The cost of grid scale battery storage has fallen dramatically over the last 24 months, but still has a lot more to go – even with some short term variations – according to Brookfield Renewables, which owns Australia’s most successful big battery investor, Neoen.
The comments came earlier this month from Brookfield CEO Connor Teskey as the company, which has emerged as the world’s biggest buyer of battery equipment after a global buying spree, released its latest quarterly results.
Teskey said that the LCOE (long term cost of energy) of big batteries have come down “very, very dramatically” in the last 24 months.
“There are some short-term dynamics at play in terms of input cost into batteries that can cause short-term variations in those LCOEs,” Teskey said in the earnings call with analysts.
“But we are still in the very early days of the supply chain scaling up and the technology improving. So long term, we expect LCOEs continue to go down, albeit there could be some short-term noise just dependent on input cost.”
That, of course, is significant for the renewable energy industry as much as it is for the legacy thermal energy industry, and even the pumped hydro market.
The promise of further cost falls will make solar and wind projects more bankable, because they can more easily store their output for times when they are more valued, rather than shutting themselves down because of negative price.
In Australia, virtually all new solar farms are now being built at solar and battery hybrids, while the wind industry is also looking at adding storage, with some looking to add a battery module with each turbine.
Competitors to battery storage satisfied themselves that big batteries could only really play in the short term storage market, say one to four hours.
But the declining costs, shrinking footprints, and improving densities – along with changes in market dynamics – suggest that big batteries are already targeting eight hours of storage as standard, and aiming even higher.
Brookfield has been on a buying spree, this year buying Aypa, the largest standalone battery energy storage platform in North America for around $US3 billion. It has 3,000 megawatts of battery storage operating and under construction, another 3,500 MW under contract, and a further 20 gigawatts in the pipeline.
It also owns Neoen, which in Australia has been the most successful builder of big battery projects, including the Collie battery in Western Australia, the expanding Western Downs battery in Queensland, as well as the original Tesla big battery at Hornsdale.
Brookfield says 30 per cent of its huge pipeline of projects is in battery storage.
“Make no mistake, batteries are the fastest-growing technology within Brookfield Renewable today,” Teskey said during the company’s earnings call with analysts.
“And we are looking to invest in and develop batteries alongside new wind and solar on a standalone basis and, you know, retroactively on existing wind and solar.
“And the opportunity set is very large. And we think now with the combination of Neoen largely in Europe, and Australia. And now IPA in North America, we have the leading battery storage providers in the most attractive battery markets around the world.
“Given the scale of our battery development activities, I do not think it is a stretch to say we are one of, if not the largest procurer of utility-scale energy storage equipment in the world.”
Teskey says Brookfield aims to be building 10,000 megawatts of new projects per year by 2027. In Australia, it had planned to build 12 gigawatts of new wind, solar and battery capacity by 2032 had it been able to go through with its agreed takeover of Origin Energy, the country’s biggest retailer and generator.
But that deal was scuppered by Australian super funds more concerned about the state of their fossil fuel investments.
Origin – which now intends to close the 2,800 MW Eraring coal generator in 2029 (after two closure delays) currently has zero megawatts of new wind and solar capacity under construction, although it is building plenty of battery storage.
To join more than 29,000 others and get the latest clean energy news delivered straight to your inbox, for free, click here to subscribe to our free daily newsletter.
