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Storage boom: Victoria outstrips South Australia tender with 100+ proposals

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Confirmation that Australia has suddenly become the “go-to” place for the international battery storage industry comes with news that Victoria’s battery storage tender attracted some 110 proposals, outstripping even the extraordinary response to the rival tender in South Australia.

Officials confirmed the tender numbers to RenewEconomy this week, with more than two thirds of the proposals being considered “credible”.

That call for expressions of interest was for a 20MW/80MWh battery storage array to be built in western Victoria, at a site with a “weak network” and expanding renewable energy capacity.

Another EOI process is being run for a another 80MW of energy storage, with proposals due on April 25. Once those have been processed, and the final configuration narrowed and defined, a dual-track tender process will take place.

That tender is also open to storage providers such as pumped hydro and solar thermal, but the time lines outlined by Victoria appear to rule these out of contention.

The Victorian tender is happening at the same time as the South Australian tender for 100MW/100MWh of battery storage (with varying configurations also welcome). The initial phase closed last Friday and on Monday the state energy minister revealed that 90 proposals had been received from 10 different countries.

About one dozen of those proposals have been identified, but many more are sailing under the horizon. Tesla, Kokam and LG Chem have all reported multiple proposals that they are involved with, without specifying any details.

Victoria is putting $25 million towards its tender for 100MW of storage, while South Australia is putting up to $15 to $20 million, and may also write contracts to provide “firm” output at critical points.

victoria planState government officials say it highlights how Australia has now become the focus of the international battery storage market, with a major push into grid scale storage, coming at the same time as burgeoning demand for “behind the meter” storage in households and businesses, and a succession of rule changes.

Key among those is the proposed change to the 30-minute settlement rule in favour of a 5-minute settlement. This might seem just a detail of an opaque energy market, but it has major implications for the future of the industry, because a 5-minute rule would encourage fast-acting technology such as battery storage and demand response.

The incumbent fossil fuel generators have been accused of using the 30-minute settlement to manipulate the markets, withdrawing capacity to force up prices at certain periods before flooding the market with suddenly available capacity to cash in on the windfalls.

And while RenewEconomy put the spotlight on the issue back in June last year, it has now taken centre stage, with The Australia Institute publishing a full-page advertisement in the Australian Financial Review on Wednesday, calling for the rule change to be implemented.

The letter, pictured below, was signed by a range of energy industry luminaries, including former Liberal leader and solar thermal hopeful John Hewson; Embark Australia chair Simon Holmes à Court; Australian Centre for Advanced Photovoltaics head Professor Martin Green; and Steve Garner, from Victorian wind tower manufacturer, Keppel Prince.

TAIopenletter

The 5-minute rule and other changes are considered critically important to the future of battery storage, which is, in turn, critically important to the wholesale shift to renewables.

Even though some proponents, such as ex Hazelwood coal plant boss Tony Concannon, now head of Reach Solar, say that large-scale solar plus battery storage is as cheap as gas-fired generation, most say that the true benefits of battery storage – and there are potentially up to 20 of them – cannot be fully exploited without a change in rules.

These include changes to markets for frequency and ancillary services, and rules that would facilitate the use of battery storage for network augmentations, or in virtual power plants, where the output of numerous solar households and businesses is aggregated to resemble that of a solar power station.

And, as TAI executive director Ben Oquist noted in a statement issued with the open letter, adjusting this key market lever is just one of several relatively simple actions that governments can take right away, to lower costs, enhance security and reduce emissions.

“The Five Minute Settlement Rule has the backing of the Australian Energy Market Operator and the Australian Energy Regulator, as well as other key industry and energy experts,” he said.

“It’s a straightforward change with wide-ranging benefits, most important of which will be create conditions to attract investment from fast responding energy technologies, such as batteries.”

But just because they can – and, arguably, should – doesn’t mean they will.

Rising above the largely confected “intermittent renewables vs baseload fossil fuels” debate has so far proven difficult for Coalition leader Malcolm Turnbull. Backing a rule that would, in effect, open the door for more large-scale renewables while actively undermining one of the last strongholds of the energy incumbents might be a bridge too far.

