The Australian Renewable Energy Agency will provide funding of up to $12m for a new battery at the Dalrymple electricity substation on the Yorke Peninsula.
The federal environment and energy minister, Josh Frydenberg, is expected to confirm the funding for the 30MW battery on Wednesday during a visit to South Australia.
The chief executive of Arena, Ivor Frischknecht, said the battery “may not be the biggest battery in the world but pound-for-pound it will pack a big punch in demonstrating how utility-scale storage can contribute to a stronger South Australian energy network”.
“This is the first large scale grid-connected battery to be designed, built and commercially operated in Australia largely with private investment from energy providers,” Frischknecht said.
Frydenberg said in a statement that transmission network provider ElectraNet would design, build and own the battery and lease out the commercial operation at Dalrymple substation to a major energy retailer. The battery is expected to be constructed and operational by February 2018.
The announcement follows a new bout of skirmishing between the South Australian premier, Jay Weatherill, and Canberra over energy policy.
In an interview with Guardian Australia on Tuesday, Weatherill renewed warnings that Labor states were prepared to go it alone on a clean energy target, or some other policy mechanism to provide investment certainty and lower emissions, if the Turnbull government dumped or shelved the central recommendation of the recent Finkel review.
The Coalition is expected to return to its internal debate about whether or not to adopt a clean energy target in September, once the government gets the advice it has sought from the Australian Energy Market Operator about how to ensure the dispatchable power requirements of the electricity grid can be met when ageing coal-fired power stations leave the system.
Political controversy over South Australia’s comparatively high share of wind energy, a statewide blackout last September and a lack of certainty about the post-2020 federal energy and climate policy has prompted Weatherill to pursue a $550m energy sufficiency plan in the state.
The state plan includes Tesla building an array of lithium ion batteries which will be able to store 129 MWh of energy. The Tesla proposal is currently the largest battery project in the world.
The smaller battery to be funded by Arena is the second phase of a storage project designed to help shore up the South Australian power grid.
Frydenberg said the federal investment would supply fast frequency response “to help balance the electricity network and reduce operating constraints on the Heywood interconnector with Victoria”.
The minister said the battery would kick in during any loss of supply in the Dalrymple area and work with the 90MW Wattle Point windfarm and rooftop solar PV systems in a microgrid.
