Solar duck curve: Neoen signs “virtual battery” deal with AGL for Canberra battery

French renewable and battery storage developer Neoen has signed what it describes as a “virtual battery” deal with AGL that will allow the big utility access to 70MW/140MWh of the new Capital battery in Canberra.

The seven-year agreement is described as a first for Australia, and a new take on how battery storage developers can offer their services to big energy companies and other off-takers, as AGL will be able to “virtually” charge and discharge the battery “as and when it chooses.”

Usually, customers are granted full “market control” rights to the entire battery storage installation, such as EnergyAustralia with Gannawarra, Ballarat, and lately Riverina and Darlington Point, and AGL with Wandoan and Dalrymple North.

The 100MW/200MWh Capital battery is being built by Neoen as part of a deal struck with the ACT government that will also see it build the first 412MW wind stage of the massive Goyder South hybrid project in South Australia.

Neoen doubled the size of the proposed Capital battery because it identified new market opportunities. AGL has now emerged as the principal customer, and will use the battery to hedge its customer load when it is complete next year.

It already operates the 150MW/193MWh Hornsdale big battery in South Australia, as well as the Victoria Big Battery, now the largest in the country at 300MW/450MWh, and the 20MW/34MWh Bulgana battery, also in Victoria.

Unlike the Tesla technology used at other battery sites, Neoen has chosen Doosan for the Capital battery.

Neoen managing director Louis de Sambucy told RenewEconomy that it the battery deal was essentially a new financial instrument that provide an innovative alternative to cap contracts (offered by the likes of Snowy Hydro to protect against high prices), and negative pricing events

“Caps are useless for negative prices,” he said. “But batteries are flexible and can handle both. That’s the beauty of it.”

In a statement, Neoen went into further details:

“This offtake will enable AGL to hedge its customer load by virtually charging or discharging the battery at any time over 5 minutes trading intervals,” Neoen said in a statement.

“It is ideally suited to managing the increasing challenges of the “duck curve” and evening peaks faced by large electricity users and retailers.

“The increasing penetration of rooftop solar capacity results in oversupply of electricity in the middle of the day. At the same time, meeting peak demand in the evening can be more challenging, especially in summer.

“This innovative and flexible offtake is extremely useful for a large electricity user or retailer by conceptually “charging” the battery during low demand periods and “discharging” it during high demand periods.

“This offtake can be scaled to precisely accommodate the size that the customer needs. In addition, Neoen has designed a bespoke and dedicated interface that allows the customer to submit live orders or use sophisticated predesigned dispatch strategies.”

AGL is busily reshaping its generation portfolio, exiting coal – too slowly for most people’s liking – and committing to a range of new battery storage projects.

It is building a big battery at Torrens Island, and has plans also at its Liddell and Loy Yang A coal fired generators, and has contracts with other suppliers, including with Maoneng in NSW.

“As we continue with our plans for an orderly and responsible energy transition, we’re conscious of the need for flexible capacity that meets the energy needs of our customers to ensure they continue to have access to affordable and reliable energy,” Markus Brokhof, AGL Chief Operating Officer said  in a statement.

“Neoen’s solution suits our needs perfectly. Our aim is to strike a balance between meeting Australia’s current and future energy needs while transitioning in a responsible way.

“AGL’s energy transition will be powered by innovations like this, bringing flexible capacity into the market and supporting increased investments in renewable energy, allowing us to prioritise customer supply while we make progress towards net zero.”

de Sambucy said the virtual battery concept will become a core Neoen product and a key element in the success of our expanding range of client offerings.

“With the Capital Battery currently under construction, we will soon be operating grid-scale batteries in three of the five states of the National Electricity Market and have multiple storage projects in development across Australia.”