Energy storage — unlocking the value
Australia is in the midst of an energy revolution. Centralised, fossil fuel-fired electricity systems are transitioning to systems powered by renewable energy. But it is the extraordinary capabilities of existing and emerging energy and battery storage technology that underpin this renewable energy revolution.
When the first electric light was switched on at the Sydney Observatory in the mid 1860s, it would have been impossible to understand the electricity revolution that would eventuate in Australia. Almost 70 years ago, the current grid really started to take shape; a highly centralised design structured around centralised generators and fuelled by the plentiful and cheap supply of Australian coal.
Now, we can see the end of coal-fired generation in Australia; an outcome that will fundamentally change our electricity system forever. The changes occurring in the electricity grid today will ensure that we will never build another coal-fired generator.
The changing energy mix over the last two decades has been driven by developments in renewable energy generation, particularly in the deployment of large-scale wind and residential solar photovoltaics (PV). Currently, there are over 1.8 million residential household solar PV systems, the highest per capita deployment anywhere in the world. This number is set to double again by the mid 2020s.
To support existing and emerging renewable generation, there is now a strong focus on the role that energy storage broadly, and battery storage specifically, is going to play. The focus on energy storage is playing out in four key areas of our electricity system — residential battery storage, grid-scale battery storage, community-scale battery storage and system-scale energy storage.
Residential battery storage
The current interest in residential battery storage (in the tens of kW/kWh) emerged in 2015 as grid-connected batteries started to become widely available. The cost of these batteries was being driven down by the increase in electric vehicle production. This created opportunities for consumers to adopt lithium batteries alongside their solar PV to enable them to store the energy they generated during the day, and then use it in the evening when buying energy from the grid was more expensive.
So what is driving customers to adopt battery storage? In most cases, it is about addressing the rising cost of electricity — which has risen 63% over the last 10 years. In addition, many customers are keen to play a role in supporting more renewable generation as a means to reduce the CO2 emissions that are contributing to climate change.
Uptake of residential battery storage predictions vary, but some are as high as 1 million residential battery systems by 2020. Progress towards this number has been modest: slowed by the economics of residential battery storage, and by the complications of installing and commissioning these new storage systems.
Reducing the complexity of installing, commissioning and operating residential battery storage systems is a crucial challenge for industry, one that will underpin the long-term success and interest in this type of energy storage.
Grid-scale battery storage
Alongside the adoption of residential battery storage, there is also increasing awareness and adoption of grid-scale, or utility-scale, battery storage systems. These batteries are often installed alongside utility-scale wind and solar farms around Australia. The best-known example of a battery like this is the 100 MW/129 MWh Tesla big battery which was installed in 2017 in South Australia. This battery installation, known as the Hornsdale Power Reserve (HPR), remains the largest lithium-based battery system currently installed in the world.
HPR won’t be the only big lithium battery in Australia though. Many states are investigating how grid-scale battery systems can support increasing renewable energy generation whilst contributing to the stable and efficient operation of the broader electricity system. Increasingly, these large-scale battery storage deployments will be selling energy and other services into the National Electricity Market (NEM), playing a key role in providing energy reliability and security for us all. The potential for this contribution is best highlighted by the HPR installation, which, since its installation, has provided a 55% share of a key stability service in the South Australian electricity market.
Lithium batteries aren’t the only story though. While the price of lithium batteries continues to be driven down by increasing electric vehicle production, the power-to-weight ratio of lithium storage is less relevant for stationary batteries. There is interest in the advantages of other battery chemistries that have longer operating lifetimes.
We are likely to see a lot more vanadium flow batteries being installed over the years ahead. Vanadium flow batteries were first developed by Australian researchers over 30 years ago, but the cost to produce them is decreasing due to the demand for these batteries coming out of China.
Community-scale battery storage
In between residential and utility-scale storage, future opportunities exist for the wide-scale deployment of community battery storage systems (ie, batteries in the hundreds of kW/kWh). These systems could provide communal energy storage for up to 150 dwellings. While there have been limited community battery systems installed to date, the economics of community battery storage is dramatically improving and is occurring alongside increasing interest in community energy models in both rural and urban centres.
However, unlocking the value to the community of these battery systems is going to require some key regulatory changes. The most notable change required is to the structure of the network tariffs which determine the cost of transferring energy between households participating in these new energy communities.
The other key challenge is primarily logistical. Namely, where do you put these community storage systems? And who will own and operate them? Addressing these challenges will provide big opportunities to shake up the current landscape of the Australian electricity system.
With all the media attention given to batteries, you could be forgiven for forgetting that Australia has had a long history of system-scale energy storage in the form of pumped hydropower.
Interest in this area has been reinvigorated with the activities surrounding the studies for what is being called Snowy 2.0 — a massive increase in the amount of pumped hydro energy storage that would be retrofitted into the existing Snowy Hydro Scheme. The Snowy 2.0 plan would add 2000 MW of energy storage capacity to the current Snowy Hydro Scheme and would come online in 2024.
Making it work
With the plethora of battery and energy storage capabilities outlined above, the question is not whether energy storage is going to play a role in our future electricity system but how significant that role will be. The challenge then becomes how we coordinate and orchestrate energy and battery storage to work as part of the broader electricity system and electricity market.
Addressing this challenge, and unlocking the value of energy and battery storage, is consuming the attention of many in the energy industry at the current time. The market operator, regulators and electricity networks are all actively engaged in solving this problem and new capabilities like virtual power plant (VPP) technology are in the process of being deployed.
Energy and battery storage will play a vital role in ensuring we have a reliable and secure supply of energy, while reducing electricity costs for both residential and industrial customers alike.
Storage will underpin the renewable energy revolution, and now is the time to take advantage of this opportunity.
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