Half the price, a lot more dense, but still very smart: Why baseload giant has doubled down on big batteries

AGL Energy remains Australia’s biggest coal generator and will likely hold that title for another few years, at least until its Bayswater coal generator in NSW’s Hunter Valley shuts down some time in the early 2030s.

It means that AGL will remain the biggest supplier of what was once known as “baseload” power, but it is also now in a massive rush to build as much as it can of the polar opposite – fast reacting and flexible battery storage that is becoming the key ingredient in a high renewables grid.

AGL CEO Damien Nicks on Wednesday told investors that the company is building big batteries “as quickly as it can”, having committed last week to its biggest yet, a 500 megawatt (MW), 2,000 megawatt hour (MWh) project at Tomago, and said it is lining up another 900 MW more at various sites across the grid.

Nicks emphasised the attraction was price, scaleability and speed to deploy. Plus, big batteries are incredibly flexible and adaptable, and service multiple market and grid needs.

Later, in an interview with Renew Economy, Nicks explained the attraction, noting the differences between its Tomago project, and the smaller 500 MW and 1,000 MWh Liddell battery that is currently being built. Both are being supplied by the US-based Fluence.

The Tomago site was chosen because it has a great grid connection, but it wasn’t the only thing going for it.

“The battery itself, I think you saw, was pretty much half the price of the Liddell battery, which is fantastic,” Nicks says, in reference to the megawatt hour costs of the project – $400,000 per megawatt hour for Tomago, compared to $750,000 for Liddell.

Not only that, the Tomago battery will use less than one third of the number of battery containers as Liddell, even though it is twice as big. There will be 435 Fluence containers at the 2,000 MWh Tomago battery, compared to 1,548 at the 1,000 MWh Liddell battery.

The Tomago cubes, or containers, will be bigger than those used at Liddell – 40 tonnes versus eight tonnes – but it also reflects higher energy density.

“The technology around how many batteries we have in those containers continues to improve, and therefore the size of the containers get bigger as well,” Nicks says. “So there continues to be technology advancement in that space, which is good to keep driving that price down.”

Fewer battery containers means fewer concrete pads, less cabling, and so less civil construction costs – a crucial aspect given that these costs are soaring across all industries.

Will battery prices continue to fall? Nicks hopes so, but it not sure.

“Whether it continues to drop further, will depend, really, on where lithium prices go, and I think they’re going to bounce around a bit,” Nicks told Renew Economy.

“The other thing I’d say is the productivity work that the treasurer is looking as well is, how do we start to get some of that balance of plant costs down, that will also help us continue to drive that down.”

How many big batteries AGL ends up building may depend on the success of consumer energy resources, and the continued uptake of rooftop solar, electric vehicles, home batteries and the like, and the ability of the likes of AGL to convince customers they should “orchestrate” these assets to provide firm and flexible power to the grid.

“When we talk about consumer energy resources, there are five key, multi orchestration assets that we’re really bringing together with technology, whether it’s hot water, batteries, EVs, peak demand.

“If we can bring them together … we don’t need to all collectively build as many large scale assets as well.” Nicks said the company’s own modelling suggested its target of building 12 gigawatts of new renewable and storage assets by 2035 could be reduced by one or two gigawatts if CER orchestration proved a success.