Neoen wins WA’s Collie big battery tender, moves into long-duration storage market

After recently being granted development approval for a 1 GW / 4 GWh big battery in Collie in Western Australia’s southwest, Neoen has today announced its contract with the Australian Energy Market Operator (AEMO) to provide almost all of the project’s Stage 1 capacity to help smooth the state’s solar duck curve.

While the Collie battery will likely grow, the project will start out with 219 MW / 877 MWh of capacity. Of this, 197 MW of storage capacity for 4 hours will be contracted to AEMO, with the agreement seemingly mandating the battery charge during the day when solar generation is at its highest, and discharge during the evening peak demand.

With this contract under its belt, Neoen has now given the green light to technology partner Tesla and construction contractor UGL, owned by CIMIC Group, to start construction for Stage 1. Neoen has said Stage 1 is expected to be operational in Q4, 2024, but given the AEMO contract kicks into effect from October 1, 2024, this would appear to be a hard deadline.

A spokesperson for Neoen told pv magazine Australia it opted to size the battery with more capacity, 22 MW over the contracted 197 MW, to provide “reasonable buffer” to ensure the contracted power will be delivered at the point of connection.

The Collie battery is Neoen’s first long-duration (4-hour) battery anywhere in the world, and the company has flagged it is now actively looking to cater to this market. It is Neoen’s sixth big battery in Australia and will consist of 224 Tesla Megapack 2XL units.

The Collie battery will connect to Western Australia’s islanded grid, known as the South-West Interconnected System (SWIS), providing system security as the state aims to close its coal-fired power stations before 2030.

The contact

Hailed as another ‘first’ in terms of achieving an innovative battery storage agreement, Neoen was awarded the contact in a competitive tender initiated by the Western Australian Coordinator of Energy.

Neoen originated the Collie big battery project in 2021, however, receiving development approval for a total of 1 GW / 4 GWh in December 2022.

Titled a Non-Co-optimised Essential System Services (NCESS) contract, Neoen’s agreement with AEMO will run for a period of two years, until October 1, 2026. It is not clear if the contract includes an extension clause.

It seems the contract hinges on charge and discharge times, basically mandating the battery act as a giant solar sponge for the WA grid – which has incredibly high penetrations of rooftop solar. The battery then becomes an antidote to the state’s growing solar duck curve, while also preparing it to wean off coal.

No financial details of the contract have been made public, but in a separate release Neoen upped its expected earnings in 2025 from €600 million ($962 million) to €700 million ($1.12 billion), citing the Collie battery contract as the reason.

Collie’s transition

Collie, approximately 200km south of Perth, has been powering WA with its two coal mines and power stations since the 1880s. Last year, however, the state government announced it would close these two plants before 2030, with the 854 MW Muja plant slated for retirement by October 2029, and the 340 MW Collie plant in October 2027.

Following the closure of these two power stations, the only remaining coal-fired power plant in WA will be the privately owned Bluewaters generator, also near Collie.

Collie has become a focal point for governments in WA as they seek to provide the historic energy hub with a just transition. Funding has poured into the district, including the state government’s $662 million (USD 450 million) funding boost to entice new and emerging industry into the district. A number of renewable energy and technology companies have taken up the offer.

According to people familiar with the situation, community acceptance for Collie’s energy transition program remains mixed, especially among former coal workers. Jobs in renewables are not permanent, pay less and require greater skillsets than jobs in coal mining and power stations. 

The Collie big battery, for instance, will produce 120 jobs during construction. The number of ongoing jobs will be a tiny fraction of that.

Neoen noted the project will co-design its annual community benefit-sharing program with the local community.

Neoen’s Collie big battery

The battery is to be built on a 31-hectare site about 12 kilometres northeast of Collie and will connect into the transmission network via the nearby Shotts Terminal substation.

Neon has previously said the project will be constructed in 200 MW / 800 MWh stages “to meet the progressive increase in demand for energy storage.”

It seems the company is proceeding with a slight variation on this, with Stage 1 constructing slightly more at 219 MW / 877 MWh of capacity.

Western Australia’s Energy Minister Bill Johnston welcomed the news saying: “While the WA government is replacing its coal-fired energy capacity with renewable infrastructure through Synergy, it is also critical for the private sector to take up the opportunity of participating and benefitting from the state’s energy transition.”

“It [the Collie big battery] will complement Synergy’s new battery at Kwinana and the $2.3 billion investment announced in the recent State Budget for further battery storage capacity in the SWIS.”

Neoen’s storage assets

The Collie project brings Neoen’s total Australian storage assets to over 1.1 GW in operation or under construction. Neoen is far and away Australia’s largest battery developer and operator. Given the company’s total global storage portfolio sits at 1.3 GW, Australia is clearly the company’s key battery market.

Neoen owns and operates the 300 MW / 450 MWh Victorian Big Battery in Geelong and the 150 MW / 193.5 MWh Hornsdale Power Reserve in South Australia (SA). Its 100 MW / 200 MWh Capital Battery in the ACT, 200 MW / 400 MWh Blyth Battery in SA, and the 200 MW / 400 MWh Western Downs Battery in Queensland are all currently under construction.