This article is part of our New Energy Insights series from our Energy, Infrastructure and Resources team. Stay tuned for regular updates and commentary on topical issues across the sector.
ARENA provided Australia’s grid scale battery storage industry with an early Christmas present on 24 December 2021, announcing a $100 million competitive funding round for grid scale batteries equipped with advanced inverters. The following three categories of projects will be eligible for ARENA’s funding round:
- New build – construction of a new battery asset (70 MW or larger) with advanced inverter capability;
- Retrofit – proposals that incorporate advanced inverter technology onto existing or committed large scale battery storage projects; or
- Expansion – proposals to expand existing or committed large scale battery storage projects by constructing a new large scale battery asset adjacent to the existing asset and incorporating advanced inverter technology in both the existing and new asset.
Note, to be a committed project, financial close must have occurred and all relevant parties and commercial contracts must be binding and irrevocable. ARENA has also provided that a maximum of 50% of the funding allocation will be allocated to retrofit and expansion projects. ARENA’s intends to fund at least three projects with a maximum funding amount of $35 million per project.
ARENA’s funding aims to support the development of batteries utilising advanced inverter capability by incentivising and de-risking the deployment of these inverters. Advanced inverter technology is crucial in the NEM’s pathway to decarbonisation as they provide system stability services that have previously been in the exclusive domain of coal and gas. As variable renewable energy’s role in the NEM increases, funding and developing technologies that are able to provide system stability will become increasingly important.
ARENA CEO Darren Miller is confident that “Grid scale batteries and other types of energy storage technology will be vital to support our future electricity system powered by renewables” and “ARENA funding will help drive the uptake of this technology and provide valuable lessons that will benefit the industry as a whole.” This sentiment is echoed in AEMO’s draft 2022 Integrated System Plan which predicts that 60MW of firming capacity that can respond to a dispatch signal will be required by 2050 to hit net-zero by 2050. AEMO predicts that 45 GW of this firming capacity will be provided by new battery storage and pumped hydro projects (distributed and utility scale).
EOI applications are scheduled to open on 1 February 2022 with a due date of 31 March 2022 (5pm AEST). Selected projects will be able to submit applications later in 2022.
Government funding will be a crucial component in any grid scale battery storage project. It is important that project developers do not “self-select” themselves out of funding programs. Therefore, we strongly recommend project developers seek out professional advisors to help assess their battery project’s suitability under the relevant funding program. We at Hamilton Locke are already engaged with our clients in relation to this program and we will be assisting in preparing applications to ARENA in the coming months and years. Please get in touch with our New Energy lead, Matt Baumgurtel, should you wish to discuss.
For more information on this funding program, including the eligibility and merit criteria, please visit: https://arena.gov.au/funding/large-scale-battery-storage-funding-round/#step-1-read-the-program-guidelines
The Hamilton Locke team advises across the energy project life cycle – from project development, grid connection, financing, and construction, including the buying and selling of development and operating projects. For more information, please contact Matt Baumgurtel.
