Investment in new energy storage capacity will be critical for EnergyAustralia, its Hong Kong parent company has said, as it seeks to take advantage of increasing price volatility in Australia’s wholesale electricity markets and to replace the ageing Yallourn coal power plant in Victoria before its retirement in three years time.
In its 2024 full-year results announcement on Monday, CLP said its Australian gentailer business is targeting a pipeline of 1.6 gigawatts of storage out to 2030, including big batteries and pumped hydro projects – many of which the company plans to develop and fund itself.
In contrast, EnergyAustralia’s approach to renewables has been to contract – rather than build – up to 3 GW of new solar and wind capacity through power purchase agreements, with PPAs for 230MW of new capacity finalised in 2024, CLP said.
In a webcast, CLP CEO T.K. Chiang said a “highlight of the year” was EnergyAustralia’s success in the federal government’s Capacity Investment Scheme for the 350MW/1,400MWh Wooreen battery energy storage system (BESS) in Victoria and the 50MW/200MWh Hallett BESS in South Australia.
In November, EnergyAustralia also won New South Wales development approval for a 500MW big battery it is building next to its Mount Piper Power coal plant in that state, while the nearby proposed 385 megawatt (MW), eight-hour Lake Lyell Pumped Hydro Energy Storage Project was declared a Critical State Significant development.
“Our three gigawatt renewable capacity that we want to develop is through PPA and not developing it, while the battery is following different strategy,” CLP CFO Alex Keisser said during an investor Q&A session on Monday.
“Where we have transmission, land, water and people, and where we are very competitive, we [will] develop here a cap-ex plan where we tender on the project quite successfully, as we could see on Wooreen and on Hallet, because we can get the right return.
“On other locations where we don’t consider that we have a competitive advantage, we are happy to contract and make use of the flexible capacity, but without investing,” Keisser said.
In July, EnergyAustralia announced an innovative offtake agreement for 200MW/800MWh underpinned by Akaysha Energy’s Orana BESS in New South Wales that allows the gentailer to use the storage attributes of the battery – due to go into service in 2026 – as a virtual commercial product.
EnergyAustralia also has a contract with the Kidston pumped hydro storage project in Queensland – initially announced in 2021 – including full dispatch rights to the facility for up to 30 years and a later option to fully acquire the asset.
“These strategic initiatives will strengthen EnergyAustralia’s ability to manage volatility in the Australian energy market and support its goal of expanding its portfolio to include up to 3 gigawatt (GW) of renewable energy by 2030,” CLP said in its investor presentation.
“EnergyAustalia’s investment in new storage and renewable energy projects will be critical for Australia, especially Victoria, as the 1,480MW Yallourn Power Station winds down before its retirement in mid-2028.”
Source: CLP annual results investor presentation full-year 2024
Overall, EnergyAustralia’s reported a $35 jump in net profit result at $A115 million for 2024, driven by the increased availability and performance of its coal and gas generation assets.
“Our team performed particularly well this year in asset operations, strategically planning our maintenance program to effectively manage and perform throughout a volatile 2024 wholesale market,” EnergyAustralia managing director Mark Collette said in a separate statement.
“This ensured our generation was available during all the critical moments of the year, a great reliability outcome for all customers.
“We saw stable generation output at our Yallourn Power Station in Victoria, with the power station completing major planned outages as part of the ongoing maintenance program to enable its reliability and efficiency in the run-up to its retirement in 2028.”
On the retail side of the business, EnergyAustralia says a sluggish economy and cost of living pressures impacted both consumers and the retail energy market where “competition was intense,” leading to higher discounts and lower margins.