As we noted in June last year, the rule change will almost certainly be opposed by owners of large generators, particularly those with existing generating assets that cannot respond as quickly to demand and supply changes and wholesale market price signals.

The position of “gentailers” – those companies with large generation assets but also promising a switch to distributed generation – will be interesting to watch.  

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  • BushAxe

    One wonders if AGL’s recent backflip on a new GT in SA has been driven by the wave of battery proposals? Have they seen the light and are now looking seriously at grid battery installations instead?

  • Cooma Doug

    The fall in battery costs and solar plus the inevitable “carbon fee” will make gas twice the cost of renewables. You think Im nuts I guess. But there will be a carbon fee introduced. It will be paid to the energy consumer as a dividend. This fee will be non political as it flows to the consumer.
    Just to be even more “out there”, you will see even Donald Trump support this concept eventually if he is still in the chair. ThIs is a world wide concept gaining some attention especially in the USA.

    • Even Exxon agrees this is a good idea. They agree because they want to set the price to closer to $20/ton instead of true societal cost of $200/ton (factors in health costs, pollution, etc.) Probable it’ll be closer to $40/ton in the end, if implemented (and I hope it will be).

    • stephan011

      People are calling it the Carbon Dividend, basic idea:
      Institute an escalating carbon tax and used the 50% of the funds to pay a monthly dividend to the bottom two-thirds.

      Then take the remaining 50% and put it towards CO2 mitigation efforts.

    • Alastair Leith

      Carbon pricing is no silver bullet and certainly at the kinds of prices being suggested will be ineffective for decades unless ramped up much more steeply than what’s likely to be considered ‘politically viable’. Let’s reflect on the fact that ALP now don’t even consider the national RET politically viable beyond 2020, though I suspect that’s more to do with their leader and his political base than anything else. Certainly 50% investment flowing to CO2 sequestration (atmospheric not coal and gas CO2!) and elimination of methane fugitives would be a good outcome.

  • Chris Fraser

    Now it’s Labor State Governments that have seen the light of Transition. I’d say right now they’ve got the goods over the alleged Rhodes Scholars from the other place …

    • Brunel

      Labor should buy 51% of MEL airport while they are at it.

      Then they can either cut parking charges or if they do not, at least the profits will go into government coffers.

      • Barri Mundee

        Worst move ever to replace a benign public monopoly such as an airport with a private monopoly. Most other privatisations have only been beneficial for owners and shareholders.

        • Brunel

          SYD airport was not a monopoly when it was government owned. It is now a contracted monopoly – nobody is allowed to build Badgerys Creek airport!

          • Alastair Leith

            HSR train to Canberra airport makes more sense than a second airport for SYD. HSR bw MELB and SYD would drastically reduce air traffic if priced right. That’s been the case with all other high volume air corridors that have seen a HSR link go in on the ground. MELB2SYD is fifth busiest air route in the world and SYD2BRIS is pretty high also.

          • Brunel

            I love high speed rail but CBR is 287 km from Sydney CBD.

            SYD airport is almost at capacity. ALP and LNP are hell bent on doubling the population – without doubling the infrastructure. So Badgerys Creek airport makes sense keeping in mind the sky high immigration rate.

          • Alastair Leith

            1 hr from Canberra Airport to Sydney CBD (no taxi) by HSR. Even less to the Western suburbs of Sydney. Reducing air traffic makes sense, increasing it doesn’t.

  • Roger Brown

    What’s the bet Turncoat will roll over the barrel ( Oil/ Gas ? ) with the 5 min rule ? Too many donors to upset .

  • humanitarian solar

    So we the majority of Australian households and small businesses, are going to pay a dividend for “very large consumers” to reduce their peak demand?

    • MaxG

      This is as silly as giving the corporations money to build solar farms to save on diesel and increase profits. It is obscene! … and very present, called: neoliberalism! :))

    • Alastair Leith

      If it’s cheaper than grid storage today then why not? At some point in a decade or less it will no longer be cheaper to pay large users to turn down and so help the grid and they will lose that DSM dividend. DSM scheme that was really called upon was ended in WA recently by (neoliberal) former Treasurer Nahan. Or they’ll be competing with 5 million other providers of cheaper peak demand power than the wholesale price can offer.

