Federal green bank powers up Victoria’s ‘Big Battery’ with $160m boost

Victoria is set to become home to one of the world’s biggest lithium-ion batteries by the end of the year after the federal government’s green bank delivered $160 million to French energy giant Neoen’s massive storage project near Geelong.

The Clean Energy Finance Corporation’s debt-financing commitment has allowed Neoen to reach financial close on the Victorian Big Battery, which would have capacity of 300 megawatts and 450 megawatt-hours – making it three times the initial size of billionaire Elon Musk’s Tesla big battery built in South Australia in 2017.

Neoen's proposed 300 megawatt battery near Geelong is among the strong pipeline of new storage projects.Credit: Neoen

“We are on track to deliver this project before the next Australian summer and are looking forward to playing our part in helping Victoria reach its ambitious target of 50 per cent renewable energy by 2030,” Neoen Australia’s managing director Louis de Sambucy said.

“We are delighted to announce that the Victorian Big Battery has reached this important financial milestone.”

The Clean Energy Finance Corporation’s $160 million debt facility will fund the design, construction and operation of the battery. The project is also being supported by a contract from the Victorian government, which says the project will bolster the reliability of the state’s electrical grid and keep a lid on energy prices as more coal-fired power stations retire and more renewable energy generators come online.

In Australia and worldwide, battery technology is emerging as key to supporting the greater uptake of renewables by overcoming the problem of intermittency when it is not sunny or windy. Big batteries capture and store excess power created during times when conditions for renewable energy are most favourable, and then release it when it’s needed during peak-usage periods such as during heatwaves.

The Victorian Big Battery is one of several battery projects that have been announced in recent months. Origin Energy unveiled ambitious plans to build a 700-megawatt battery at its Eraring coal-fired power station in NSW, which would be the nation’s largest, while AGL is seeking to roll out 1000 megawatts of batteries across several sites.

Federal Energy Minister Angus Taylor said the Victorian Big Battery’s ability to boost the capacity of the Victoria-NSW interconnector and respond to unexpected network outages could save industrial electricity users up to $280,000 a year on their bills. Victoria’s biggest energy user, Alcoa’s Portland aluminium smelter, could save as much as $1 million a year.

“Investments in batteries can help stabilise our grid at a time of record investment in renewables,” Mr Taylor said.

The battery, which will use Tesla technology, will be owned and operated by Neoen. The company will pay for the construction of the battery and maintenance, while consumers will pay for use of the battery through their power bills.

The Victorian government says this cost will be offset by the reduction in power costs. But industry representatives for the nation’s largest energy and gas providers have criticised the project as a “bad idea”, which lacks independent scrutiny of costs and benefits or clarity on how it would participate in the energy market.

“This battery will be funded by Victorian consumers whether or not it proves useful,” Australian Energy Council chief Sarah McNamara said in November. “It will also impact private investment decisions made in good faith within that framework.”