Solar storage to beat gas peakers by early 2019

The Lyon Group says it is negotiating an innovative new offtake product with a number of retailers and large energy users, now that all three of the projects in tranche 1 of its large-scale solar storage project pipeline have received development approval.

Lyon has Australia’s largest pipeline of large-scale solar and large-scale battery storage projects, comprising more than 1,700MW solar and 1,000MW battery storage.

Lyon Group partner David Green said Lyon had executed a connection agreement with Ergon Energy for Cape York Solar Storage, and the three projects – Cape York (QLD), Riverland (SA) and Nowingi (VIC) – were on track to commence construction within Q1 2019.

Lyon calls its new offtake product Fast Dispatch Renewables Power Purchase Agreement (FDR PPA).

“Australia needs flexible clean power, and Lyon’s fast-dispatch renewables are cheaper and faster than a gas peaker, Mr Green said.

“Consumers will benefit from the lower prices that should flow from retailers having unprecedented flexibility to control Lyon’s integrated solar storage plants.

“What we’re putting into the market is competitive now – Lyon’s FDR PPA is cheaper than a gas peaker, and competitive with intermittent/load following generators via optimised time shifting.”

Mr Green said Lyon’s FDR PPA gave retailers new risk management options, control of multiple value streams and 100 per cent value capture.

“This saves retailers from having to contract with their competitors for evening peak exposure or build a gas peaker. There’s no variable fuel cost or fuel supply risk with a Lyon FDR PPA, just an indexed fixed price.

“Retailers get substantial upside from unpriced value streams and because these projects are relatively policy-proof – dispatchable, zero emissions renewable energy faces less regulatory risk.”

Mr Green said a key factor in Australia’s current power price hike was the increased incidence of gas peakers setting the NEM spot price over the past two years.

“This tipping point where fast dispatch renewables are cheaper than gas peakers means enhanced system security and lower power prices because they’re no longer set by international gas prices. This is going to be one of 2018’s biggest energy stories, in Australia and around the world.”

Mr Green said the previously confirmed sale of the three projects to a major new global player in the Australian energy market is expected to close in the coming weeks.

“We anticipate connection agreements for Riverland and Nowingi by the end of February, with the exact date dependent on the capacity of AEMO and ElectraNet to progress the substantial volume of connection applications on their books over the next two months,” Mr Green said.

“If everyone comes to the party for Cape York Solar Storage, we can have a spade in the ground in February or perhaps even January, which would mean it is operational next summer.”