      • humanitarian solar

        The new 5kW inverter export limit will reduce the power available for peer to peer trading. If the local property is using 3kW and the battery is already full, then that would leave 2kW for peer to peer trading if that system were to be implemented. Now the 5kW export limit is in place, installers will be forced to steer more towards putting PV into batteries. I’d say this will also lead to bigger overall batteries. So unfortunately things have moved away from peer to peer aspirations and more towards isolated individual self generation and self use.

  • humanitarian solar

    Two out of the three proposals above, are downstream reactionary approaches to target problems as they arise, rather than planning networks absent of these problems.

  • humanitarian solar

    What I propose, is we slug these “very large consumers” with hefty “demand tariffs”, so they have a timely review of their own onsite infrastructure and use new technologies to disperse their peak usage throughout the day, by using strategies such as onsite load management, using batteries to iron out their demand peaks throughout the day, and where possible, get their own renewable generators to clip the peaks of their kWh’s. Take some f__king personal responsibility, rather than expecting us to pay for your inadequate antiquated electrical infrastructure.

    • California is doing demand-pricing that varies throughout the day. This is supposed to encourage more people to aim their PV westward since the peak generation is mid-day but peak demand is evening when people get home from work and turn on their A/C. This also encourages storage tech since that can be set to shift demand to lowest possible rate. Some Powerwall pricing could even come out at a 2-year ROI since the utility could pay people to absorb excess production (negative electrical costs)(happens during “peak shaving” times).

      • humanitarian solar

        Interesting. I do a similar thing on my property, aim to use solar during peak generation and minimise use during peak demand – to keep the battery full for the night. With facing PV westward, there was informal talk with installers encouraging westward PV, though the all day harvest is best for N, NE and NW. In practice I think it comes down to what rooftops are in good repair and choosing a roof that suits the budget, for the first PV string. I think it’s best to always max out every rooftop and plan to do one at a time if the budget is a factor. I agree W roofs can be good to keep the battery full, as much as possible, going into the evening, making the battery last longer.

        With storage tech, inverter manufacturers appear to be slowly increasing features for grid interaction and grid support, like these I found on one manufacturers website: Uninterrupted Power Supply, Energy shifting, Peak lopping, Adjustable export control (brand called Selectronic).

        In Australia we’re not generally at the point of grids seeing consumer solar (and wind) as a support to the grid and policy seems more focused on limiting exports to 5kW. In these changing policy times, I think it’s good to have a flexible system, where settings can be changed, to cope with future rule changes as the grid evolves. Here’s a diagram I found comparing solar harvest for tilt and orientation:
        https://uploads.disquscdn.com/images/cc618338a65204f07ec185133213422bd09d906e6299492162ffc6c0030e220a.jpg

    • Alastair Leith

      What about those industrial users who use a lot but it’s fairly constant, or at least not peaking like the grid already?

      • humanitarian solar

        My electrician, also an experienced solar installer of larger systems in my town, says commercial systems often have usage charges to avoid, so their installs produce some local power to cut their overall usage throughout the day. This keeps their consumption lower than higher rates for higher kWs of usage. I’m not familiar with the structure of their tariffs and if they apply to high kW anytime or at certain periods.

  • humanitarian solar

    Social Justice Approach to Transforming our Electrical Infrastructure:

    We create a world where grids take responsibility for grids and getting their own grid scale storage, “very large consumers” take responsibility for “very large consumers” and small scale consumers take responsibility for themselves only, with an absence of cross subsidies ANYWHERE. Distributed generation and storage, will necessarily entail distributed responsibility. Fairly. The bigger the size and profits, the bigger the personal responsibility.

  • A CARBON-DIVIDEND would help: at point of import/extraction, tax carbon $50/ton, with 80% of money returned to consumers per-capita. The 20% remainder can be divided into either PV/battery subsidies or a separate quasi-governmental entity renewables-fund that invests in PV/wind R&D, loan guarantees for green energy projects, etc.