The Australian Renewable Energy Agency (ARENA) has signed an agreement with the South Australian government to help deliver energy storage projects in the state.

The agreement follows an announcement by the South Australian government in mid-November that it would create a A$50 million Grid Scale Storage Fund (GGSF) to support the development of energy storage infrastructure in the state’s electricity system.

ARENA and South Australia’s government will work together to assess energy storage projects that could be eligible for joint funding. They have also agreed to share knowledge about projects.

Applications for the GSSF may also be eligible for funding from ARENA under its Advancing Renewables Programme (ARP).

The GSSF will be divided into two streams for both behind the meter assets and grid scale assets. The technology neutral fund may support projects such as pumped hydro, hydrogen, gas storage, solar thermal, bioenergy and battery storage. Applicants must be able to match funding dollar-for-dollar.

The South Australian government have given preference to projects targeting financial close by the end of 2019.

“This multi-million dollar fund is more great news for both business and consumers, and is one of a range of measures the Liberal government is taking to make electricity more affordable and reliable,” said state Energy Minister Dan van Holst Pellekaan said. “The fund is technology neutral. Eligible projects must benefit the state by addressing the challenges that have driven up electricity prices in South Australia.

He added: “For example, projects could boost the reliability of our network during peak periods or increase the security of supply at the fringe of our grid. The fund will leverage South Australia’s world-class renewable energy assets, as well as the engineering and technology expertise within our business and investment community.”

South Australia has the highest penetration of renewable energy in Australia’s National Energy Market (NEM), at 45 per cent, and has targeted energy storage technology as a means of tackling issues associated with intermittency.

The world’s largest lithium-ion battery is currently under construction in South Australia, at Neoen’s Hornsdale wind farm.