The number of large storage facilities currently in planning is soaring. The market for home battery storage is also expected to grow in 2020.
By Heiko Stumpf | GTAI Sydney
Australia is becoming a leader in large battery storage systems. The expansion of the world’s second largest lithium-ion battery was just completed in South Australia in September 2020. This increases the capacity of the internationally renowned Hornsdale Power Reserve (Noen/Tesla) to 150 megawatts (MW; capacity 150 megawatt hours (MWh)).
Further large-scale plants are likely to be built in the coming years. Rystad Energy analysts report a high market dynamism. For example, the project pipeline for large batteries has increased fivefold over the past one and a half years. Even at the beginning of 2019, the projects across the country amounted to a total output of 5 gigawatts (GW). That rose to 25 GW by mid-2020, spread across some 140 individual projects.
Companies are building new mega batteries
The French company Noen has set itself particularly ambitious goals with the planned Goyder Renewables Zone in SA. Along with wind and solar parks, a gigantic battery storage facility is set to be built there (900 MW/1,800 MWh). The construction will take place in three phases (300 MW/600 MWh each). The plans well and truly dwarf even the world’s largest battery in San Diego, California (Gateway Project, 250 MW). Noen plans to build another large battery with a capacity of 600 MW in Geelong, Victoria.
The energy group AGL Energy is also investing heavily. Storage facilities with a total capacity of 850 MW are to be built by 2024. The centrepiece is a planned battery park with 500 MW at the site of the Liddell coal power plant. The plant will be shut down in 2023 but the existing grid infrastructure will continue to be used. A further five batteries will be realised together with the partner companies Maoeng Group and Vena Energy.
This development is associated with changes in the Australian electricity market. By 2040, around 60 percent of the existing coal capacities, around 23 GW, in the National Electricity Market (NEM) on the East Coast grid will be decommissioned. To replace this, a huge increase in wind and solar power capacity is required. According to a medium scenario of the Australian Energy Market Operator (AEMO), storage capacities of more than 12 GW are required to ensure the stability of the power grid.
Industry experts expect that batteries will be able to secure larger market shares in addition to pumped storage power. Currently, operating facilities such as the Hornsdale Power Reserve still generate over 80 percent of their sales from network services in the Frequency Control Anciliary Services (FCAS) market. However, since this offers only limited potential, project developers must find new sources of income.
With the planned Goyder battery, Noen aims to be able to offer hedging transactions on the electricity exchange. Due to the huge increase in solar power, the spot prices in the non-domestic market are increasingly falling into negative territory in the middle of the day but then rise again significantly at peak load times. As the price differences between peak and off-peak times drift further apart, battery operators should increasingly be able to make money through arbitrage by feeding electricity stored during low-price hours into the grid at peak load times.
The regulatory conditions for this are being improved significantly. For example, the average spot price in the NEM has so far been calculated at a thirty-minute interval. From October 2020 this interval will be reduced to 5 minutes. This will benefit technologies such as battery storage, which can react quickly to fluctuations in demand.
The government is also providing new funding for battery research. Under the Technology Investment Roadmap, a total of AUD18 billion will be invested in innovative energy solutions by 2030. The aim is to develop long-duration energy storage (6 to 8 hours or more) at a price below AUD100 per MWh.
Australia is also developing into an interesting sales market for manufacturers of home batteries. Nationwide, 2.3 million households already have a solar system on their roofs. The total installed capacity has already reached around 10 GW. With an expected increase of almost 3 gigawatts, 2020 could be a new record year.
This means that there is a large group of potential buyers. A total of around 73,000 home storage systems have already been installed in households, with a total capacity of more than 1 gigawatt hour (GWh). According to Sunwizz forecasts, around 28,000 systems could be sold in 2020. Other market researchers also expect a positive market trend. Wood Mackenzie expects installed home storage capacity to increase to 4.2 GWh by 2025.
With the Distributed Energy Buyback Scheme, Western Australia is introducing a feed-in tariff geared towards home batteries. Between 3 pm and 9 pm, a payment of 10 cents per kWh is granted, at other times of day it is only 3 cents per kWh. There are also funding instruments in other states.
SA is a leader in the implementation of virtual power plants (VPP) with 7 projects. The SA government and Tesla are funding the South Australia Virtual Power Plant (SA VPP), which is to become one of the world’s largest with 50,000 participants. New South Wales is supporting the development of 5 VPPs with the Emerging Energy Program. AGL Energy plans to build a 350 MW VPP on the East Coast by 2024.
However, Western Australia is testing the concept of community batteries. It allows households with solar systems to rent storage capacity via a subscription (for example, AUD1.60 per 6 kWh).
Translation by: 2M Language Services.