Waratah Super Battery to take another revenue haircut as transformer failure causes more delays

• The owner of the Waratah Super Battery in New South Wales is expected to suffer another revenue haircut as a result of the delays caused by the “catastrophic” failure of one of the transformers at the country’s most powerful battery.

NSW transmission company Transgrid, which is responsible for managing the Waratah’s principal role of acting as a kind of “giant shock absorber” to the grid, confirmed on Thursday revenues had already been cut because of delays incurred before the transformer incident last month.

As Renew Economy has previously reported, the earlier delays were blamed largely on bad weather and flooding at the site on the central coast in NSW, prompting Transgrid to get approval in March from the Australian Energy Regulator for payments to be reduced.

Because large parts of the contract details – including the level of payments – are blacked out to protect “commercially sensitive” information, it was not absolutely clear if the payment changes were an overall reduction, or just a deferral, moving the schedule of payments from one financial year to another.

A Transgrid spokesman told Renew Economy on Thursday that those delays did indeed result in a reduction to the amount payable to Transgrid “over the project term”. This, then, impacts the scale of payments passed on to Akaysha Energy, the owner of the battery.

Akaysha won a 5.5 year contract in 2022 to provide the shock absorber services, officially known as a System Integrity Protection Scheme (SIPS), and this was due to start before August this year, when the Eraring coal generator was expected to be shut down. That closure is now delayed until at least August, 2027.

To meet this contract, Akaysha set about building its first ever project, the 850 MW and 1,680 MWh Waratah Super Battery, which is the most powerful battery in the country, and likely the world. Up to 700 MW, and 1,400 MWh will be made available at times to deliver the entirety SIPS contract.

Waratah started delivering on its interim contract (350 MW and 700 MWh) in early August and says it will continue to do provide this interim service, despite the transformer problems, which were described as “catastrophic” in an internal memo and as a “temporary outage” in public statements.

The battery had been on the point of reaching full commissioning at the time of the transformer incident on October 18, but that has been put off now until May at least, depending on when a new transformer can be delivered.

Rob Stewart, managing partner of international infrastructure investor GIP, one of Akaysha’s owners, described the problems at Waratah as a “hiccup” and a “bump in the road” in comments to the AFR on Thursday. But it is now clear it will be costly.

The extent of the new delays are not clear, although Akaysha issued a statement on Friday saying that it could meet the entirety of the SIPS contract with just two of the three transformers.

That means little in the way of redundancy, and it likely means that the battery will be able to deliver the SIPS service, but not additional market trading from the spare 150 MW and 280 MWh of capacity.

It also suggests that problems in the second transformer, while perhaps not requiring a massive rebuilt, may be difficult enough to push the start of the contract out to May, as it is has advised AEMO.

“We are continuing to investigate the cause of the transformer failure and confirm replacement timelines,” the company said in a statement.

“The battery is expected to begin full operation during 2026. The market will be informed of timelines as required.

“The battery can operate at 700MW with two transformers, which is the full SIPS service requirement. The project was designed to include an additional transformer to maintain SIPS delivery in the event of an outage.”

But the delay in reaching full service for SIPS is almost certainly going to result in more missed revenues.

• “The contract has appropriate mechanisms to ensure that payments reflect the actual SIPS Service provided. These are subject to annual adjustment processes with the Australian Energy Regulator (AER),” the Transgrid spokesperson said.
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• “The AER’s original revenue determination for the Waratah Super Battery SIPS Service contract included a provision to update the approved schedule of payments in the event of a delay in achieving commercial operation.

“Transgrid submitted an application on this basis to the AER in March 2025. The application was subsequently approved by the AER, resulting in a reduction to the amount payable to Transgrid over the project term.”

The scale of the original payments, and the reductions, and even the new dates previously agreed in March, have not been revealed, with the numbers blacked out in all documents published by the regulator – unlike similar but smaller SIPS services delivered in South Australia and Victoria.

There is now a greater trend to keep financial details hidden from view. The ACT government, which pioneered the use of so-called “contracts for difference” as it signed up enough wind and solar farms to reach its target of 100 per cent net renewables, always published the agreed prices.

But other states have failed to do so, and neither has the federal government in its series of tenders under the Capacity Investment Scheme, designed to propel the industry towards the 2030 target of 82 per cent renewables.

Many in the industry wish the numbers were published, and argue it would help transparency and get more projects built.

See also: Was the high cycling of Australia’s most powerful battery too much for crippled transformer?

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