scope of the tender are Cape York (Queensland) and Riverland (South Australia).

Other developments are for the Kingfisher project near Roxby Downs in South Australia, which Green says is going through state planning approvals, and others will also emerge, including deals with large energy users for both solar and storage.

“These projects are working through development consultation and approvals. The land has been secured, technology and other commercial arrangements are in place, and the required network capacity analysis and consultations are well advanced,” Green said.

“Projects like these are the heart of Australia’s energy transition, allowing for substantially higher levels of variable, low emissions generation, while strengthening the resilience of the system.  It is real and it is happening.”

Green says the full services of battery storage are not yet fully understood, noting that large-scale battery storage can provide both a cost-effective alternative to network infrastructure upgrades, and to new gas generation, and can ensure the true value of large-scale renewables is realised, if all its “value stack” can be exploited.

Green said that Lyon is developing a number of new and innovative battery storage products that it will release to the market in the near future.

lyon tender

  

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  • David leitch

    I look forward to FID on these projects.

    • coreidae

      What is not talked about enough is the speed with which these projects can be constructed and bought onto the grid. It is of major importance, especially when compared to the slow construction time of such alternatives such as coal or gas fired power (years), or indeed nuclear (decades). Are there any studies on construction time for given capacity by technology? Would be very interesting to see. It reminds me of the differing IT approaches of “scale out” vs “scale up”

      • David leitch

        I agree the fast build is important, massively reduces risk as does the modular nature i.e. 20 MW or 250 MW have similar costs. Just not that fast.

        • Just FYI, and i didn’t include it in the story. Green says that it will be a modular construction, and that the various projects would come on line in 50MW increments, which seems pretty standard fare in big solar.

          • coreidae

            Thanks @disqus_an6c03erWr:disqus, most interesting.

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    • coreidae

      @disqus_Xs9Kgmarr0:disqus good interview on 7.30 report tonight. For them I actually thought it was a fairly balanced article.

  • riley222

    Gosh I hope all the gold plating we’ve been hit up for recently covers transmission costs.
    Let me guess, it doesn’t and it won’t, so off we go again.
    Don’t get me wrong these projects can’t come quick enough for me, but the lack of any overall plan is just piling expense on expense.

    • lin

      Nowingi is next to a big transmission line.

  • George Darroch

    They’re smart to get in quickly. Capacity is constrained, and this will put the brakes on new wind and solar heading east into the NEM.

  • Tom

    Two comments:

    1) Are these horizontal single axis tracking power plants? If so, it’s great news – heaps of power until 8pm in summer.

    2) 100% equity financed: I wonder if it will be on the ASX, and if an IPO is going to be released at some stage. I wouldn’t mind a read of it – if the numbers stack up the SMSF might just feel the need to kick in. If it is 100% equity financed, it means no debt, which means no interest that needs to be covered – just a small, steady ROC.

  • Doremz

    Does anyone know which battery manufacturers can deliver on these large projects. I’ve been following the RedFlow zinc-bromide story but understand that they have production issues. Tesla has publicly stated it can keep the lights on all over SA but Lithium ion batteries lose significant storage capacity over time and may not be the most cost effective longer term solution.

    • Michael Anthony

      Kocam, BYD, LG, Tesla, to name a few, depends on what the power and energy needs are:

  • Peter F

    So these three plants total 600MW, annual supply 1,400-1500 GWhr. Probably about 300MW at summer peak. for $1.9bn. Annual O&M about $10-15m, add another 150MW of batteries brings it up to $2.2 b, summer peak 450MW Operating in one year

    Malcolm’s new 500MW coal station $2-2.5b, same peak summer supply 450MW. Annual generation at current CF 2400-2,600GWhr operating costs $160m per year. Operating in 6-7 years

    Which one looks like the safer bet

    • BB

      Peter I think your analysis forgot something: the cost for the atmosphere, I mean CO2 should be added in.

  • Michael Anthony

    lots of announcements from Lyon, love that, lets hope they turn dirt on something soon.

    • Yes, like David, I look forward to FID!