Delta Electricity hopes a pair of 30 megawatt batteries will help the ageing Vales Point power station improve its integration with an increasingly unstable electricity grid.
Spokesman Anthony Callen said the company was in the process of applying for funding from the Clean Energy Finance Corporation as part of the $1 billion grid reliability fund announced on Wednesday.
"It (the battery project) is not designed to extend the life of the plant but rather reduce the wear and tear and help the plant respond to variations in the grid," he said.
The grid integration fund will look at storage and network options to help with the integration of renewables across the national power grid.
It will support clean energy projects including energy storage, pumped hydro, grid stabilising technologies and transmission and distribution infrastructure, including eligible projects listed under the Underwriting New Generation Investments program.
But the new fund will not be asked to fund any coal investments, such as the $20 million proposal to upgrade the existing turbine at Vales Point Power Station, which supplies about 4 per cent of power for the national grid.
The company argues the turbine upgrade would reduce greenhouse gas emissions by 100,000 tonnes of carbon compared to existing operations.
It is believed federal energy Minister Matt Canavan is lobbying to have the Vales Point upgrade funded as part of the Underwriting New Generation Investments program.
Delta also signed a deal for a 62 megawatt solar farm at the Vales Point site earlier this month.
The Hunter Business Chamber chief executive Bob Hawes said proposals that sought to replace generation capacity that will be lost with the pending retirement of coal fired power stations in the Hunter were welcome.
"Battery and pumped hydro have some capability to address the gaps in supply that may eventuate from renewable energy sources at times when the sun is not shining or the wind is not blowing," he said.
The Chamber had an abiding concern that on a 'like-for-like' basis the comparison of the new proposals fell well short of the capacity and reliability of the current generators.
"For example, Vales Point is rated with a 1320megawatt capability on a virtual 24/7 basis. The battery proposal is rated at 30megawatt and the recent solar farm deal announced by Delta, is 62megawatt," Mr Hawes said.
"Notwithstanding that there is likely potential for other energy generation initiatives on the Vales Point site, and elsewhere, that will contribute to the total generative capacity across the state, there will still likely to be a significant shortfall in matching the megawatt hours capacity of the current assets on which Hunter industries rely to operate."
