A $1 billion solar-battery farm to be built by Lyon Group and Downer EDI in South Australia's Riverland will be the world's largest and ready to help prevent blackouts in the state's fragile power grid by next summer.
Lyon Group, a Brisbane-based partnership headed by David Green and backed by Mitsubishi of Japan and US hedge fund Magnetar Capital, has secured land and will start construction in June to be operational in December.
The project includes a 330 megawatt solar farm costing $700 million and a 100MW battery with four hours of storage – or 400MWh capacity. Grid connection negotiations are well advanced on privately owned scrubland land near the town of Morgan.
A battery farm of that size would have been big enough to prevent the partial SA blackout on February 8 - but not the epic blackout that crippled the state on September 28 last year.
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The $1 billion solar-battery farm will be in SA's Riverland district Lyon Solar
The Riverland project isn't dependent on the tender for grid scale batteries to fortify SA's fragile power grid announced by the Weatherill government two weeks ago - but the outcome of that tender could influence the final configuration of the Riverland project.
Tesla, software billionaire Mike Cannon-Brookes, AGL Energy and ZEN Energy are eyeing the government tender and a similar one in Victoria, but Lyon is set to be the first to put batteries on the ground in the race to build a world-scale storage project in Australia. Blackstone
Mr Green told reporters in Adelaide private equity firm Blackstone was among those backing the project via Magnetar. The solar power it generates will qualify for renewable energy target subsidies - currently worth $84 per MWh - on top of the wholesale market price.
"We have the capital. That's already secured," he said. Mr Green said big players like Blackstone-backed funds didn't "come in behind something that's ill-considered".
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Lyon Solar's Australian pipeline: 1,700MW solar + 1,000MW storage Lyon Solar Riverland Supplied
He said "full performance warranties up to 20 years" could be offered for the project, which will use lithium ion batteries.
The project looms as a gamechanger in the roiling debate over how to fix SA's energy security woes and fortify the wider national grid as large eastern states follow SA's lead and install more wind and solar energy, triggering the retirement of old, coal fired power stations such as Victoria's 1600MW Hazelwood plant, which shut down its last turbines on Wednesday.
It is in addition to a previously announced $350-400 million Kingfisher solar-battery farm project at Roxby Downs, a pivotal point in the SA power grid given its proximity to BHP Billiton's giant Olympic Dam copper-gold mine and Oz Minerals' Prominent Hill mine. The Kingfisher project, with 120MW of solar panels and 100MW/200MWh of batteries, is due to be operational in June 2018. Energy transition
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The Lyon Solar-Mitsubishi backed Kingfisher solar and batteries project could supply BHP Billiton's Olympic Dam copper and goldmine in South Australia, which faces skyrocketing electricity costs. Aaron Bunch
Both mining projects suffered prolonged outages after SA's statewide blackout on 28 September, which sparked a national debate on energy security culminating earlier this month in South Australian Premier Jay Weatherill's $550 million energy security plan and Prime Minister Malcolm Turnbull's announcement of a feasibility study into a 2000MW expansion of the Snowy Hydro scheme.
Lyon Group is being partnered by US-based battery partner AES Energy Storage, which participated in California's emergency roll-out of large-scale battery storage last year along with Tesla and Greensmith, the supplier to South Australian battery company ZEN Energy. Transport, engineering and maintenance services firm Downer is earmarked to be the contractor for the Riverland project.
Batteries are vying with other technologies to help make wind and solar power more reliable and stable and Mr Green said Riverland and Kingfisher will each have battery storage systems larger than any already operating around the world.
Lyon also intends to be a bidder for the 100MW storage battery contract being let by the SA government for which expressions of interest close on Friday.
Mr Green's career in utilities includes developing energy projects, advising governments on electricity restructuring, a stint at failed investment bank Babcock & Brown and roles as leader of Ernst & Young's energy and utilities and water practices.
Mr Weatherill again defended a decision on Thursday by the SA government to reject a proposal by Alinta, which asked for $25 million in taxpayer subsidies in 2015 to keep the Northern power station at Port Augusta open until 2018. "It's a dud deal," Mr Weatherill said.
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