Big batteries that can export for longer are now becoming the norm in Australia, on the back of a combination of government incentives, technology changes, and what will make money.
Fewer developers are asking for two hour batteries now, says Fluence Energy growth director Sam Markham.
“We are really seeing that shift to slightly longer durations, and that’s really driven by the midday low prices, but also the evening peaks are getting longer,” she told Renew Economy.
“There is that really strong in-market signal for increasing durations, and that’s supported by falling energy storage prices as well. So the internal rates of return are looking stronger if you can increase a little bit of the duration.”
Government programs that want to shoehorn very long duration batteries of as much as eight hours are also contributing, as bidders who miss out are likely to still go ahead with a slightly shorter duration, say around four hours, Markham says.
The federal Capacity Investment Scheme (CIS) tenders for batteries have tended to set a minimum duration of four hours, while the last two New South Wales (NSW) tenders for Long-Term Energy Service Agreements (LTESAs) have focused on eight hours or more of storage.
The NSW government is hailing the last tender as the biggest and most successful battery tender of its type, both in terms of scale and number of projects, and also because of the falling costs of the technology and the bids.
Developers pitch bigger batteries
Data on the size of batteries currently proposed in Australia appears to bear out what Markham is seeing in the Fluence order book.
There are 557 battery projects bigger than 100 megawatt (MW) which have two or more hours of storage, of which 60 per cent come with four hours or more, according to data collated on the RenewMap site.
Crunching the RenewMap data bit further shows 91 of the 557 projects submitted development approvals in the last year, and 76 of those came with four hours or more of storage.
Fluence’s biggest project in Australia now is the 500 MW, 2000 megawatt hour (MWh) Tomago battery for AGL in NSW. Of the 12 other projects its supplying the largest are clustered in NSW, Victoria and Queensland.
“We’re also looking at the WA market,” Markham says.
“They all present a real rich opportunity for energy storage and a range of durations. Each state has their nuances. Each state has slightly different revenue curves, so I guess that’s kind of up to our customers on where, what states are kind of the most interesting at the moment.”
Data centres consider eight hour giants
The market for batteries with capacities up to eight hours could be in data centres, says Fluence Energy revenue growth leader Jeff Monday.
“Power bridging and power backup, the eight hour use case is allowing us to go in and replace diesel generator sets,” he told Renew Economy.
Data centres are looking at two to four hour batteries for peak shaving, and longer than that for a “shock absorber” use case.
“The power smoothing use case of delivering high quality power and acting as a shock absorber between the data center, its generation source, whether that’s the grid or another asset, and really kind of delivering smooth, stable power. They’re looking at it as an agile asset in the data center space,” he says.
Although, Monday also says data centre developers are watching efforts at Nvidia to solve the peak shaving issue at a GPU level.
The chipmaker says a new way of connecting 72 graphics processing units (GPUs) together in a data centre rack with their own storage will manage sudden power spikes and carve as much as 30 per cent from grid demand.
“Those [developers] that are thinking ahead, they’re thinking maybe if I’m building a data center, I can lease the power smoothing capacity to the hyperscaler for the next 10 years, and then turn around and leverage the reserve capacity [of an in-house battery] as that use case gets resolved by the GPU to trade that capacity back into the market,” Monday says.
“That’s actually creating some really interesting total cost of ownership and internal rates of return models for those customers.”
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