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Eight hour big battery trumps pumped hydro in NSW long duration storage tender

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A proposed big battery with eight hours storage has emerged as a surprise winner in the NSW state government’s first long duration storage tender, beating out pumped hydro projects that had been expected by some to emerge as a dominant force.

The 50MW, eight hour battery battery will be built at Limondale by German energy giant RWE, next to an existing solar farm also owned by the company.

The result is stunning for two reasons. Firstly, it will be the first eight hour battery to be built in Australia, and one of the first in the world. All big batteries in Australia till now have had one or two hours storage, mostly because they were focused on grid and frequency services, which requires only a fast and short response.

The Limondale BESS, located near Balranald in the south-west renewable energy zone, will be a lithium-ion battery project with a continuous discharge capacity of at least 8 hours, and will be designed to time shift the output of wind and solar and fill in gaps in supply.

The second stunning aspect of the battery win is what it might mean for the future of pumped hydro storage projects in Australia – a technology that was considered a shoe-in by some in the energy sector for the country’s long duration storage needs.

There are at least half a dozen major pumped hydro projects proposed in NSW, including by energy majors AGL, EnergyAustralia and Alinta, but – assuming they pitched for this tender – none was able to match the RWE battery proposal on the key criteria of value for money for consumers.

It is thought that pumped hydro is being challenged by big jumps in capital costs, and the risk of project delays. They may, however, get support from the new Labor government’s newly formed Energy Security Corporation, although the details of that have not yet been released.

Genex is currently building the country’s first privately owned pumped hydro facility at the old Kidston gold mine in Queensland, but its funding needs are being almost entirely met by government agencies, while the huge Snowy 2.0 project is running way over budget, and way over time.

The auction for long duration storage was part of the country’s biggest ever auction for large scale renewables and storage, and the first conducted by NSW as it plots it transition from coal to renewables.

It also coincided with the release of the generation auction results, which saw prices below $35/MWh for solar and below $50/MWh for wind. See our story: NSW gets stunning low price for wind and solar in biggest renewables auction

The announcement comes just three days after AGL closed the last unit at the country’s oldest coal generator, Liddell, for the last time, and ahead of the anticipated closure of the country’s biggest coal generator, Eraring, in late 2025.

NSW had been seeking up to 600MW of long duration storage, but it is understood that AEMO Services – which is managing the tender – has until around 2025 to fill that capacity. So there could be another opportunity for pumped hydro, or more eight hour batteries.

Another tender for renewable generation and storage is expected to be kicked off later in May. There is also an existing tender for up to 380MW or short duration firmed capacity – at least two hours – that is also designed to help replace the capacity lost with the closure of Eraring.

That auction is expected to be dominated by either big battery projects, or demand management, which is being invited to compete in a tender of this scale for the first time.

RenewEconomy reached out to RWE for further details of the Limondale battery storage facility, and was informed a statement would be issued later on Monday.

Giles Parkinson

Giles Parkinson is founder and editor of Renew Economy, and is also the founder of One Step Off The Grid and founder/editor of the EV-focused The Driven. He is the co-host of the weekly Energy Insiders Podcast. Giles has been a journalist for more than 40 years and is a former business and deputy editor of the Australian Financial Review. You can find him on LinkedIn and on Twitter.

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