A new fund led by the former heads of key Australian energy agencies, and backed by one of the world’s biggest asset managers, has made its first investment in Australia, a landmark giant battery project in Victoria that will play a first-of-its-kind role in helping to stabilise the grid.
Sostoneo, backed by Italian-based insurance giant Generali, and led in Australia by former Australian Renewable Energy Agency boss Ivor Frishknecht, has bought the 185 MW/370 MWh Koorangie Energy Storage System near Kerang in Victoria from developers Edify Energy.
The $400 million Koorangie battery is significant for a number of reasons. It is located in a region rich with renewables, but with a weak grid – so weak that it has been dubbed the “rhombus of regret” because of the severe limitations on existing and planned wind and solar projects.
Koorangie will help ease those problems through a landmark, first of its kind 20-year contract with the Australian Energy Market Operator (announced last year) for 125 MW to provide system strength services, using the “virtual machine mode” of Tesla Megapack technology.
These services have traditionally been supplied by spinning machines such as coal, gas and hydro plants, and more recently also by synchronous condensers – spinning machines that don’t actually burn fuel.
But battery technology has now advanced to the point that it can provide this service too, through what are known as “grid forming inverters.” And the battery is still able to provide multiple other functions, such as frequency control and energy arbitrage.
Edify hailed the ability of the battery to peform multiple tasks, effectively rubbing its belly and patting its head at the same time.
“We love the fantasticness of KESS; it’s ability to provide system strength services to AEMO while not compromising on its ability to perform in the energy market for the benefit of Victorian electricity consumers and providing a path to a 100% renewable electricity future,” Edify CEO John Cole said.
Edify has been one of the most prominent battery storage developers in the country, building the nearby 25 MW/50 MWh Gannawarra battery and the newly completed 150 MW/300 MWh Riverina battery complex in south-west NSW.
The Koorangie battery, which is due to begin operations in early 2025, also has a 15-year off-take agreement with Shell Energy for the full 185 MW/370 MWh, and long term debt has been provided by CBA, DNB and BNP Paribas.
It will be able to use the full capacity because the part reserved to AEMO for system strength is only needed on a “transient” basis.
The facility is located in the heart of the proposes Murray River Renewable Energy Zone, and will facilitate a new terminal station between Wemen and Kerang.
The battery is the first investment in Australia for Sosteneo since its launch last month. The company is led by Frischknecht, and includes Nick Renshaw, formerly at Natixis, and former AEMO boss Audrey Zibelman sits on its board.
“In an Australian first, the KESS battery project is providing inverter-based grid-forming services under a 20-year contract with AEMO,” said Frischknecht, the managing partner and chief investment officer for Sosteneo in the Asia Pacific.
“With revenues secured through long-term agreements with Shell Energy and AEMO, the KESS project is well-aligned with our objective of delivering stable commercial returns to clients whilst making an active contribution to the decarbonisation of the energy system.”
The project will benefit from part of the $119 million grant from the Victoria government, which is being given to AEMO to help manage system strength in Victoria.
Shell, which also has a contract for a 60 MW/120 MWh component of the Riverina battery, said the Koorangie facility will help establish a more resilient power system in Victoria and optimise supply and costs for its customers in a transitioning energy market.
The Koorangie project is part of a $480 million investment the Victorian Government is making through its Renewable Energy Zone Fund in 12 projects to address capacity constraints and strengthen and modernise the state’s grid.
The project will also contribute to Victoria’s drive to meet legislated energy storge targets of at least 2.6 GW of storage capacity by 2030 and 6.3 GW by 2035, when it aims to reach 95 per cent renewable share.
The Koorangie battery is to be built on the traditional lands of the Barapa Barapa, Wamba Wamba and Yorta Yorta people, within the Gannawarra Shire.
See also:Â Big Battery Storage Map of Australia
