Analysis and Commentary

Neoen shows the electricity industry has become storage

Analysis and Commentary

By Peter Roberts

French renewable energy storage developer Neoen is showing how a new element of the electricity industry is emerging as highly profitable, taking the shine off traditional generation, distribution and retailing.

The company owns the original big battery the Hornsdale Power Reserve in South Australia of 150MW/193.5MWh, as well as the Victorian Big Battery of 300MW/450MWh near Geelong, Victoria (pictured).

Neoen recently reported battery storage revenues for the first nine months of 2022 of $100.8 million, earning premium prices with its ability to add additional peak capacity on the existing Victoria to New South Wales electricity interconnector (VNI).

But the battery has also generated sales from network services (FCAS) and arbitrage revenues.

Considering the original Hornsdale big battery (since expanded) had a capital cost of $90 million, that’s not bad going.

Now Neoen is about to begin construction of a 300MW/800MWh battery storage at Blyth also in SA to back up a planned 203MW wind farm at Goyder South supplying BHP’s Olympic Dam copper and uranium in that state.

Neoen and BHP have just signed a Power Purchase Agreement as part of the miner’s efforts to reduce the carbon intensity of its products.

According to Neoen CEO Xavier Barbaro: “This first baseload PPA is a significant step forward for Neoen and will serve as a template for future contracts, opening up new market opportunities in Australia and in the rest of the world.”

When the big battery was commissioned in December 2017 it was a massive gamble for the then SA state government and for Tesla.

Today it has fundamentally altered the economics of renewable energy globally and answered the taunt of the political sceptics that the sun doesn’t always shine and the wind doesn’t always blow.

That may be but renewables plus storage are now so obviously the way forward that even one of the world’s most conservative companies is relying on it for its future.

You have to wonder what is next?

Picture: Victorian big battery

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