The challenge of getting increasingly big wind projects over the line has been highlighted by one of the country’s biggest renewable developers – customers want “shape” and investors want long term certainty, and both are struggling to get what they need.
Wind farm developments in Australia have slowed to a crawl, with just a few smaller wind projects reaching financial close in the last year despite the support offered through the federal government’s Capacity Investment Scheme.
The only wind farm currently under construction in NSW – desperate for new wind and solar to replace its ageing coal generators – is Uungula project owned by Squadron Energy, which has also been building the Clarke Creek wind farm in Queensland, and is looking to start the Spicers Creek project in NSW.
Squadron CEO Rob Wheals identified two of the major issues in a discussion at CEDA’s conference on climate and energy issues in Melbourne on Thursday.
The first was the challenge of getting equity and debt investors across the line from what are increasingly big and complex projects.
“You’ve got deli veering risks and your construction risks, which in the renewable space, particularly for large wind projects, is getting pretty complex,” Wheals said.
“We’re taking about billions of dollar of capital and making big investment decisions. You need the comfort … of revenue certainty, and that’s one of the challenges we have got.”
“We’ve had the PPA market, which has given certainty in price, but not on volume, that might give you 10 or 15 years. But these assets have a technical life of 35 years. That’s a big question, how you think about certainty beyond that.”
The issue is clearly taxing the minds of federal energy and climate minister Chris Bowen and his team, and Bowen recently told Renew Economy’s Energy Insiders podcast that the signals for wind energy “need work”. More recent media reports suggest some tweaks, or even re-bids for some project developers under the CIS.
See: “Wind will require further work:” Bowen says renewables target still achievable, but not inevitable
That remains to be seen, but the other intriguing issue is about shape, the second major challenge raised by Wheals.
“Customers are thinking differently about what they want from an energy agreement today. They want more shape,” Wheals said.
“That’s leading us to think different about how we contract.”
Wheals did not spell it out, but the hint was clearly towards battery storage. The utility scale solar market has solved this issue with solar-battery hybrid technology, which have dominated recent federal and state auctions to the point where standalone solar projects are simply not going ahead.
In April, for instance, Flow Power killed its Springdale solar project saying the market had moved on to hybrids since it received a planning nod in 2021, and UK-based Revera Energy dumped plans for a solo 500 megawatt (MW) solar project.
Battery storage has been considered for some wind projects, and one wind-battery hybrid has won a contract under the CIS – Windlab’s Gawara Baya project in Queensland – even though it is yet to reach financial close or begin construction.
Windlab, majority owned by Squadron, has however revealed it is considering storage for another Queensland project, revealing in an EPBC application in March that it’s considering pairing a small battery with each turbine at the 1.4 gigawatt (GW) Bungaban wind project in Queensland.
Chinese turbine manufacturer and wind turbine developer Goldwind is also pursuing the wind-battery idea, and last year completed the first one in Australia: it connected a DC-coupled battery to a single turbine at the 312 MW Moorabool wind farm.
Gilbert and Tobin lawyer Jamie Guthrie says Acciona, Neoen and Iberdrola are all looking at the technology, largely because of the issue of “shape”, and the potential for storage to solve thorny network problems.
“The most arguable case for wind storage would be because wind is disproportionately affected by transmission constraints, down in Victoria particularly,” Guthrie tells Renew Economy.
“With all the congestion we’re seeing and curtailment, the battery will obviously store that curtailed energy and discharge when the network frees up.”
New offtake and tech needed
But the battery technology needs to be run differently, to manage the more variable generation from wind, and offtake deals need to change as well – as Wheals said customers are already asking for from wind.
Two offtake options are emerging, Guthrie says.
A bundled PPA offers a single contract that covers the output from both wind farm and battery where the offtaker gets shaped – time-shifted generation – and firmed power.
The developer manages the battery behind the meter.
The other, more popular option is a hybrid, where the developer has a firming and shaping obligation and can use the battery to do that, but the battery is not specifically part of the contract.
It means the battery can be used to make money elsewhere, such as in arbitrage or frequency control ancillary services (FCAS).
“Everyone likes wind, so if you can couple wind and battery together that makes sense as a better asset class,” Guthrie says.
AC not DC
Guthrie has seen a number of projects where the developer has considered putting a battery behind-the-meter but stepped back – the still-early stage concept proved too hard, or too new from an equity final investment decision or revenue perspective.
And while the opportunity to solve network constraints is a big one, connecting a battery behind-the-meter to a wind project is a bit more complicated than doing so for solar.
Firstly, wind turbines make AC (alternating current) electricity while batteries store energy as DC (direct current), which means it adds an extra, efficiency-losing, conversion step.
And wind generation profiles are not as routine as solar, and the extra variability not only makes charging and discharging less predictable but it also complicates modelling on battery degradation.
“If you go back to base principles, wind storage doesn’t fit as neatly as solar storage,” Guthrie tells Renew Economy. “Solar has that natural arbitrage. Peaks during the day, take that excess volume and at night discharge to get the upside.
“Wind generates across all hours of variable output, nighttime is often a bit more consistent, so you don’t have this consistent charge compared with what you do with solar. The revenue case is a bit messier. It’s more dependent on a sophisticated optimization strategy.”
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