As the new Australian government sets about its plan of revamping the nation’s climate change agenda, a similar overhaul is occurring within the fossil fuel-dependent energy sector. 

Australia is heavily reliant on coal for its energy generation, accounting for around 75% of the nation’s total production, according to Geoscience Australia, while coal was responsible for 30% of Australia’s greenhouse gas emissions in 2019.


But as the urgency of the climate crisis escalates, efforts are being made to transition Australia’s energy dependency away from carbon-intensive fuels. 

For example, the 2.88-gigawatt (GW) Eraring coal-fired power station, operated by Origin Energy, is now set to close in 2025 — seven years ahead of schedule.

An “influx of renewables” was touted as the driving force behind the premature closure, but for Origin, the bricks and mortar of the Eraring plant presented an opportunity to harness the spooling supply of green energy by converting the site into a battery energy storage system (Bess).

The first phase of the project will see a 460MW/920MWh capacity system put in place, used for frequency control ancillary services (FCAS), balancing demand throughout the local power system. Eventually, a 700MW Bess will be installed, allowing the operator to hedge costs by using intra-day energy arbitrage. 

For the Australian energy market, the converted Eraring site represents a seismic shift in the direction of Australia’s energy infrastructure needs.

Finding the Bess solution


Beyond this colossal plant, similar proposals have been drawn up to further expand Australia’s burgeoning Bess infrastructure within decommissioned coal plants. The New South Wales state government has already greenlit a 300-megawatt (MW) Bess at the Liddell power station, Muswellbrook.

In Victoria, the Yallourn coal-fired power station has had its closure brought forward four years to 2028, and plans for a completed 350MW Bess have been scheduled for 2026.

When announced in 2021, EnergyAustralia described the Bess as being “larger than any battery operating in the world today”, but given the pace of expansion within the Australian renewable energy market, that figure has already been eclipsed by a magnitude of two. The existing Yallourn site generates around 1.48GW, but EnergyAustralia has said that these new energy storage systems will be scaled up prior to the power station — Australia’s dirtiest by carbon dioxide emissions — being removed from Victoria’s grid.

Some 20km away, the Hazelwood power station is also undergoing a ‘Bess-toration’. The coal-fired generator, which ceased energy production in 2017, will be home to an operational Bess by November this year. Financed with A$150m ($108.3m) of French utility company Engie and Macquarie’s Green Investment Group capital, the site will be operated as a joint venture between Germany-based Siemens and US-based energy distributor AES.

A 2020 a report from Cornwall Insight found there are 7GW of proposed battery energy storage projects in Australia, with the average project in that pipeline sized at around 150MW.

Overall, Australia’s Bess market has been gathering momentum. Total Bess installed capacity exceeded 1.09GW at the end of 2021, about 75% of which was made up by non-residential, utility-scale Bess deployments, according to Melbourne-based market intelligence firm SunWiz. 

The Australian Bess market is now expected to register a compound annual growth rate of more than 7% between 2022 and 2027, according to Mordor Intelligence.

While this repurposing of coal plants may appear to be a symbolic indication of a shift in Australia’s energy industry, the commercial reasoning for overhauling coal plants is justified, says Matthew Lumsden, CEO of UK-based Bess provider Connected Energy. 

Chiefly for the site operators, the high capacity and high-cost infrastructure are already in place, making it a logical decision to revamp rather than demolish the sites.

Beyond the physical assets, such as cabling, transformers and control mechanisms, Mr Lumsden points to the “intellectual assets” already in place at these sites, with a “skilled and knowledgeable energy workforce” in place locally.

But it is not solely Australia that is attracting attention. Elsewhere, he notes that the transformation of fossil fuel plants into Bess sites is gaining traction, with “several such sites being considered” across the globe.

Globally, the energy storage market is new and evolving, so the investment case “varies greatly between markets and geographies”, says Mr Lumsden, as does the pace of policy and regulation.

In the UK, the pipeline of energy storage projects is set to double by April 2023, according to industry group RenewableUK.

Mr Lumsden adds that in most markets seeking to decarbonise their infrastructure, there will be a “technical requirement for energy storage, so commercially attractive market mechanisms will be required to enable this to happen”.

Local issues, global opportunity

Much like the rest of the world, the Australian energy economy is in a state of transition, yet Australia’s vast geography necessitates a shift in distribution and consumption alongside production, Mr Lumsden says.

“Australia has a highly distributed largely coastal population, so the expansion of transmission infrastructure to marry up large-scale distributed renewable generation with these widely distributed point loads will be extremely expensive. Using battery storage to provide more localised control is a commercially attractive solution,” he says.

In Australia’s sparsely-populated Northern Territory, for example, a 35MW Bess from Hitachi Energy has been touted as a key enabler of more domestic solar production. Around one in six Territorians have household solar panels, significantly less than other states. 

“Renewables are the way forward, this is why we are investing in the Bess,” says Northern Territory renewables and energy minister Eva Lawler, “so we can have clean and efficient energy which helps us reach our renewables and net zero emission targets.”

Similarly, Gareth Edwards, associate professor at the University of East Anglia’s School of International Development, says there is a need for clear transition pathways on a regional basis. 

Many parts of rural Australia are “currently dependent on coal mining and power for employment”, and battery storage systems are just one example of the energy and infrastructure solutions that will need to be implemented over the coming years. 

The actions of Australian decision-makers are likely to be watched from across the world as nations continue to integrate sustainable energy into their networks. Yet, fittingly, it is Australia’s mining industry that separates it from the pack.

Australia is the world’s “key producer of battery minerals”, says Mr Martinus, with efforts to attract investment and move “downstream along the supply chain into battery materials manufacture and storage packs” well underway. 

Therefore, it “makes sense to accelerate the transition to battery storage here, maybe more than anywhere else in the world”, says Mr Lumsden.

This article first appeared in the June/July 2022 edition of fDi Intelligence. Read the online edition of the magazine here.