St Baker wants “green loan” for big batteries to cut wear and tear at coal plant

One day after the federal Coalition announced a new $1 billion fund to assist with grid integration, the Vales Point coal plant half owned by Liberal Party donor Trevor St Baker has reportedly put its hands up for a pair of batteries that it says will reduce wear and tear on the ageing coal plant.

Delta Electricity, which operates the ageing Vales Point coal plant near Lake Macquarie, wants to install two 30MW batteries – and have the new fund managed by the Clean Energy Finance Corporation provide a loan to help it buy it – so it can reduce the strains on the plant’s governor controls.

These control are key to helping the plant respond to variations in the grid, particularly in frequency control, and has been a major source of revenue for the generators, even though many new batteries are able to provide the same services.

The new $1 billion grid integration fund unveiled on Wednesday will look at storage and network options to help with the integration of renewables on the grid, and may also be asked to fund the 11 gas and pumped hydro projects shortlisted by the government under its Underwriting New Generation Investment program.

The new fund will not be asked to fund any coal investments, such as the Vales Point proposal for a turbine upgrade to its plant that will increase its efficiency that also made the shortlist.

But Delta was quick to respond to the new fund announcement with its new proposal.

“It’s not a coal-fired project,” Delta CEO Greg Everett told The Daily Telegraph. “It’s a battery project.”

Everett told the newspaper that the batteries would deliver the same benefits they would if they were placed anywhere else in the power grid, while also mitigating the stress on the coal plant “from more renewables”

“The economics are not such that the battery works on a stand-alone basis,” Everett said. “You would need some financial support. It could be a quite innovative and leverageable initiative.”

Most battery storate plants have required support from the CEFC, or the Australian Renewable Energy Agency, or state governments, to make their economics work, although Alinta’s big battery at its Newman gas generator in the Pilbara, and AGL’s contract with four new big batteries in NSW will not require subsidies.

Batteries have been installed – and proposed – across the main grid for varying purposes such as grid security, frequency control, mini-grid capabilities, arbitrage and balancing the output of wind and solar farms.

This is the first proposal from a coal plant to reduce the stress of its governor controls, which have been an increasing cause of concern to regulators and market operators in Australia because they are becoming increasingly erratic and slow, particularly in comparison to the speed, accuracy and versatility  of new batteries such as the Hornsdale Power Reserve (also known as the Tesla big battery) in South Australia.

According to the newspaper,  Delta said that a coal plant in Spain completed a similar change, installing 20MW of battery storage for about $30 million to reduce the strain on its governor controls.

However, while such an investment – which would have been a world first – was flagged in 2017, it is unclear that it every went ahead.

And last month, the owner of the coal plant cited, Endesa, announced plans to close all its remaining coal generation fleet in Spain and Portugal as the share of coal plunged to just 6 per cent and the economics were no longer viable.

Endesa intends to invest in solar instead, including a 1GW solar plant at one of its coal generator sites.

Delta earlier this month signed a deal for a 62MW solar farm on the old ash tailings at Vales Point, which St Baker and his business partners bought from the NSW government for just $1 million in 2015, and which two years later was revalued to more than $700 million after posting a $113 million profit.

RenewEconomy sought further details from Delta but a spokesperson was unavailable for comment.