One of the key figures to emerge from the CSIRO’s latest GenCost report – apart from its forced obsession with the Coalition’s nuclear fantasies – was the plunging cost of battery storage.
According to the draft 2024/25 GenCost report – released on Monday – the price of battery storage has plunged more than 20 per cent in the last 12 months – echoing recent data that has emerged from China and in other analysis. But there is a chance that the figure is already out of date.
One of the newest gigawatt scale battery projects to be announced – and to gain approval – is the 2,600 MWh Kemmerton battery proposed by Chinese solar giant TrinaSolar in the industrial hub of Kwinana, south of Perth.
That would make the battery one of the biggest in Western Australia (overtaking Neoen’s Collie battery, pictured ab one), and beaten across the country only by Origin’s newly scaled up 700 MW, 2,810 MWh Eraring battery for committed projects – but what makes it particularly interesting is the advertised capital cost.
According to TrinaSolar that cost will total just $400 million. The company clarified to Renew Economy that this $400 million reflects only the first 330MW/1.32GWh stage of the project – but it still appears to set a new low for battery storage project costs in Australia.
It equates to around $300/kWh – substantially lower than the apparent price of the Eraring battery in NSW, and lower than the prices tracked by industry analysts Rystad Energy (see graph below)
In July, Origin announced that the second stage of the Eraring battery – sized at 240 MW and 1030 MWh, would cost $450 million ($436/kWH) but that had the advantage of sharing a site and infrastructure of the previously announced 460 MW, 920 MWh first stage, that was priced at $600 million ($652/kWh).
The Rystad graph shows that battery projects being built and completed this year have displayed a substantial cost reduction, as noted by CSIRO. It also shows the continued reductions in solar PV, and the rise in wind farm costs, as also noted by the CSIRO.
The CSIRO draft GenCost report puts the current price of a four-hour battery at $423/kWh, made up of the battery price of $294/kWh and the $149/kWh balance of plant costs.
It is a key factor, along with the falling cost of solar, in identifying integrated renewables as easily the lowest cost option for Australia as it seeks to replace its ageing coal generators.
According to battery storage providers and developers that Renew Economy spoke to this week, that sounds about right.
And they will be watching with interest if Trina’s project is able to deliver at its advertised price, and which technology they use, and if it does include balance of plant costs (some where skeptical).
It could be in house technology, given Trina is branching into large scale batteries in Australia – with projects in South Australia and Victoria – and is developing its own technology.
Chinese manufacturing, and a current glut of battery cells, is one of the main reasons for the stunning price falls over the last few years.
By the end of the decade the CSIRO expects capex costs for a four-hour battery to fall to around $367/kWh and will break below $300/kWh in 2037. Predictions of renewable and inverter based technologies have always been proven wrong, however.
Technology development and manufacturing efficiencies have consistently delivered bigger than expected price reductions – in sharp contrast to the nuclear industry, where prices have only ever risen.
Meanwhile, a new report from another industry analyst, Wood Mackenzie shows a massive pipeline of 60 GW of battery projects under development in Australia, representing more than $A80 billion of potential investment.
It says the increase in wholesale market price volatility is boosting the investment case, particularly for four-hour battery projects, which it says have higher profitability compared to the typical 1.6 hour duration of projects operating today.
“Projected internal rates of return (IRRs) for 4-hour battery systems range from 13% to 15%, highlighting their viability in a volatile energy market,” the Wood Mackenzie report says.
“Our 30-minute price forecasts show daily price spreads consistently over $A100 per megawatt-hour, with an increasing number of spikes up to $A400 or more. By 2030 over 80% of battery project revenues will come from energy arbitrage, as FCAS markets saturate” said Wood Mackenzie research associate Max Whiteman.
He predicted that battery storage costs would fall a further 20 per cent by 2030, and the planned coal retirements would create more opportunities for the technology.
