Sun Cable and Neoen herald age of giants

BY RICHARD HEAP:

Citius, Altius, Fortius.

We may not have had the Tokyo Olympics this summer thanks to you-know-what. But the appeal of the Olympic Games and their slogan – the Latin for ‘Faster, Higher, Stronger’ – will endure. It must be exhilarating when you know you’re the best in the world, if only for a moment. Not that I’d know!

In energy storage, it’s a feeling that French developer Neoen had up until two weeks ago. The firm switched on the 100MW / 129MWh Tesla Big Battery at the 315MW Hornsdale wind farm in Australia in 2017, and grew it to 150MW / 194MWh with an extension earlier this year.

For 33 months, this was the world’s biggest battery. But no longer.

On 19th August, LS Power turned on the 250MW Gateway Energy Storage project in California, which it is using to store excess energy from its solar portfolio. John King, head of renewables at LS Power, said this would “improve electric reliability, reduce costs and help our state meet its climate objectives”.

Now it’s always exciting to welcome new champions, and Gateway helps show the credentials of LS Power and the US at the forefront of storage globally.

Yet it could soon be dwarfed by a pair of Australian behemoths.

Last week, Neoen filed an application for the A$3bn ($2.1bn) Goyder South complex in Australia, which is set to be made up of 1.2GW wind, 600MW of solar and 900MW / 1.8GWh of battery storage.

Goyder South is set to be made up of three equal-sized phases, but only the first phase could be built without upgrades to the electricity grid.

The French firm clearly wants to win back its gold medal!

This followed the announcement last month that the Australian government is looking to fast track the $A22bn ($16bn) Australia-ASEAN Power Link project by Sun Cable. The developer plans to pair 10GW of solar with up-to-30GWh of storage, and then export the electricity to Singapore via a subsea cable. It could be the world’s largest solar farm and the world’s largest battery.

It’s fair to say that Goyder South and the Australia-ASEAN link would both be very significant projects. Both will face hurdles: the former relies on upgrades to the electricity grid if it is to reach its full size, and the latter needs a subsea link from Australia to Singapore.

But they both show the era of storage giants is upon us. That’s good news for those who are looking to draw more institutional capital into energy storage.

The example of solar

We need only look at where solar was eight years ago.

Back then, the industry was dominated by small residential and commercial installations, while larger utility-scale projects were in their infancy. Since then projects have become larger as costs have fallen, and this has led more utilities and investors to make utility-scale solar a key part of their strategy. Utility-scale storage will have a similar impact on investment.

Not that storage is an untapped market for institutions. Goldman Sachs has been in the sector since the mid-2010s and concluded two deals this week, and we’ve also seen Capital Dynamics form a tie-up too. But we expect more of their major rivals to enter this industry over the next three years.

The expert panel in our Watts in Store webinar on investment tackled some of the hurdles to institutional funders last month. You can access that here.

Unlocking this investment can’t be done by the industry alone.

The US Energy Storage Association said in its roadmap for the industry, which it published this week, that 100GW of installed capacity could be built in the US in the 2020s – but only with the right government support. This includes an investment tax credit for standalone storage projects, capacity targets at state level and action on any necessary grid adaptations.

Institutions have long seen storage as an interesting sector, but it is huge schemes that will encourage more to commit.

We may remember 2020 as the year that everything including the Olympics was cancelled. But it’s also the year that storage truly started to ‘go large’.

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