NEOEN Neoen SA

By Robb M. Stewart

MELBOURNE, Australia--The world's largest battery is about to get even bigger, with Tesla Inc. (TSLA) set to boost the capacity of its southern Australia lithium-ion operation by 50% to provide additional stability to the power grid.

Neoen SA (NEOEN.SA), the French company that owns and operates the 100 megawatt-129 megawatt hour lithium-ion installation known as the Tesla Big Battery, said Tuesday the 71 million Australian dollar (US$48 million) project will create Australia's first grid-scale battery.

The Hornsdale Power Reserve in Jamestown, north of Adelaide, was built by the Silicon Valley auto maker in less than nine months in 2017 after Chief Executive Elon Musk offered to help the government of South Australia state bolster a vulnerable power network hit by a string of blackouts. Tesla's system stores power generated by a wind farm built by Neoen.

Battery storage has become a critical bridge for Australia's power network as aging coal-fired plants are increasingly shut down. Power generated by wind and solar farms need a backup for intermittent supply, and recent decreases in battery prices have made them an alternative to plants that only run during peak hours.

South Australia Minister for Energy and Mining Dan van Holst Pellekaan said the battery's expanded capacity will reduce volatility in spot electricity prices and protect the state grid from network disruptions.

In its first year of operation the battery saved consumers more than A$50 million, Neoen said, adding that the expansion--due to be completed in the first half of next year--will increase savings.

When the additional Tesla battery packs are installed at the site, the operation will provide a large-scale demonstration of the potential for battery storage to provide inertia to a network, stabilizing the grid when electricity supply and demand fluctuate, the French company said.

The battery technology will trial responding to supply shifts by automatically charging and discharging, imitating existing services in current fossil-fuel power systems.

The project will receive A$15 million over five years from the state government's Grid Scale Storage Fund, becoming the first development to receive money from the fund that was set up a year ago. The federal government's Australian Renewable Energy Agency has committed A$8 million in grant funding, while government-owned Clean Energy Finance Corp. will provide debt financing, Neoen said.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

November 18, 2019 23:47 ET (04:47 GMT)

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