Business

In the Australian Outback, answer to renewable power's top problem emerges

Bloomberg

The answer to the renewable energy industry’s biggest challenge is emerging in the Australian Outback.

Early next year, one of the first power projects that combine solar and wind generation with battery storage is planning to start up in northern Queensland. The Kennedy Energy Park, just outside the sleepy town of Hughendon, will combine 43 megawatts of wind and 20 megawatts of solar with a 2-megawatt Tesla Inc. lithium-ion battery.

Hybrid projects like this aim to tackle a problem faced by climate-change challengers and grid planners across the globe: how to firm up intermittent renewable power so that the lights stay on when the sun doesn’t shine or the wind doesn’t blow.

They could also be precursors of what is to come in the next decade. Plunging green technology costs are opening up markets, and suppliers are seeking new avenues to combat falling margins. Australia, India and the U.S. already have a combined pipeline of over 4,000 megawatts of “co-located” hybrid projects, according to a BloombergNEF analysis.

Kennedy Energy Park’s location is one of the best on the planet for pairing a strong and consistent solar resource with a highly complementary wind profile, said Roger Price, chief executive officer of Windlab Ltd., the company leading the development along with Eurus Energy Holdings.

“When you start to combine wind and solar in an intelligent, optimized way, then you can provide much greater penetration of renewables into the grid,” Price said in a phone interview, adding that the facility is expected to start up in two or three months.

Price said combining wind and solar allowed the project to save on connection costs to the network while enhancing grid utilization because the wind generally blew at night when solar wasn’t available. In addition, Kennedy has potential to supply more power to the grid than its 50-megawatt transmission line can handle, so the battery will allow that excess power to be stored.

A range of co-located projects have followed in Kennedy’s wake, with 690 megawatts of capacity commissioned across the country, BNEF said in a report last month. In January, a joint venture between Lacour Energy and a unit of Xinjiang Goldwind Science & Technology Co. won approval for the 250 million Australian dollar ($170 million) Kondinin complex in Western Australia, which will combine battery storage with 120 megawatts of wind power and 50 megawatts of solar.

The French company Neoen SA has even bigger ambitions: Its Goyder South project in South Australia, which is scheduled to begin construction in 2021, is on a scale not yet seen for a renewables project in Australia. It includes 1,200 megawatts of wind power and 600 megawatts of solar, backed by 900 megawatts of battery storage.

Australia is not the only place developing the concept. In the U.S., NextEra Energy Inc. is working on two projects that combine the three technologies, while Vattenfall AB is working on a “triple-scoop” project in the Netherlands that is believed to be the first of its kind in Europe. India is also keen on the idea, with the government putting policies in place to encourage co-located projects in a number of states, according to BNEF.

“Whenever we are kicking off a photovoltaic or an onshore wind project in the future, we will always consider whether we should do it as co-located,” Alfred Hoffman, a vice president at Vattenfall’s wind unit, said at a BNEF summit last month in London.

There are various constraints to developing such integrated projects. In Europe, for instance, most large-scale wind and solar is procured through auctions, which aren’t currently designed for co-located projects, according to Cecilia L’Ecluse, a solar analyst at BNEF in London. There can also be permitting issues, such as Germany’s ban on using farmland for solar, she said, while in the U.S., developers may not be facing the same grid-access challenges, so the savings incentive might not be as strong.

Windlab’s Price acknowledged that combining technologies would only work in certain locations and that in a well-connected grid, wind and solar don’t necessarily need to be on the same site to deliver combined benefits. The Kennedy project has seen the start of commercial operation delayed into 2020 due to holdups in getting the necessary approval to connect to the grid.

It could be in developing countries where the concept could make the biggest difference, said Price, who is also working on an 80-megawatt multitechnology project in Kenya. It is also a particularly pressing problem in countries like Australia, where a number of aging coal-fired power stations are scheduled to retire over the next decade, leaving renewables to fill the gap.

“In the future, we won’t have these big fossil-fuel plants to keep the grid stable. That’s an additional task that renewables will have to take on,” said Bo Svoldgaard, senior vice president of innovation and concepts at Vestas Wind Systems A/S, which partnered Windlab on the Kennedy project and supplied the turbines. “The fossil fuel plants will disappear — maybe not tomorrow, or in two years’ time, but they will disappear.”

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