Shell-backed Koorangie battery project completes financing

Australian renewable energy company Edify Energy and Sosteneo, a specialist infrastructure investor, announced the completion of project financing to build and operate the Koorangie Energy Storage System (KESS) with support from Shell Energy.

The 185MW/370MWh battery storage system, valued at AUD400 million ($253.9 million) will be built in the Murray River region, near the renewable energy rich area of Kerang, Victoria.

Developed and structured by Edify, the energy storage system will utilise Tesla Megapacks, equipped with grid forming inverters that operate in ‘virtual machine mode’.

This will allow the storage system, capable of powering 350,000 homes for two hours, to operate in a manner akin to a conventional generator and provide crucial system strength services to increase the renewable hosting capacity of the Murray River renewable energy zone.

According to the partners, the financing deal represents the first transaction in Australia for fund manager Sosteneo after its launch in September, which acquires 100% ownership of the system on behalf of its clients.

The project includes a 20-year System Support Agreement with the Australian Energy Market Operator (AEMO) for the provision of system strength and is further supported by a 15-year offtake agreement with Shell Energy for the full 185MW/370MWh.

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Said Sosteneo’s managing partner and CIO Asia Pacific Ivor Frischknecht in a release: “In an Australian first, the KESS battery project is providing inverter-based grid-forming services under a 20-year contract with AEMO (Australian Energy Market Operator).

“With revenues secured through long-term agreements with Shell Energy and AEMO, the KESS project is well-aligned with our objective of delivering stable commercial returns to clients whilst making an active contribution to the decarbonisation of the energy system.”

The Victorian Government is also supporting the KESS project with funding of AUD119 million ($75.5 million) to AEMO as part of a programme to strengthen the grid so it can host the new renewable generation Victoria needs.

The project is part of a AUD480 million ($304.6 million) investment the Victorian Government is making through its Renewable Energy Zone Fund in 12 projects to address capacity constraints and strengthen and modernise the state’s grid.

The project will also contribute to Victoria’s drive to meet legislated energy storage targets of at least 2.6GW of storage capacity by 2030 and 6.3GW by 2035.

KESS is to be built on the traditional lands of the Barapa Barapa, Wamba Wamba and Yorta Yorta people, within the Gannawarra Shire.

Commented Edify Energy’s John Cole, the company’s founder and CEO: “We are delighted to be delivering a ground breaking project with partners and stakeholders we have worked with on other assets including, Tesla, Shell Energy, Consolidated Power Projects, CBA, BNP Paribas, DNB, Gannawarra Shire Council, the Victorian Government and AEMO.”

Commonwealth Bank’s Deborah Leerhsen, executive general manager of Global Institutional Banking Coverage, added that the contract with AEMO also represents a “new milestone for battery developers, demonstrating that storage system operators can secure an additional income stream for providing system strength to the grid.”