Can Australia lead the world in storage?

Friday, 01 December, 2017

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Australia has the potential to lead the world in developing large- and home-scale energy storage systems, says a report by the Australian Council of Learned Academies (ACOLA).

However, without proper planning and investment in energy storage, electricity costs in Australia will continue to rise and electricity supply will become less reliable, warns the ACOLA report, titled The role of energy storage in Australia’s future energy mix.

Co-funded by the Office of the Chief Scientist Alan Finkel, the report found that there is public awareness of energy storage solutions such as batteries and pumped hydro, but there is very limited knowledge of other emerging technologies such as renewable hydrogen.

There are 1.8 million homes with rooftop solar power systems that could use battery packs for energy storage but there is reluctance from customers to install batteries at home for perceived safety reasons, according to the report.

“This report clearly shows the two sides of the coin — that energy storage is an enormous opportunity for Australia but there is work to be done to build consumer confidence,” said the chair of the ACOLA expert working group, Dr Bruce Godfrey.

“Australia has world-class resources of raw materials used in battery manufacturing, most notably lithium. Our raw materials, together with our world-class expertise in the development of energy storage solutions, including batteries, the design of software and hardware to optimise integration in smart energy systems, and expertise in the design and deployment of systems for off-grid energy supply and micro-grids, demonstrate that Australia has the potential to become a world leader,” states the report.

“While the possibility of Australia becoming a manufacturer of existing battery technologies is highly unlikely, there is opportunity for manufacturing of next-generation battery technologies.

“There is a legitimate role for governments to ensure that the right policy settings are enacted to drive growth in energy storage. Policy leadership will result in innovation, investment, the establishment of new high technology industries, the growth of existing high-technology industries and increased or new energy exports. A proactive approach will provide the opportunity for Australia to lead and facilitate reskilling of workforces and the creation of jobs across all levels of the value chain from mining and manufacturing through to consumer spending.

The report explains that energy storage solutions can improve Australia’s energy system in two major ways. First, by providing greater security by stabilising frequencies that fluctuate within seconds, especially with renewable energy sources such as wind and solar farms. Second, by improving reliability by providing additional back-up power when needed in times of high demand such as heatwaves.

Below are the 10 key findings of the report:

  1. Security — There is a near-term requirement to strengthen energy security in NEM jurisdictions. Maintaining acceptable energy security levels for customers will dominate energy reliability requirements until well in excess of 50% renewable energy penetration. Batteries are cost-effective for system security when installed with a high power-to-energy ratio, noting that there are other ways to strengthen system security (eg, installation of more fast-start gas turbines, use of spinning reserve in wind turbines, and demand response and load shedding measures).
  2. Reliability — At an aggregated national level, Australia can reach penetrations of 50% renewable energy without a significant requirement for storage to support energy reliability. Installing the levels of storage power capacity (GW) required for the purpose of security creates the opportunity to expand energy stored (GWh) capacity for reliability at a lower marginal cost than would otherwise be the case. Despite significant development time, pumped hydro energy storage (PHES) is presently the cheapest way to meet a reliability requirement. Projections indicate that the most cost-effective energy storage options available in 2030 will be PHES, lithium-ion batteries and zinc bromine batteries. These all have similar levelised cost of storage (LCOS), depending on the PHES sites selected and uncertainty in the rate of reduction of battery costs.
  3. Policy and incentives — Australia is well placed to participate in global energy storage supply chains. Business opportunities will arise, given appropriate policy decisions at state and Commonwealth levels, and incentives. Australian companies and researchers are commercialising their energy storage intellectual property through international and global partnerships. Australia has abundant resources (eg, solar), appropriately skilled workforces and established supply chain relationships to generate renewable hydrogen and ammonia at the volumes required to supply potential export markets, such as Japan and Korea.
  4. Enhanced collaboration — Australia is recognised as conducting world-leading research in several energy storage disciplines, but deriving the full return-on-investment from this research requires improved research translation through national and international industry-research collaboration and commercialisation.
  5. Funding and revenue — The availability of private sector risk capital and profitable revenue streams for Australian energy storage start-ups and projects is a challenge for new ventures, as is policy uncertainty. Profitable revenue streams from energy markets together with consistent, stable and integrated energy and climate policies will be essential to drive investment in energy storage and other technology solutions that support decarbonisation of the electricity system while ensuring system security and consumer equity. Technology-neutral market-based reforms will be required to address these challenges at least cost.
  6. Sustainability — A high uptake of battery storage has a potential for significant safety, environmental and social impacts that would undermine net benefits. The development of safety standards is required given anticipated rapid uptake of batteries. As an early market ‘test bed’ for batteries, Australia has an opportunity to promote and lead development of sustainable supply chains from mining to disposal. This would use Australia’s expertise in sustainable mining to lead and support the development of international standards. There are opportunities for consumers to influence commercial behaviour globally through improved awareness of the environmental and social impacts of battery development.
  7. Waste management — Unless planned for and managed appropriately, batteries present a future waste management challenge. Australia has an opportunity to play a product stewardship role to ensure the sustainable repurposing of used electric vehicle batteries and recycling of all batteries. Focused development of recycling infrastructure and technology will be crucial and provides an opportunity for industry development and job growth.
  8. Affordability — Australians are deeply concerned by the sharp rise in electricity prices and affordability. Deregulation of the electricity market, changes in feed-in-tariff schemes and other time-of-use tariffs have led to an underlying general mistrust of the government and energy providers. Focus group participants believe that individual consumers who can afford home battery storage units may elect to become independent of the grid to avoid rising energy costs.
  9. Safety — A majority of respondents surveyed said they did not know enough to make an informed decision about whether to purchase a home battery storage unit. Although a battery storage installation standard is currently being developed, there are concerns that an early incident may have serious ramifications for household deployment, with many referring to the ‘Home Insulation Program’ failure. ‘Pumped hydro’ was recognised by some as an established utility-scale technology, but that possible ‘social licence’ issues may arise due to the perception of competing land use and a potential lack of water. There is an opportunity for governments to increase the public’s knowledge and awareness of energy systems (from energy generation through to storage — at utility and consumer levels).
  10. A higher renewable mix — Australians favour a higher renewable mix by 2030, particularly PV and wind, with significant energy storage deployed to manage grid security. The majority of those surveyed suggested they would look to government to play a role in the future energy mix, but lacked confidence that their preference for higher renewables would be achieved without consistent energy policies.

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