Neoen unable to repeat Hornsdale battery bonanza in first quarter revenue
Sophie Vorrath 12 May 2021 0
The stunning January 2020 performance of Australia's original Tesla big battery, the Hornsdale Power Reserve, continues to set an unattainable benchmark for French renewables giant Neoen, with the company's first quarter 2021 result down 16% on the same time last year – a victim of its own success.
Neoen on Wednesday reported a Q1 2021 consolidated revenue of €80.2 million ($A124.4m), a decrease of 16% compared to the same time in 2020, dragged down by a decline in storage revenue from €21.6 million in 2020 to €5.3 million this year.
Wind and solar generation contributed to the bulk of the earnings for the quarter: €38 million from solar (equal to the same time in 2020); and €36.7 million for wind, a slight increase on the same time in 2020 thanks to "excellent wind resources" in Europe.
Neoen chief Xavier Barbaro said the "very substantial contraction" in the earnings from storage was to be expected, given the "exceptionally strong level of revenue recorded by our storage activity in Australia during the first quarter of 2020," which the earnings report explains benefited from specific non-recurring conditions.
As RenewEconomy has reported, those "non-recurring conditions" refer to the bonanza from the January 2020 event when the main link from South Australia and Victoria was blown down by a storm, and the Hornsdale and other batteries played a key role in holding the South Australia grid together, for which they were amply rewarded.
Since then, the Neoen's Hornsdale Power Reserve has grown in size, but its earnings have shrunk as a result of increased competition in one of the key network services market and – happily for the Australian grid – no repeat of the South Australian system black.
In fact, the overall improved stabilisation of Australian National Electricity Market, thanks in no small part to grid-scale batteries, and the addition of ever increasing amounts of new renewable generation capacity – in particular heaps of rooftop solar – have proven to be a dampener for battery storage revenues, in general.
As Neoen put it, storage revenue was also depressed in the first quarter of 2021 by the less favorable market conditions for network services (FCAS) in Australia, and as weaker demand for electricity during the period placed reduced strain on the grid. For Neoen, storage revenue accounted for 7% of consolidated revenue in the first quarter of 2021, compared to 23% in Q1 2020.
But of course, there are plenty more renewable energy and storage strings to Neoen's bow than the SA big battery – and there will be many more revenue streams for batteries to tap as grids modernise and rules change.
In February, for example, Neoen announced it had reached financial close on its Victorian Big Battery – which stands to be one of the world's largest battery storage projects with a capacity of 300MW/450MWh – just three months after securing a 250MW grid services contract with the Australian Energy Market Operator. Neoen said the Victorian big battery was on track to be operational in time for the next Australian summer.
In addition, the company noted that its much-delayed 214MW Bulgana wind farm in Victoria (with 20MW/34MWh in storage), which gradually began injecting electricity into the grid from the end of the first half of 2020, had continued to operate "at a limited capacity" over the first quarter of 2021.
Neoen also used its Q1 results statement to reiterate its target of having more than 5GW of capacity in operation or under construction by the end of 2021, fully operational by year-end 2022, and at least 10GW of capacity in operation or under construction by year-end 2025.
In Australia, the development pipeline includes the massive Culcairn solar and battery project, which aims to combine 350MW of solar with a 100MW/200MWh big battery in southern NSW. The Culcairn project was granted development approval by the NSW government in late March.
Neoen has also proposed to build a massive wind, solar and battery storage hub in the New South Wales New England region of New England, that will combine around 380MW of wind power, 120MW of solar and a 400MW battery (MWh not yet specified) on land between the towns of Bendemeer and Kentucky.
One notable disappointment in Australia for Neoen – although this was not marked in the company's results for Q1 – was the extraordinary intervention earlier this month by federal resources minister, Keith Pitt, to veto a proposed $280 million loan from the Northern Australia Infrastructure Facility for Neoen's Kaban Green Energy Hub.
The Kaban Hub is a $A340 million, 157MW wind project planned for south-west of Cairns that also has planning approval for a 100MW big battery and that, last year, had reportedly reached the "due diligence" stage to receive a loan from NAIF for its construction.
In a statement at the time of Pitt's intervention, Neoen Australia chief Louis de Sambucy said the company was disappointment by NAIF's decision not to proceed with a loan to Kaban Green Power Hub, but not deterred from developing the project.
"Neoen remains committed to Kaban and the opportunities it presents for energy affordability, reliability and emissions reductions in Queensland. The project combines a 157 MW wind farm contracted with CleanCo at a competitive electricity price, with a network improvement in Far North Queensland.
"Our focus remains on delivering Kaban. We are now actively exploring all options and are hopeful of announcing a positive pathway forward in upcoming days," de Sambucy said.
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