Lyon Group today announced that it has signed an agreement with China’s second largest power generation company, China Huadian Corporation, to co-develop and invest in power generation with integrated battery energy storage systems (BESS) in China, Australia and other Asian markets.

The agreement brings together an alliance to co-develop stable renewable energy including Japan’s JERA Co. Inc, with whom Lyon and China Huadian each signed separate agreements in 2018.

Lyon’s agreements with China Huadian and JERA position Lyon at the heart of overcoming the limitations of solar and wind energy so they can become primary power sources for the world.

The new agreement documents Lyon and China Huadian’s current focus on:

  1. specific BESS retrofit opportunities in China and two other Asian countries, based on detailed plant-specific assessments; and
  2. China Huadian’s intention to co-develop, purchase, finance and construct Lyon’s advanced integrated solar battery power stations in Australia, as lead EPC contractor via subsidiary China Huadian Engineering Co. Ltd, one of the world’s leading renewable EPC companies.

The new agreement also covers:

  1. integration of long-duration BESS into new and existing China Huadian projects in China and in other Asian nations, to overcome the unstable power output of renewables, avoid curtailment, increase efficiency of exiting plant and ensure future renewable projects integrate BESS; and
  2. development and acquisition of new and existing renewable power generation, as well as supplementation of existing thermal generation.

China Huadian has total assets of more than 825 billion RMB ($172 billion AUD).

Lyon is assisting two of the world largest utilities to address impediments to the roll out of renewable generation. China Huadian and JERA’s generation portfolios are bigger than 150GW and 74GW respectively.

Lyon Chair David Green said the world’s biggest utilities are awake to the imperative of making solar and wind energy work – for power systems, for investors and for national economies.

“Major global utilities like China Huadian and JERA, and the others who have approached Lyon for assistance, are very focussed on addressing the very real limitations of traditional renewables.

“They understand that just continuing to invest in inflexible traditional solar and wind with uncontrolled, energy that is destabilising and often wasted is not commercially sustainable.’

As China ramps up its huge wind and solar construction plans, reduces subsidies, and moves toward a more competitive market, the value of avoided curtailment will be measurable in billions of RMB.

“China Huadian has big plans for solar and wind development but the significant curtailment and grid disturbance they have experienced to date shows that the volume of renewables they want to build will deliver greater benefit, both technically and commercially, with integrated storage.”

Lyon’s project design philosophy is that all new electricity generation must meet the power system requirements of a modern, stable electricity grid and be capable of providing commercial returns.

“Major global utilities like China Huadian are approaching Lyon to work with and invest alongside us because our project design philosophy leads to flexible, dispatchable power stations that supply valuable clean energy, enhance grid stability, and address connection/curtailment risks.

“Traditional standalone solar and wind projects deliver destabilising energy and waste too much of their output. They impose large expenditure on grid stabilisation, network augmentation and ’firming’. They are less flexible than the thermal generation they are supplanting.

“Lyon’s integration of long-duration battery storage with power generation creates flexible, stable power stations that deliver predictable, dispatchable clean power. This reduces investment risk.”

The way that Lyon integrates BESS and renewable generation addresses many of the key opportunities and risks created by substantial and rapid change across the world’s electricity markets:

  • Low and even negative pricing during peak solar and wind production (in markets without competition, this translates as a pattern of new supply variously exceeding and falling short of demand);
  • Greater demand for ancillary services at the same time as lower supply of them, reflecting the nature of predominant generation substitution (wind and solar replacing coal);
  • Growing curtailment of new generation, due to factors including but not limited to thermal constraints and local voltage and frequency destabilisation, driven by construction of clusters of solar and wind in zones remote from matching grid capacity or load; and
  • Adverse loss factor changes, reflecting the same factors as growing curtailment.

“Solving the inflexibility, instability and curtailment of solar and wind is key to lifting and eventually removing the physics, economics and political ceilings on zero emissions power.”

“It’s the big global utilities that understand these challenges and are focussed on overcoming them.”

Background

Lyon Group

The Lyon Group is an independently owned group of companies founded in 2003 which focuses on solar battery power station development, ownership and operation.

Lyon is recognised as one of the world’s leading independent developers of utility-scale integrated renewable generation and BESS.

Lyon developed the world’s first grid connected integrated large-scale solar PV and BESS project, Lakeland Solar and Storage Project, in Queensland, Australia. Lyon is now leading the roll-out of the region’s largest project pipeline of utility-scale integrated solar battery power stations.

China Huadian Corporation

China Huadian Corporation (CHD) is ranked 397 among world’s top 500 companies by Fortune Global 500, 2018.

China Huadian Engineering Co. Ltd (CHEC) develops and invests in overseas markets on behalf of CHD and is the technology and innovation arm of CHD. The main business of CHEC includes overseas independent power producer development, equity investment, power plant EPC and operations & maintenance and technology innovation.

In October 2018, Mr Xie Chunwang as Chairman of China Huadian Green Energy Co., Ltd, one of the sibling companies to CHEC within the CHD group, signed an MOU with JERA and TEPCO Fuel & Power, Inc. on cooperation in energy infrastructure including power generation in third countries.

JERA

The primary investor in Lyon’s developments to date has been JERA, one of the world’s largest energy companies. JERA’s expanding generation portfolio is currently 74GW. The world’s biggest gas buyer and one of the world’s largest coal traders, JERA is an equal joint venture of two major Japanese electricity companies, TEPCO Fuel & Power Inc and Chubu Electric Power Company Inc.

JERA has recognised Lyon as “the world’s leading independent developer of integrated utility-scale battery storage and renewable generation projects”.[1]

Lyon and JERA entered into a joint development agreement covering Lyon’s tranche 1 Australian projects in January 2018, and an Asia Pacific Alliance (also including Fluence) in May 2018.

 

[1] https://www.jera.co.jp/english/information/20180529_26

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