The SEC’s first project will be a battery big enough to power 200,000 homes

A Melbourne battery farm big enough to power 200,000 homes will be the first project funded by the revived State Electricity Commission, with the Allan government agreeing to pay $245 million for a major share in the project as construction begins.

SEC Minister Lily D’Ambrosio is to announce on Thursday the investment for the Melbourne Renewable Energy Hub – claimed to be one of the biggest battery projects of its kind – to be built near Melton.

Artist’s image of the Melbourne Renewable Energy Hub.Credit: Equis

Labor made an election pledge last year to “bring back” the SEC and promised to put $1 billion towards the building of 4.5 gigawatts of renewable energy and storage – enough to offset the generation of coal-fired power station Loy Yang A.

Equis Australia’s Melbourne battery farm, also known as the Hub, will be the first project funded under this commitment.

The SEC will invest $245 million, allowing construction to start within weeks. The aim is to have the battery operational by 2025.

It will be made up of three large sections that add up to 600 megawatts, enough energy to power 200,000 homes during peak periods.

The SEC’s investment has also allowed the project to be expanded so that its total capacity is 1.6 gigawatt hours. This means it will have enough storage to provide power for 2½ hours at its maximum output.

“The investment is a huge step forward in increasing Victoria’s renewable storage capacity, which is critical to meeting our nation-leading targets of 95 per cent renewable energy generation by 2035,” D’Ambrosio said.

The Melbourne Renewable Energy Hub is claimed to be one of the largest battery projects in the world and will be twice the size of the 300-megawatt Victorian Big Battery near Geelong. Tesla will supply the batteries.

Victoria’s $245 million investment means the SEC has a 38.5 per cent stake in the project. This will make it a major shareholder and mean the government must be included in discussions about its operations.

A potential expansion of the Hub in Melbourne’s west has been mooted that would eventually take it to 1200 megawatts. Discussions about the SEC funding to be announced on Thursday were focused on the first stage.

Premier Jacinta Allan at Careers for Net Zero in the Melbourne Convention and Exhibition Centre.Credit: Louise Trerise

The Allan government has set a target that Victoria must have 2.6 gigawatts of energy storage set up by 2030 and 6.3 gigawatts by 2035.

During peak periods of energy generation from solar panels and wind farms, electricity fed into the nation’s power grid will be collected by the battery and stored to be provided to homes and businesses at times when it is needed most.

The announcement comes weeks after Premier Jacinta Allan unveiled the SEC’s 10-year strategic plan, which included registering it as a company that could sell power to manufacturers. State-owned schools, hospitals and services in stand-alone buildings will be its first customers, and the SEC will be expected to service all government customers by 2025.

The commission will initially do this by selling renewable electricity the government had previously secured from 10 or 15-year service agreements, used to support the development of new projects.

Allan also revealed the SEC would become a one-stop shop that would assist Victorian households to transition from gas to electric appliances.

More than 100 registrations of interest were filed by projects seeking funding from the commission’s $1 billion funding pool. Allocation of the remaining money has not yet been announced.

Energy experts have questioned whether the SEC can deliver on its initial pledge to bring down power prices under its current regime.

The government has argued that using its investments to encourage more renewable projects will allow those projects to spend any profits on building more generation and storage, which would supply the grid with more options and lead to lower bills.

Victoria is racing to build enough renewable energy generation to offset the loss of coal-fired power stations that play a major role in the national grid. Yallourn will close in 2028, while an agreement between AGL Energy and the Victorian government will keep Loy Yang A open until the mid-2030s.

At the same time, billions of dollars in new transmission projects will be needed to better connect solar farms, wind farms and offshore wind to the existing network.

The state’s net-zero target is to reduce its emissions by 75 to 80 per cent by 2035.

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