New investment commitments in Australian big battery projects surged to record highs in the first three months of 2021, according to the Clean Energy Council, but it could be masking a potentially devastating collapse in new large-scale wind and solar investment.
Analysis compiled by the CEC shows that financial commitments for new big battery projects increased four-fold between Q4 2020 and Q1 2021, from 150MW to 600MW in the first three months of this year.
“Big batteries have come of age, with investors recognising the increasing cost competitiveness as well as the role they play in providing energy security and supporting renewable energy across Australia,” CEC chief executive Kane Thornton said in a statement.
Big batteries reaching financial close in the first quarter of 2021 include the 300MW/450MWh Victorian Big Battery, the 250MW/250MWh Torrens Island Battery and the first stage of a big battery that will be co-located at the New England Solar Farm, providing 50MW/50MWh of storage.
The Clean Energy Council recently published analysis of the costs of battery technologies as a provider of vital peaking services to the national grid, finding that they are already becoming financially competitive with conventional gas peakers to provide the grid support services.
Battery technologies also have the added advantage of delivering highly precise frequency control services, outperforming gas generators in FCAS markets.
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However, the strong investment in new battery storage projects is masking what has been a challenging period for other clean energy projects.
Financial commitments for new large-scale wind and solar projects have fallen dramatically over the last 12 months – to their lowest level in the last five years – as policy uncertainty and ongoing difficulties relating to grid connections weigh on investor confidence.
The CEC says it is concerned by an apparent slow down in investment commitments for new wind and solar projects, which are down by 45 per cent in the first quarter of 2021.
It says just one large-scale renewable energy project was committed in Q1 2021 – the 400MW New England Solar Farm in NSW – and suggested that Morrison government threats to intervene in the energy market had led to increased investor hesitation.
“This is a deeply concerning trend when, in light of the speed of the clean energy transition worldwide, the brakes are being put on Australia’s promise as a renewable energy superpower,” Thornton said.
“Confidence for new investment in the sector is really in limbo at the moment. Projects are experiencing significant and often unanticipated delays through the grid connection process, and as we saw last week with the announcement of a new gas-peaking plant at Kurri Kurri, government intervention in the energy market adds to the uncertainty for investors.”
Thornton said government intervention to directly build their own high-cost generation is not only a poor use of taxpayer funds but also further undermines investor confidence in new generation.
“In the Clean Energy Council’s most recent survey of CEOs of Australia’s leading renewable energy investors, after challenges with the grid, ‘Unpredictable or unhelpful government intervention in the energy market’ rated as the second most significant challenge,” Thornton said in a statement last week.
“If Australia is to ensure we effectively manage the transition of the energy system, we need to restore confidence in the role of governments to work collaboratively and focus on clear market signals for investment and customer confidence.”