EnergyAustralia secures taxpayer support for two batteries

The company will develop two large-scale batteries after being picked for taxpayer support by the Albanese government.

EnergyAustralia will build two batteries after securing underwriting from the Albanese government under its centrepiece capacity investment scheme.

The government last year said taxpayers will underwrite 32GW of new renewables as Labor moved to accelerate the country’s transition away from coal and implemented two so-called pilot programs for the scheme.

Federal Energy Minister Chris Bowen said six batteries will be given support, with EnergyAustralia developing two projects in Victoria and South Australia.

EnergyAustralia managing director Mark Collette said the selection of its two battery projects are a boost for the company and South Australia – where one of the developments will be placed.

“Both our Wooreen and Hallett battery storage projects will be critical in supporting Australia’s clean energy transition. Both batteries are to be located near power stations, Jeeralang in Victoria and Hallett in South Australia, using land we own and existing transmission infrastructure to efficiently supply additional capacity to the market.”

The batteries are scheduled to operational in 2026 and 2027.

South Australia has Australia’s largest amount of rooftop solar, which can often provide more energy than the state needs. This excess energy is often curtailed, though it will one day be transferred to neighbouring Victoria.

While South Australia has significant solar resources, it is often left in a vulnerable position when the sun sets as it has insufficient fossil fuel capacity to compensate. Batteries will help provide the missing capacity and EnergyAustralia, Origin Energy and AGL Energy are developing storage capacity in the state to capitalise.

The development of the two batteries will temper concerns about the capacity of Australia’s third-largest electricity and gas retailer to meet its transition goals as it continues to be impacted by heavy losses in 2022.

EnergyAustralia has set the target of developing 5GW of renewable energy capacity but owner, China’s CLP Holding, has indicated it was looking for partners to develop the projects as it focused investment on core markets.

Mr Bowen hailed the interest in the scheme as indicative of market appetite to participate in Australia’s energy transition.

“This reliable renewables plan is about unlocking private investment to build at least 32GW of solar and wind generation, and storage, in grids across Australia between now and 2030,” he said.

“We wanted 600MW. We received bids for 19GW – 32 times more than what we asked for.”

However, industry figures said the true test of the scheme will be seen in December, when the government is scheduled to announce which projects have been selected as part of the biggest tender from the capacity investment scheme.

The government in May asked for bids for 6GW of capacity, which federal Energy minister Chris Bowen said was massively oversubscribed.

Unlike in the first tender processes, the tender will include both new large-scale renewable energy developments and batteries, and will test market appetite for wind and solar projects which offer developers much lower returns.

Australia’s largest energy retailers, AGL Energy and Origin, have both said they intend to develop batteries on their balance sheet, but the returns on solar and wind are too small for them to fund.

Unlike wind and solar, batteries are very lucrative amid wild swings in daily wholesale electricity prices.

Australia has a record amount of rooftop solar and when conditions are sunny, wholesale prices are often well below zero, but when the sun sets prices often jump.

Battery operators can then install large-scale batteries and charge them cheaply during the day, before dispatching electricity and earning lucrative returns when the sun has set.

Originally published as EnergyAustralia secures taxpayer support for two batteries