TransGrid has unveiled plans for a large battery to be built in western Melbourne without any call on government funding, demonstrating a turning point in the rapidly developing market for grid-scale energy storage.

The 300 megawatt battery will be installed in the Deer Park energy hub, the key source of power supply for metropolitan Melbourne, said the NSW grid owner’s commercial arm, Lumea.

The storage capacity has yet to be finalised but is likely to be about 580 megawatt-hours, said Lumea’s head of infrastructure, Nigel Buchanan, who put the likely cost at $270 million-$300 million. That would mean the battery could in theory produce power for almost two hours at full output.

Mr Buchanan said the company, which on Monday called for expressions of interest to participate in the project, is looking to demonstrate that thanks to falling costs batteries can now be fully funded through the market, something that was out of the question just a few months ago.

“It’s moving extremely quickly,” Mr Buchanan told The Australian Financial Review, adding that Lumea had been examining the potential for fully commercial project for the past two years and only now was that feasible.

“We’re really excited about the opportunity to demonstrate a private sector market solution for storage that doesn’t involve government support.”

Lumea has drawn up a potential list of 15-20 companies that will be invited to submit proposals to join the project, including electricity traders, battery players and others. Financial close is targeted for later this year, with the battery targeted to come online within 12-18 months.

The Deer Park battery is the latest utility-scale storage project to be announced across the country as electricity suppliers and grid owners look to maintain a stable grid amidst surging intermittent renewable energy generation. However, most have involved an element of state government support, through grant funding, underwriting or services contracts, or funding from federal government agencies.

Lumea is already developing a $62 million battery at Wallgrove in western Sydney to trial the supply of inertia to the grid from a storage plant. That 50MW, 75 megawatt-hour project – the first grid-scale support battery in NSW – is due to come online in October. It is partly funded by the Australian Renewable Energy Agency and the NSW department of planning, industry and environments’ Emerging Energy Program.

Mr Buchanan said the Deer Park project would prove that grid-scale battery energy storage systems are a good long-term investment to maintain the reliability and security of the power system and ultimately bring lower energy costs for consumers.

The expressions of interest process is expected to reveal whether other opportunities exist to supply system reliability services to the grid as the market switches towards lower-carbon energy supply, Lumea added.

Source: Financial Review