ARENA still has $700m to spend, to bring down cost of storage

The Australian Renewable Energy Agency has tipped 2018 to be the year of large-scale energy storage, as it focuses its efforts and remaining funds on integrating large-scale solar and wind into the national grid.

In an address to the Large Scale Solar and Storage conference, co-hosted by RenewEconomy in Sydney on Monday, ARENA investment director Dan Sturrock said that the agency had more than $700 million in its kitty to spend on accelerating the integration of renewable energy technology in Australia.

Much of this, he suggested, could be directed towards large-scale energy storage projects, including pumped hydro and battery storage projects, as ARENA worked to bring down costs in the same way it has already done with large-scale solar.

“As we sit here today, we still have more than $700 million to spend over the next few years,” he said.

“In the same sort of way that we (used ARENA) funds to bring down the costs of large-scale solar PV, we hope to do the same for other technologies, including storage, in particular.”

Sturrock said that ARENA’s large-scale solar funding rounds had shown “very quickly” how the program took the industry from being two-thirds subsidised to the point where it was now building some of the cheapest new generation capacity without any subsidy at all.

“We saw what was achieved in large-scale solar – that surprised many. Battery storage can do the same, but it’s a bit more complex.”

Sturrock said ARENA had so far tipped a total of $20 million into three large batteries projects, including $12m for a 30MW/8MWh lithium-ion battery in South Australia – part of the Energy Storage for Commercial Renewable Integration (ESCRI) project.

But he again stressed that taking energy storage technologies down the cost curve could be a more complex challenge than it was for large-scale solar, particularly against the backdrop of continued policy uncertainty around the proposed National Energy Guarantee.

“2018 could also be the year of the review,” Sturrock said, noting the number of consultation papers currently in the works, and of course the ongoing negotiations around the federal government’s proposed National Energy Guarantee.

“It’s a very complex technology, it’s a very flexible technology, but… the business case (for energy storage) is also quite complex and very challenging to get it to stack up,” Sturrock said.

“There are a number of financial opportunities and challenges, and ARENA working on all of these, he said,” pointing to the NEG’s reliability obligation as an example.

“This changes things for PV, and raises opportunities for storage.”