Design released for first federal big battery storage tender out west

The design for a new tender under the federal government’s Capacity Investment Scheme has been quietly rolled out, this time for at least 2,000 megawatt hours (MWh) of battery storage in Western Australia.

The tender – registrations open this month – is going to seek 500 megawatts of battery capacity with an average of four hours storage (hence 2,000 MWh), but its design is complicated by the presence of capacity credits in the W.A. energy market.

W.A. is an interesting challenge for market operators and regulators as it is an islanded grid with no connections to other states, and little prospect of any, unless someone really wants to string some poles and wires across the Nullarbor or maybe to Indonesia via a sub-sea cable. Some actually have considered the latter idea, but for green energy exports.

This time last year the state had no large scale batteries on its main grid, known as the South West Interconnected System, but now has a booming market thanks to large contracts written by the market operator to time shift the output of rooftop solar to the evening peak.

Those batteries include two giant batteries at Collie, the town that hosts the state’s remaining coal fired generators that will close by the end of the decade.

These include Neoen’s 560 MW, 2240 MWh battery, which will be the largest in the country when complete (pictured above), and a 500 MW, 2,000 MWh battery being built by state owned Synergy just up the road.

Another three big batteries are also under construction, including a major expansion of the first battery in the state at Kwinana.

Most of these battery projects have contracts under a scheme called NCESS, which means they are not eligible for the CIS tender, and will not result in a repeat of recent NSW tenders which have seen projects already under construction awarded contracts.

The federal government’s CIS aims to contract 23 gigawatts (GW) of new wind and solar capacity, and 9 GW of battery storage (with an average duration of four hours). This will take it most of the way to its target of 82 per cent renewables by 2030.

The first 6 GW auction for new wind and solar capacity attracted interest from projects totalling more than 40 GW, while a storate tender targeting 600 MW (2,400 MWh) of battery storate in Victoria and South Australia was also heavily over-subscribed.

The CIS offers a contract that provides a guaranteed floor, which eliminates price risk for new contracts and helps secure finance, and also a ceiling, which obliges project owners to share excess profits to the government.

The W.A. component is complicated by the existence of the capacity credits in the W.A. market. These credits will form part of the ceiling agreed in the CIS contract. The minimum project size is 30 MW and two hours storage, and all projects must be operating by 2026, or 2027.

Virtual power plants, demand response, and other virtual aggregation and flexible load technologies will not be eligible for the first round, but could be eligible in subsequent rounds. Hybrid projects, batteries paired with wind or solar plants and sharing the same connection point, are eligible.

The merit criteria includes price, location, fuel source, degradation and agreements with First Nations people and local communities.

Registration for the W.A. storage tender will open this month and close in August, with bids due in October and November and the winners will be announced next February. It is expected that auctions will be held once a year until 2027.