Western Australia to Increase Capacity Payments for Six-Hour Battery Storage to $491,700/MW by 2029
The Economic Regulation Authority of Western Australia has proposed increasing capacity payments for six-hour battery storage systems to $491,700 per megawatt by the 2028/29 year, up from $360,700 currently. This adjustment aims to promote large battery systems alongside gas generators as the region transitions away from coal-fired power. The rise in payments is driven by higher construction, labor, and transmission costs, as well as increased demand for grid-forming technologies.
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The Economic Regulation Authority of Western Australia has proposed increased capacity payments for large battery storage systems, recommending annual payments of $491,700 per megawatt starting in the 2028/29 year, up from $360,700 currently and $141,900 in 2022/23. This change aims to encourage six-hour storage batteries as a new benchmark.
Payments will also apply to gas generators and other dispatchable generation. The assessment is based on a 200 MW battery with 1,200 MWh of storage, providing potential payments of $9.8 million annually.
The rise in payments is attributed to increased storage capacity and rising costs in construction, labor, and transmission connections. The report also highlights rising costs of power conversion systems, which have doubled due to greater demand for grid forming inverters and supply chain issues. As coal-fired generators retire, the emphasis on flexible capacity and battery storage is expected to grow.
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