The battery storage market in Australia is experiencing significant growth, particularly within the green energy sector. Recent data indicates that more than half of the wind and solar farms awarded Capacity Investment Scheme (CIS) agreements in the latest tender also feature battery storage. This trend highlights the accelerating development of battery technology, which is outpacing large-scale wind and solar projects.
According to David Leitch, co-host of the Renew Economy podcast, the first three CIS tenders have secured an impressive 8,469 MW of battery capacity, equating to 30,377 MWh of storage. In comparison, large wind projects stand at 6,554 MW, while solar projects reach 6,461 MW. Notably, these figures pertain only to the National Electricity Market (NEM) and exclude the separate grid in Western Australia.
Growing Offtake Contracts Signal Industry Confidence
The CIS underwriting agreement serves as a valuable tool for mitigating financing risks for developers. However, the primary focus for battery project developers is securing offtake contracts. Wendel Hortop from Modo Energy reports that 13 separate offtake agreements have been announced across the NEM from ten different entities. These contracts encompass various types, including traditional physical tolls, virtual tolls, revenue swaps, and firmed Power Purchase Agreements (PPAs).
New entrants, such as the federal government-owned Snowy Hydro, are now participating in the battery storage market. In contrast, established players like AGL and EnergyAustralia appear to be retreating, possibly due to having already committed significant resources to their own projects.
Notable Contracts and Industry Impact
Among the notable offtake deals, the agreement between BHP and Neoen stands out. This “baseload renewables” contract also encompasses the Goyder North wind project, which will support the energy needs of the Olympic Dam mine and refinery operations. Similarly, Rio Tinto has entered into a significant contract with Edify Energy to power its smelters and refineries in Gladstone. The company has stated it must transition from coal power to renewables and storage by the end of the decade to ensure its future viability.
Moreover, Origin Energy has secured two major contracts involving the Supernode battery project located on the outskirts of Brisbane. This facility is poised to become the largest battery storage site in Australia once its first three stages are completed, including an additional PPA with Stanwell.
The surge in offtake agreements reflects growing confidence in the battery storage sector, underscoring its crucial role in Australia’s transition to renewable energy sources. As the demand for clean energy solutions increases, the battery storage market is poised for continued expansion, attracting both established and new players alike.
