Australia may need twice as many big batteries to make up for lost wind

Australia may need to install more than double its planned capacity of big battery storage projects in coming years to make up for the shortfall in wind capacity, according to one of the original architects of Australia’s energy transition.

Alex Wonhas, who led the design of the first iterations of the Australian Energy Market Operator’s planning blueprint, known as the Integrated System Plan, says it is clear that less wind capacity will be built than forecast, and the shortfall will have to be made up by a mix of solar and battery storage.

“We are seeing less wind,” Wonhas tells Renew Economy. “It’s much more difficult from a permitting point of view, and wind is also more reliant on more transmission infrastructure, and that has proved challenging to build.

“And we are getting much more solar in the energy mix. That is not necessarily a bad thing, but it is a different pipelines. And it means we will need significantly more battery storage to enable the scheduled retirement of existing coal plants.”

Wonhas was speaking as the new company he heads, the Singapore-backed Ampyr, announced it had reached financial close for its first big battery project in Australia, the 300 MW, 600 MWh first stage of the Wellington battery in NSW.

That battery is the first of a 6 gigawatt hour pipeline of battery storage projects that Ampyr plans to bring to the Australian market by 2030, so Wonhas now has a financial incentive in highlighting battery storage.

But he says his calculations, which he also described in a presentation at the Australian Energy Week conference in Melbourne last month, is a simple reflection of technology change.

At that conference, Wonhas noted that the lower deployment of wind would require a near doubling of planned battery storage capacity from 16 GW to around 31 GW.

More may be needed – potentially up to 44 GW – if more system constraints emerge, and if the rollout of household batteries is less than expected, although the new rebate should address that part of the equation.

“I think it is what we will need to do,” Wonhas says. “The ISP is very close to my heart, and it fleshes out the optimal development pathway. It takes into account an ideal scenario, (but) when we look at the reality of what is being deployed, we have to service the need that the market has.

“I think we need to be quite nimble in managing the system. We need to adapt our plans.”

If less wind capacity is built, the system will require more battery storage because solar – as the name suggests – only produces power when the sun is shining.

Wonhas says that the saving grace is that the combined cost of solar and storage is comparable to the combined cost of wind and transmission, an assessment that has also been made by the UK-based energy think tank Ember, and by the Australian-found energy investor Quinbrook.

See: Why solar and batteries are the new “baseload”, and now the engine room of the energy transition

It is also generally accepted that – apart from its planning issues – the cost of wind technology has increased in recent years, and the cost of transmission has also risen, by up to 50 per cent according to AEMO, which it says will prompt a review of its future transmission plans.

Wonhas says, however, that whichever way the technology case falls, he has no doubt that Australia will get to – or get close to – its target of 82 per cent renewables by 2030, despite the reservations being expressed by many in the industry.

“In the next three years, we are going to make all the investment decisions that will take Australia’s grid beyond 80 per cent renewables,” Wonhas says. It might not all be fully commissioned by the end of 2030, but it will be locked in.

“We are going to go beyond 80 per cent. It is going to happen, it is unstoppable. And that is an incredible achievement because people said the world would stop when we reached 20 per cent renewables. But it didn’t. It’s a bloody impressive achievement for Australia.”

Wonhas notes that the falling costs of battery modules is resulting in “good deals” for battery cubes in the market, and he expects that costs to continue to decline.

But he says Ampyr is also conscious of the rising balance of plant and connection costs, a lot of it due to the challenge in finding a skilled workforce. Optimal sites are also getting difficult to find, and even big batteries are finding themselves constrained in some parts of the grid.

“People need to be careful where they build big batteries. If you get congested or curtailed even 3 to 5 per cent of time when most of the revenue expected, then your business model really sucks.”

Part of the solution to that problem is to dedicate some batteries as “virtual transmission”, like the giant “shock absorber” batteries now being commissioned at the Waratah Super Battery, on the site of the shuttered Munmorah coal generator.

However, these “virtual transmission” batteries require specific contracts to act in a way that supports the grid requirements, rather than being focused on arbitrage and providing services such as frequency control.

Wonhas is also interested in those sorts of developments, and it is thought many are being considered, particularly to solve the problems around insuffient transmission capacity in some newly created renewable energy zones, such as the South West REZ in NSW, and fears that similar REZs in Victoria may also be too small.

See also: Major new player signs contracts for first big battery project as it aims for 6 GWh of storage by 2030