The South Australian government has announced plans to install the country’s biggest battery storage installation as part of a sweeping response to the series of blackouts and what it says are the failures of the National Electricity Market.
The $500 million scheme includes plans for a new battery storage installation of at least 100MW, a new 250MW government-owned gas-fired generator to act as an emergency back-up, and a new “energy security” scheme that could encourage solar thermal and other storage technologies.
The state will also introduce a new competitor to the market through its previously announced government procurement scheme, will encourage more gas exploration, and will give treasurer and energy minister Tom Koutsantonis greater power to intervene in the market and instruct generators to deliver supplies.
The idea, premier Jay Weatherill said, is for the state to take control of its own energy future, and not rely on a “broken” National Energy Market, and to forge ahead with its push into renewable energy.
The biggest news, though, is the tender for a new battery storage plant. It comes on the same day that Victoria announced its own plans for 100MW of battery storage and less than a week after Tesla’s Elon Musk promised he could build a 100MW plant in South Australia within 100 days, or deliver it for free.
That promise, in response to a tweeted question from Australian tech billionaire Mike Cannon-Brookes, sparked huge political and media interest, as well as a host of proposals from local and other international players.
Those players will now have the chance to bid against each other in the tender, which South Australian treasurer Tom Koutsantonis says will be held as soon as possible to ensure the installation is completed by next summer.
Koutsantonis said it was a “happy coincidence” that this tender came just days after the tweets, but he will have a ready-made line-up of candidates.
Among those competing will be Tesla, Zen Energy (with Greensmith), Lyon Solar (with AES) and Perth-based Carnegie Clean Energy. Others are also expected to join.
“I expect you will see lots of applications,” Koutsantonis said.
The new installation will be funded through a new $150 million South Australia Renewable Energy Technology Fund, although he estimated that only around $15-$20 million will be needed for a plant, with the rest saved for later auctions and initiatives. Victoria is allocating a similar amount.
“This will provide an incentive for more forms of storage,” Koutsantonis says. “Storage is the next phase of the evolution of renewable energy.”
He said the fund would split evenly between grants and loans, and will effectively duplicate the Australian Renewable Energy Agency and the Clean Energy Finance Corporation.
“In the space of five weeks we have gone from ridicule … to a celebration of South Australia as potentially being the international leader in renewable energy policy,” Weatherill told journalists.
“We have taken on significant challenges and come up with the solutions.”
In its most controversial announcement – and one many will see as un-necessary but a political back-stop -South Australia will also spend $360 million building a new 250MW gas-fired generator, which it also hopes to have in place by next summer, although it admits the time-frame will be tight. Diesel generators will be installed in the meantime.
It will act not as a competitor in the market, but as an “emergency back-up,” to ensure that the rolling blackouts such as occurred on February 8, when “load shedding” was imposed by the market operator, are not repeated
“We have a system that puts profits before people,”Weatherill told reporters. “It is a disgrace. They chose to black out south Australia instead of turning on a power station.”
Weatherill said the market was broken, and accused existing players of using their market power to extract benefits for themselves.
The government hopes to shake that oligopoly by introducing a new generator through its previously announced procurement scheme to provide 75 per cent of the government’s energy needs.
The shortlist for this tender, Koutsantonis said, includes only new generators. He would not reveal the number but it is thought they would include the 110MW solar tower and molten salt storage plant in Port Augusta proposed by SolarReserve.
Another major new initiative is an “energy security target” which will require energy retailers in the state to source 36 per cent of their energy from “synchronous generation”, which could include gas-fired generation and solar thermal, and battery storage attached to wind and solar plants.
This target will rise to 50 per cent by 2025 – and will be implemented through a credit scheme similar to the proposed emissions intensity target. Indeed, it has been designed by the same man, Frontier Economics’ head Danny Price.
The government will also double grants available to gas explorers to $48 million, including a 10 per cent royalty share for landholders as an incentive to allow exploration on their land.
But most energy analysts do not expect this to increase gas availability, because of the long lead-times and the falling cost of renewables and storage.
Indeed, the decision by Santos to work with ZEN Energy to build a new solar farm, rather than drill for more gas, in order to free up gas reserves, suggests that gas exploration is already out of the money.
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