AGL buys up battery energy storage specialist Firm Power, adding 6.1 GW to pipeline

In a market announcement, energy generating and retailing major AGL confirmed it has entered into a binding agreement to acquire battery energy storage specialist Firm Power in a wider deal also encompassing a solar developer and wind farm, worth about $165.5 million (AUD$250 million).

The transaction will deliver AGL, which operates Australia’s largest private electricity generation portfolio within the National Electricity Market (NEM), a pipeline of grid-scale battery energy storage projects to AGL’s pipine and portfolio. The 6.1 GW figure includes 21 mid-sized battery projects, ranging between 200 MW and 500 MW and two- to eight-hours storage duration.

The capacity includes 2.7 GW in the state of Queensland, plus 2.3 GW in the state of New South Wales, and 500 MW of capacity under development in the state of Western Australia, and 300 MW in states Victoria and South Australia.

AGL Managing Director and Chief Executive Officer Damien Nicks said the purchase will support the company’s transition away from coal-fired power generation to backed-up renewables.

“Today’s announcement demonstrates our commitment to grow and accelerate our development pipeline, which is already 6.2 GW, so that AGL is best placed to take advantage of market conditions and prioritise developments that generate the best long-term value and be a leader in the energy transition,” he said.

“We believe this high-quality development pipeline presents strong optionality for AGL, focusing on firming capacity which will be required to firm new renewable generation for our customer base and portfolio as thermal baseload generation exits the NEM.”

Nicks said AGL already has already made good progress on its ambition to build and operate a leading battery energy storage portfolio in the NEM with 800 MW of grid-scale batteries in operation or under construction.

AGL, alongside its strongest competitor Origin Energy, will cement itself as one of the largest big battery developers in Australia with the purchase. The company already had 2.3 GW in its 2030 development pipeline. In terms of the bigger picture, a strong wave of new projects has helped grid-scale batteries in operation or under construction in the country lift to more than 9 GW.

Consultant Rystad Energy had recently stated that the ongoing build places Australia fourth in the world behind only China (57 GW), the US (36 GW) and the UK (12 GW).

The push is being helped by falling battery prices and lithium price falls, with margins so low that cell makers are seeing losses, and sluggish demand from some sectors including electric vehicles.

AGL said its proposed acquisitions are subject to customary conditions, with completion anticipated before the end of the year.

With reporting from pv magazine Australia / David Carroll