Neoen to expand Li-ion battery capacity at Hornsdale plant

Australia’s Hornsdale Power Reserve, the world’s biggest lithium-ion battery plant, is set to expand capacity by 50% to 150 megawatts, according to Neoen SA, the French power producer that owns and operates the site.

The $48 million project built in 2017 in conjunction with US-based Tesla Inc, has saved local energy consumers more than $50 million in energy costs over its first year of operation, Neoen said on Tuesday November 19. The expansion which will be completed in the first half of 2020, will see these savings continue to grow, the company added.
"By providing an additional 50 MW of fast-ramping market capacity, it is designed to reduce spot price volatility and protect the grid from network disturbances, resulting in more affordable, reliable, and secure power for all South Australians," Dan van Holst Pellekaan, South Australia's Minister for Energy and Mining, said.
The South Australian government is committing a total of $15 million over five years in grant funding toward the expansion through its Grid Scale Storage Fund. The Australian Renewable Energy Agency (ARENA) is also contributing $8 million, and the project will benefit from up to $34 million in cheap loans through the Clean Energy Finance Corp (CEFC).
The expansion indicates the rapid increase in market demand for battery energy storage systems (BESS) technology that utilizes lithium-ion batteries in Australia amid a phase out of coal plants.
"The fact that Neoen are looking to expand the Hornsdale by 50% just a year after it started speaks volumes as to the success of the business model and that means it is likely to be replicated elsewhere," William Adams, head of battery materials research at Fastmarkets, said.
"While the market's attention is on the outlook for EVs, Fastmarkets have long said that energy storage systems, like the one at Hornsdale, will also be a strong growth market for lithium-ion batteries and the raw materials that make them. Indeed Australia seems to have been bitten by the 'big battery bug' as there are numerous plans under way for even bigger battery storage projects in the country," he added.
Energy storage projects in progress in Australia include a 900 MW project proposed by Neoen in South Australia that would be connected to solar and wind farms. The South Australian government also gave the green light to a project by EPS Energy that plants to install a 500 MW solar and battery storage plant in Robertstown, according to the company's website.
Fastmarkets assessed the lithium carbonate 99.5% Li2CO3 min, battery grade, spot price cif China, Japan & Korea at $9-11 per tonne on November 14, stable from the previous week.
While the price has remained stable in October and November amid thin spot liquidity, it has been weakening over 2019, down by 29% from $13-15 per kg a year ago, as a result of increased lithium supply as well as growing capacity to convert material, which has caused an oversupplied spot market.

Cristina Belda

cristina.belda@fastmarkets.com

Published

Cristina Belda

November 19, 2019

14:26 GMT

London