Brisbane energy group Lyon Solar has enlisted Japanese giant Mitsubishi Corporation to bankroll a $2 billion solar and battery power program that could help prevent blackouts like the one that hit South Australia on Wednesday.
They plan to build 1000 megawatts of large scale solar power and storage batteries across Australia by 2020 in a world-leading program that will cost nearly $2 billion and could spawn a local battery assembly industry.
The project is Australia's biggest solar plus batteries plunge. It aims to take batteries to a new level and help stabilise the electricity grid as intermittent wind and solar energy increasingly replace coal-fired power – with Victoria's Hazelwood plant the latest to face closure.
Batteries are vying with other technologies to help make wind and solar power more reliable and stable. These include high-transmission proposals such as Transgrid's $500 million South Australia-NSW interconnector, pumped hydro storage, wave power and solar plants that can store energy as molten salt.
Lyon Solar partner David Green said renewable energy projects backed up by batteries could also help to maintain the power supply in communities cut off by storms, like South Australia.
"For example, where a township is connected to the grid and a storm damages a section of the network, the localised generation can provide the electricity to township," he told The Australian Financial Review.
Lyon Solar sealed its 35/65 joint venture with Mitsubishi – a global machinery to coal and financial services conglomerate with sales of $250 billion – in Tokyo on Wednesday. They will use batteries supplied by AES Energy Storage, part of the US power group AES Corporation.
The Australian rollout be a model for at least 1000MW solar and battery projects across Asia, Mr Green said, "unlocking great potential for Australian industry and jobs" and filling a gap after the shutdown of local car assembly.
It will help Australia meet its Paris carbon reduction targets by making it possible to close the oldest, most polluting power stations and bring more wind and solar power into the National Electricity Market without the volatility that has hit South Australia this year.
"This new joint venture is a key step towards the moment when there will be no real limit to the amount of renewable projects that can be connected to the electricity grid in Australia," Mr Green said.
He said the two companies would build 1000MW of large scale solar generation backed by 500MW of batteries across Australia by 2020.
As well, they will build another 500MW of batteries to support the grid, enabling more wind and solar power to be connected without reducing reliability and stability.
Mitsubishi will join Lyon in the Kingfisher project, a 100MW solar plant at Roxby Downs in South Australia backed by 100MW of batteries which Lyon Solar announced earlier this month at a cost of $400 million.
Olympic Dam, Roxby Downs
Kingfisher could provide electricity directly to BHP Billiton's Olympic Dam and Roxby Downs mines and metals processor Nyrstar's Port Pirie smelter, as well as helping to shore up South Australia's shaky electricity supply.
Lyon Solar has tripled the scale of its plans after gaining Mitsubishi's backing. Mr Green's career in utilities includes developing energy projects, advising governments on electricity restructuring, a brief stint at failed investment bank Babcock & Brown and roles as leader of Ernst & Young's energy and utilities and water practices.
Mitsubishi is a longstanding investor in Australia and its heavy industry unit was an unsuccessful bidder for Australia's $150 billion future submarines contract.
Previously Lyon Solar was looking at a $600 million program to roll out 300MW of large scale solar backed by 60MWh of battery storage, including a less ambitious Kingfisher project.
It will start work soon on the first stage of an 80MW solar and battery project near Cooktown in Queensland's far north.
Cooktown and Roxby Downs are "fringe of grid" locations where the cost of batteries can be justified because they can forestall huge investments in poles and wires required to deliver the same level of reliability.