South Australia’s huge lithium battery is already making money: report
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Tesla’s massive lithium ion grid battery in South Australia made its French owner Neoen up to $US17 million revenue in just six months, according to a report in Electrek magazine.
The numbers are revealed in a prospectus Neoen recently filed ahead of an initial public offering and listing on the Paris stock exchange.
Neoen’s Hornsdale Power Reserve — which sits 220km north of Adelaide and can power up to 30,000 homes — is the world’s biggest lithium-ion battery.
In its prospectus, Neoen revealed Hornsdale cost 56 million euros (about $91 million) and had made about 14.8 million euros in its first six months.
“The cost of operation are not made clear in the filings, but we would assume that they are fairly low, which would make the return on investment extraordinary quick for the massive project,” Electrek reported.
If accurate, the favourable economics represent a huge boost to the stationary storage market and for battery metals stocks covering lithium, cobalt, graphite, nickel and vanadium.
Stationary storage systems are big batteries often designed to store excess power from the power grid — including from renewable sources — for use during expensive peak demand periods.
Speaking at this month’s Benchmark Minerals Intelligence World Tour, Cairn Energy Research Advisors managing director Sam Jaffe said that about 87Gwh of batteries will be sold for stationary storage by 2027 – in 2010, that number was zero.
Half this will be lithium-ion and 25 per cent vanadium flow, or VFRB.
“The price has come down for these cells so dramatically over the last eight years that it is now affordable to use batteries for grid storage,” Mr Jaffe said.
Mr Jaffe said Hornsdale was the world’s largest storage facility — but within two years “it’s probably going to be 20th or 30th on the list, in terms of what is being built today”.
Tesla’s Elon Musk also said at a shareholder meeting earlier this year that the rate of stationary storage “is going to grow exponentially”.
And Wood Mackenzie have stated that “batteries overtaking peaker [plants] may be a common occurrence in the US in as little as four years”.
Peaker plants – usually gas powered — run only when there is a high demand. Because they supply power only occasionally, the power supplied commands a much higher price per kilowatt hour than base load power.
But holding a slightly less bullish view was energy analyst Dylan McConnell from the University of Melbourne, who told Stockhead that while Hornsdale has performed crucial services — at impressive speeds — battery costs still needed to fall to compete without subsidies.
He said a number of other upcoming stationary storage installations — such as the 25MW/50MWh Tesla battery at the 60MW Gannawarra solar farm, and the 30MW/30 MWh Ballarat terminal station battery in Victoria — still needed subsidies, just like Hornsdale.
“In the short to medium term batteries becoming economic and replacing larger peakers partially depends on what happens with battery costs,” Mr McConnell said.
“People keep saying that battery costs are coming down, but battery prices are pretty much where they were two years ago — the cost reductions that we have been promised have yet to be realised,” he said.
South Australian minister for energy Dan van Holst Pellekaan, and Neoen were both contacted by Stockhead for comment.