BlackRock raises $500 million for world’s largest battery storage project located in NSW

BlackRock, the world’s largest asset manager, has raised $500 million to help fund one of the world’s largest battery storage projects, the Waratah Super Battery (WSB) in New South Wales.

The $500 million raised, with $100 million of support from Clean Energy Finance Corporation (CEFC), will go a long way towards development of Waratah, which will be located on the site of a decommissioned coal-fired power station on the state’s Central Coast, about 100km outside of Sydney.

BlackRock says the project can play a key role in solving New South Wales’ energy problems.

“The state’s aging, coal-fired power plants were expensive, inefficient and required costly maintenance on a regular basis. But it had half a solution – through direct investment and incentives, it had developed wind and widespread solar power to replace the capacity of the plants,” the company has stated.

Waratah Super Battery’s role in transition of energy grid evolution

The finance firm said the investment by BlackRock Alternatives will support the evolving electrical grid of New South Wales for years to come, with the solution an example of many of the opportunities the company sees in transition investing.

According to BlackRock, a grid-scale battery can serve a similar role with wind turbines, whose electricity generation tends to be at their greatest in the evenings when electricity needs can be lower. The net result is a more efficient power grid that maintains its resilience even through the transition to new energy sources.

“Waratah’s size means that it has greater capacity than other grid-scale batteries to store and distribute energy as required – an important consideration for Australia’s most populous state.

“So, New South Wales came up with the second half of its solution – a massive battery installation that would take advantage of peak electricity production from new sources to avoid energy shortfalls and protect against sudden surges. The project would be the Waratah Super Battery – the single largest grid-scale battery on the planet.”

Waratah is part of an Australia-wide initiative to increase renewable energy and support the grid with large-scale battery storage.

Currently, Australia has a pipeline for large-scale battery development that’s second only to China.

Clean Energy Finance backs the project

Clean Energy Finance Corporation (CEFC) is tipping in $100 million to back the Waratah project.

It says the investment commitment in the Waratah Super Battery (WSB) is part of the company’s increasing focus on the enabling technologies that will transform Australia’s energy network.

CEFC chief executive officer, Ian Learmonth, said the 850 MW/1680 MWh WSB will unlock reserved transmission capacity in the NSW network giving consumers in the state’s main load centres greater access to low-cost clean energy, while maintaining network security.

“Long and short duration storage assets are critical to building an energy network fit for purpose in the 21st century, enabling Australia to capitalise on its abundant natural resources of wind and solar to decarbonise the grid,” Mr Learmouth said.

“Battery storage underpins a future balanced grid, ensuring that more clean energy can reach more consumers and providing network stability as coal continues to exit the network earlier than predicted. Our investment in the Waratah Super Battery supports a secure grid powered by renewable energy and fit for a future, low emissions economy.”

Tesla powers up in Queensland

Earlier this week, global battery technology powerhouse Tesla participated in a major milestone at a battery facility in Queensland.

Tesla and Genex Power (ASX: GNX) have now achieved initial energisation for the 50MW/100MWh Bouldercombe Battery Project (BBP), located near Rockhampton.

The energisation signals a major construction milestone as it enables the Project to begin the commissioning phase ahead of full operations commencing.

Genex partners Powerlink, Consolidated Power Projects and Tesla Motors Australia have concluded the tasks required to allow the commissioning phase of the project to commence, including successful energisation of the Powerlink transformer and high voltage balance of plant components and initial energisation of the Megapack units.

The commissioning phase will be completed over the coming months to ensure the project is fully operational ahead of the peak demand summer season.

Following completion of commissioning, the project will be operated under an autobidder offtake agreement with Tesla.

Battery power building up

According to the federal government-backed Australian Renewable Energy Agency (ARENA), battery use in the Australian electricity grid is expected to keep growing due to technological advances and rapid cost declines.

It says a number of government schemes have also driven down battery costs and subsidies, accelerating the adoption of the technology by Australian energy producers and users.

In Australia, battery storage for renewable energy is increasingly used in a variety of designs, purposes, sizes and locations.

Batteries are used in the national electricity grid (at both the transmission and distribution levels). They are also gaining popularity for use ‘behind the meter’ in homes, businesses or industrial operations.

Australia an early mover

Thanks to the vast distances in Australia, the nation is an early mover and world leader in the take up of big battery storage projects.

Supported by government and industry, some of the world’s largest battery storage operations are already active or being proposed around the nation.

A recent report from international law firm Allens found that Australia’s investment in the development of big batteries continued to gain momentum in 2022, with the announcement of several significant battery projects.

The report concluded that from a market perspective, revenue opportunities for batteries continue to grow and diversify, including as a result of government-led initiatives such as revenue underwriting schemes and a proposed congestion relief market.

“We are seeing an increase in demand from corporate offtakers for ‘firm’ offtake arrangements, and the emergence of novel offtake structures, including revenue sharing arrangements and support agreements.”

Critical minerals availability a concern

However, the report also noted that the demand for batteries and international supply chain constraints have placed significant pressure on the availability and affordability of critical minerals required in the battery manufacturing process.

“The Federal Government is seeking to capitalise on Australia’s large reserves of critical mineral resources for the battery industry through strategies such as the National Critical Mineral Strategy and the Australian Made Battery Plan.”

“New policies and proposed reforms will likely continue to play a major part in shaping the trajectory of big batteries in the market, including the Government’s Capacity Investment Scheme and proposed transmission access reforms,” the report suggested.