A decade after boldly declaring that it had “bet the whole company” on the controversial Snowy 2.0 pumped hydro scheme, the federal government owned Snowy Hydro has signed its second major battery storage contract in the last three months.
Snowy Hydro on Friday rewarded TagEnergy’s bold approach to renewable and storage development, announcing that it had signed up for a large chunk of the proposed capacity of the new 150 MW, 600 MWh Golden Plains battery that it had committed to a few weeks earlier.
The deal makes sense, given that Snowy Hydro is also a major customer of the neighbouring Golden Plains wind farm, that is already partially operating and will be the biggest in the country – at least for a while – when complete.
The Portugal-based TagEnergy, unlike most other developers, took a calculated punt and committed to, and began construction of, the Golden Plains project without having locked in any government underwriting or private contracts, reasoning that customers will come once the facility is built, or at least committed.
That has proved to be an astute assessment, and Australia’s race to its target of 82 per cent renewables might have been a lot easier had others developers and investors been equally as bold.
Snowy Hydro has agreed to sign up for a 15-year, 105 MW, four-hour virtual toll agreement with the Golden Plains battery, to add to the off take deal for 40 per cent of the first 756 MW stage of the wind farm.
The new battery deal following an agreement announced in September for a then groundbreaking virtual toll deal with Akaysha Energy’s 311 MW, 1244 MWh Elaine battery, also in Victoria.
The Golden Plains battery will be completed by 2027, and the Elaine battery by the same year, meaning that both will be completed and functioning well before the Snowy 2.0 pumped hydro project, which was supposed to be up and running by end of 2025.
Snowy 2.0 will now not be operating before the end of the decade, at best, and faces further blowouts that are so complex, and potentially large, that Snowy Hydro says it will take nine months just to figure them out.
The signing of the two battery storage contracts will presumably help Snowy Hydro manage and defend its dominance of the capped contract market, which provides insurance for customers against big price spikes in evening and other demand peaks.
Snowy Hydro was once so dismissive of battery storage that its former CEO Paul Broad once put an absurd price tag on the technology and was quoted as saying in the AFR in 2019: “You can’t have renewables without reliable storage and the best form of storage is water.”
South Australia is the living proof that you can have a lot of renewables, without water storage. It currently has a share of 75 per cent wind and solar – the highest in the world – and aims for 100 per cent net renewables by the end of 2027.
South Australia has no pumped hydro – despite multiple attempts to use generous government finance to get them going – but it does now have eight big batteries and another dozen or more under construction or in commissioning, and even more in the pipeline. AEMO rates it as the country’s most secure grid.
Snowy Hydro current CEO, Dennis Barnes, says the Golden Plains contract underscored the importance of on-demand and flexible capacity to ensure the National Electricity Market (NEM) remains reliable as base load power options like coal retire.
“This new virtual storage agreement complements our portfolio of on-demand generation and gives us the fast-start power we need to quickly soak up excess wind and solar, and stabilise the grid at times of volatility,” Barnes said in a statement.
TagEnergy managing partner Andrew Riggs said the virtual tolling agreement reinforces the vital role grid-scale batteries will play as a long-term energy solution underpinning the transition.
“The addition of large-scale energy storage at Golden Plains is another important step forward in achieving a more secure and flexible supply of clean electricity for the people of Victoria,” Riggs said.
“This virtual toll arrangement will enable Snowy to leverage the flexibility of our storage assets without needing to build, own or operate their own.
“It will provide TagEnergy with a predictable revenue stream to balance market exposure from trading remaining capacity as merchant. And it will support integration of more renewable energy into the grid to balance the intermittency of wind-generated power for a more resilient, reliable and stable power supply.”
For more information, please see Renew Economy’s Big Battery Storage Map of Australia
