The New South Wales state government says it will target investment in battery storage, including community assets, as well as long duration storage solutions such as pumped hydro with its newly created green bank, known as the Energy Security Corporation.
Energy minister Penny Sharpe on Friday unveiled the first investment mandate for the ESC, which has been seeded with $1` billion in funds, and announced its first chief, with Paul Peters – a founder and former head of advisory firm Novo – to act as interim CEO.
In a statement, Sharpe said the key priorities for investment include co-investment in short to long-duration storage projects that capture excess renewable energy, to maximise use of electricity generated from solar and wind.
“After a decade of privatisation, the Energy Security Corporation gives the people of NSW the chance to invest in their energy system,” Sharpe said in a statement.
“I congratulate Mr Peters on his appointment, and I am looking forward to the Energy Security Corporation supporting projects throughout NSW.”
Both NSW and Victoria – two states that have largely privatised their energy assets – have created new state owned bodies as they race to fill in investment gaps in their transition from coal to renewable dominated grids.
Victoria has a target of 95 per cent renewables by 2035, so it needs the capacity built to replace its last three brown coal generators at Loy Yang A and B and Yallourn. NSW has a fleet of four remaining black coal generators, but all are expected to close within a decade, with two – Eraring and Vales Point – likely closing within the next five years.
Victoria’s State Electricity Commission recently announced the purchase of a delayed solar and battery project near Horsham and on Friday announced it had chosen a supplier for the battery component of the project.
In NSW, it has been expected that long duration storage would be a focus of the newly created ESC in NSW given the difficulties of getting projects such as pumped hydro off the ground through the recent tender processes.
Pumped hydro projects been unable to compete with eight-hour battery projects and even new technologies such as advanced compressed air in the recent tenders, possibly because of growing civil construction costs, and the lengthy timelines for such projects.
A number of pumped projects have emerged as potential candidates, including those put forward by EnergyAustralia, AGL, Atco, Alinta, and a company linked to former prime minister Malcolm Turnbull.
The state government statement identified four technologies that would be the focus of co-investment: large scale batteries, community batteries, pumped hydro, and virtual power plants. It did not give a breakdown of how much of its funds would be allocated to each technology.
NSW sees the ESC as a state version of the federal government’s Clean Energy Finance Corp, and the board – once appointed – will be looking for projects in the market, and expect to be approached by the private sector.
Renew Economy understands that the board is close to being finalised.
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