New big battery projects in Australia double in size as storage prices plunge

As new wind and solar projects continue to stall at the gate, battery storage is having another record breaking year, with construction numbers for the 2024 calendar showing the market is on track to beat last year’s number, helped along by a halving in battery storage costs.

According to analysts at Rystad Advisory, close to three gigawatts (GW) and eight gigawatt hours (GWh) of new battery storage capacity has started construction in 2024, and construction starts are expected to exceed 5 GW by the end of the year.

Among the projects are the second stage of the Eraring battery, that will add 240 MW and more than four hours of storage (1030 MWh) to the first stage, which was a two hour battery sized at 460 MW and 920 MWh.

A whole series of four hour batteries have started construction in Western Australia too, where projects are being specifically contracted to time shift solar from the middle to the day to the evening peaks.

“Four hours in now the new two hours,” Rystad’s David Dixon notes in a LinkedIn post, referring to the fact that the new batteries are focused on longer storage and arbitrage, while earlier batteries were focused on system services and grid support, which the focus is on capacity and less on storage duration.

Dixon also notes that battery storage costs are falling significantly, highlighted by the cost reveal from Origin Energy when it announced the second stage of the Eraring battery last week.

“The project cost of around $A437 a kilowatt hour (kWh) is the cheapest we’ve seen in the Australia market,” Dixon notes, although he says that is partly due to the fact that the second stage will piggy back on the civil construction and other works of the first stage.

“It does reflect the fall in prices for utility scale batteries over the past 12 months, with greenfield project capex expected to
near or below $A600/kWh, depending on size and hours of storage.”

Dixon says prices for battery storage projects have fallen dramatically from around $A900-$A1,000/kWh in the middle of 2024 to $A650 to $A750/kWh at the start of 2024 and $A500 to $A625/kWh now.

In a separate report, BloombergNEF also notes that storage is growing rapidly, with 7.8 GW of new grid scale batteries under construction (it did not provide a GWh figure). This is nearly as much as the capacity of new wind and solar under construction, which currently stands at 8.9 GW of new wind and solar being built across the country.