Solar farms wrestle with storage costs in Queensland as tender closes | RenewEconomy

Solar farms wrestle with storage costs in Queensland as tender closes

Solar projects tendering for Queensland government’s 400MW of large-scale renewables contracts will have to add storage to their projects.


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Solar farm developers in Queensland have had to come face to face with the cost of battery storage as they compete for a slice of the major 400MW of large-scale renewable contracts put up for tender by the state government.

The Queensland government is hoping to commission at least 100MW/MWh of storage as part of the tender, but is requiring all solar farms – but not potential wind projects – to add storage to their projects.

The first round of registrations attracted enquiries from more than 200 different proponents, and will announce in the next couple of days how many responded to the EOI (expressions of interest) process that closed on Tuesday. A formal tender will follow in November.

Solar project developers were required to provide equivalent storage for around 20 per cent of their average daily output.

So, if a 100MW wind farm with a capacity factor of 25 per cent produced an average 400MWh a day, it would have to come up with 120MWh of storage – about the same size as the Tesla big battery. A 30MW solar farm – the minimum allowed under the EOI – would need around 39MWh of battery storage.

Any separate battery storage installations must have a dispatchable rating of at least 5MW/5MWh.

Solar developers have been scratching their heads about this requirement for a bunch of reasons.

One is that Queensland is probably the state with the least amount of storage needs – given its surplus of coal and gas fired capacity.

But maybe the government in planning for the future, although they could wait two years and see storage costs fall dramatically. It would likely make sense for South Australia, but that is going to be a call for AEMO and the new Energy Security Board.

Secondly, they question why wind farms are not required to do add storage to their plants. The theory is that the tender has been structured to encourage more wind, as there are already more than 20 large-scale solar projects being developed or about to reach financial close.

Thirdly, this could be a heaven-sent opportunity for the Kidston solar and pumped hydro storage plant. The project already has an ARENA grant and a state-based PPA for the first stage of the solar project (50MW and the state government seems keen on helping out with transmission lines for the second stage).

Still, given the fact that losses during the process of pumping water up to the top dam, before letting it flow back into the pit will likely be around 20 per cent, then Kidston could be facing the same storage costs as the mob looking at batteries. It is going to be fascinating to find out.

The government is also keeping its options open on how it will structure any contract. It has indicated that projects will only require a contract for part of their facility, meaning the process could drive significantly more than 400MW of renewables.

For renewable energy projects the contract could include a fixed price for all output out to 2030, or a “sculpted” price that would presumably allow for higher payments in peak periods (courtesy of the storage, if need be).

A third option is a “cap and floor” structure which would see governments make up any difference if the market price fell below a floor, and the developer returning excess revenue if the market price rose above an agreed cap. The ACT government has a similar arrangement, but only for the deviations from a fixed price rather than a band.

That, presumably, has given the project developers much to think about, particularly as they grapple with the cost of battery storage, and its anticipated falls, and how the various “value streams” of battery storage can be extracted,

Their EOIs are not final, but the government and its advisors will study them closely before defining the terms of its final tender – hopefully getting the whole process locked in and contracted before the state heads for the polls.

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  1. Chris Jones 3 years ago

    I think the battery storage requirement is a sound call, although exactly how much storage is up for discussion. But the requirement for storage will do two things – 1. It will provide the output smoothing the grid needs for reliable operation, and 2. It will drive the cost of battery storage down through increases in global production. For each MW of installed capacity, 0.5 MWh of storage would be sufficient. This also favours generators with higher capacity factors – another driver of efficiency and viability.

  2. DJR96 3 years ago

    I don’t think this process is anything more than an information gathering process. See what the industry can come up with and the costs.
    I think the Qld government will call the election next week. That immediately puts it into care-taker mode and there is no obligation to follow up with any of this process.
    If the ALP retain government, then they might run with it in two years time when battery costs have reduced. If the LNP get in…..don’t hold your breath.

    • Ren Stimpy 3 years ago

      If the QLD LNP get in….prepare to go back to the Stone Age.

      • Daniel Boon 3 years ago

        what about Labor’s love affair with Adani (just sayin)

        • Ren Stimpy 3 years ago

          Yeah fair point. Though I reckon if it was the state government had to cough up the $1 billion to build the rail line to nowhere instead of the NAIF, all bets would be off.

  3. Mike Westerman 3 years ago

    It is hard to fathom, while Wivenhoe remains underutilised. Powerlink owns the land for Mt Byron PHES which could be developed to 1000MW and is on Brisbane’s doorstep so I would have thought this would be a better idea, given Tully + Kidston provide hydro in the north, and Burdekin Falls plus a PHES there cover the central coast.

    Note also that the round cycle efficiency only impacts on the pumping cost – the system is rated for the generator power and pond storage. So if pumping requires 20% longer but the price is <$40 from excess solar, it's scarcely a killer and certainly doesn't take PHES anywhere near battery costs.

    • Andrew Scott 3 years ago

      It seems you may have a well informed and considered view for utilising PHES facilities throughout Queensland.

      Do you have a map showing facility locations, capacities, power ratings and grid connection routes that you have contemplated for the region?

      I hope your line of thought can be spread, discussed and developed with a sense urgency, as much greater utilisation of PHES at the earliest opportunity is now a ‘must have’.

      • Mike Westerman 3 years ago

        Andrew – it depends on what level you wish to approach it: Prof Andrew Blakers’ GIS study has identified many “possibilities” – see for the Qld sites. Few of these have had any investigation, and those that have were still focused on onstream sites eg Tully Millstream, Koomboolooba, Mt Byron. If I was looking to ensure Qld had all the dispatchable power it needs I would make Wivenhoe a separate entity, then encourage several more but prohibit concentration of ownership ie not more than 1GW with one owner, prohibit ownership by any other participant who could use it to restrict supply ie limit to ownership by non-dispatchable generators or retailers. I can’t see how these projects are going to get up on a purely merchant, privately funded basis, as there is simply too much uncertainty in estimating outcomes, so government supported funding will be necessary, as we have seen with Kidston.

    • George Michaelson 3 years ago

      The owner has assets which they believe they have a right to work differently, to secure maximum income. I’ve said in other articles here, there is inadequate “chinese walls” between the PHES component, and the gas/coal component behind the operator. If the PHES element was operated to its own goals, I believe it would operate far more often, and intervene in pricing peaks far more often.

      Its CS Energy: its the government. So, this is the most tractable entity there is, if you want to make something of it.

  4. neroden 3 years ago

    This outrageously high storage requirement is clearly intended as a solar farm killer. That said, it isn’t going to work: battery prices are coming down fast enough that the projects will get built anyway.

    • Miles Harding 3 years ago

      There is a long history of the monopoly operator attempting to nobble the competition. First it was distorting the unit cost of energy and network fees, now this.

      The effect may be somewhat different to that intended by the nobblers and actually deliver a benefit to the solar farm. It will be possible to buffer the PV output, avoiding selling into a saturated daytime market, instead selling into the more profitable peak periods.

      From a coal troll’s perspective, they will be saved from the duck curve forcing them out of business, only to be replaced by the prospect of their peak income being lost.

  5. solarguy 3 years ago

    I think you have made an error. 20% of 400MWh is only 80MWh in your wind farm output example, not 120MWh. And if were talking about a 30MW Solar farm, the average daily output would be around 150MWh, so 20% of that is only 30MWh.

    So, I don’t know how you came up with your figures?

  6. Daniel Boon 3 years ago

    what the Qld government wants is a farm built, but no commitment to buy the power

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