The first big battery to be fitted retrospectively to a large-scale renewable energy generator in Australia, and the first to be paired with a solar farm, has provided some valuable insights into how battery storage can position itself in the country’s energy markets, and also identified some of the barriers and hurdles.
The Gannawarra battery has performed above expectations, made money for its investors and operators, provided valuable services to the grid, and also discovered some potential problems, such as hefty network charges and the limitations of the current market rules, which are finally being reviewed
The Gannawarra Energy Storage System (GESS), as it is officially known, began operations in Victoria in early 2019, sized at 25MW/50MWh (so two hours of storage), and located next to the 50MW Gannawarra Solar Farm. It used Tesla Powerpacks and is jointly owned by Wirsol and Edify, which also manages the asset, but the day-to-day operations are conducted by EnergyAustralia under a novel service agreement.
A report into its first 12 months of operation was this month published by the Australian Renewable Energy Agency, part of the “knowledge sharing deal” that came as part of the funding agreement that saw ARENA and the Victoria government provide $25 million towards the cost of the project.
The first thing of note is the revenue performance. The Gannawarra battery made most of its initial income from arbitrage, or energy trading, that bought at low prices and sold into the morning and evening peaks. It managed to buy power at an average of around $69/MWh and sell it at an average price of more than $154/MWh in winter, and buy and sell at $64/MWh and $174/MWh in summer.
That provided the bulk of revenue in the first six months (green), but once the battery was registered to provide regulation FCAS (frequency control and ancillary services, a key grid service to maintain frequency at appropriate levels), Gannawarra started earning most of its money from these key markets (black, and blues).
This became much more evident in its second period of operations (graph below), where the FCAS market grew to dominate its revenues base, sometimes reducing the energy arbitrage plays to negligible amounts.
The advantage of a battery is its flexibility and speed of response which means that, unlike the traditional providers of FCAS like coal, gas and hydro plants, it doesn’t have to be generating to deliver FCAS. Even better, it can offset the cost of charging by being paid to stop charging and provide the service.
“GESS has outperformed expectations in regulation FCAS markets, averaging around $500,000 per month between July 2019 and February 2020,” it notes. “Battery systems are highly effective in the provision of FCAS, which is critical in ensuring the stability of the system.”
It is now looking at providing another string to its bow, adding contingency FCAS trading that can be enabled and switched on remotely.
“Co-ordinated and stacked participation in both energy and FCAS markets is a key feature of battery business cases,” the report says.
“The FCAS market is an enablement market which means the battery can be paid on enablement without dispatch. The actual FCAS dispatch is generally 5-10 times less than energy dispatch.
“This means the same amount of energy stored can provide a longer duration enablement of FCAS than in the energy market. FCAS participation therefore preserves battery cycling and energy degradation limitations, while still ensuring revenue creation.”
It notes that the proliferation of big batteries means it is not clear what the future of FCAS revenue will be, but for the moment it will focus on energy arbitrage in peak times, and FCAS for most of the rest of the time.
On the flip side, the Gannawarra battery is getting whacked with some hefty network charges, apparently the result of it being paired with the solar farm, which has a large low voltage tariff class, with a focus on low overnight loads. That’s when the battery likes to charge, because the prices are lower there in Victoria, but it means it attracts heavy “demand tariffs” from the local network operator.
It could shift to charging during the day, but that risks attracting even higher demand charges, particularly if the solar output is low due to cloud cover or maintenance. Even so, the network charges mop up around half of its energy arbitrage margins.
“Given the significant network charge costs, EnergyAustralia has restricted GESS’s charging rate to 10MW, when charging from the grid. Even with this inefficient restriction, the monthly DUOS cost imposed on GESS is around $45-55k,” it says. And it is doing most of that charging from midnight to 6am, and offsetting those costs by frequent interruptions for regulation FCAS.
These network charges are not applicable to energy storage connected to the transmission network in Victoria, because they tend to use the network at times that are considered to be more helpful than a hindrance, so represents a more cost-reflective and usage-based approach.
The other major problem is being paired with a solar farm and having to operate under the constraints of that facility’s connection agreement. This effectively means that the combined solar farm and battery are limited to the 50MW rating, meaning the battery is effectively constrained to using headroom in this connection point from un-utilised solar output.
That means it has to have accurate real-time knowledge of the solar farm’s output and what headroom is available for the battery, but that is often not the case. One incident this year resulted in a major over-estimation of the solar farm’s output, meaning the battery lost out on around $150,000 of revenue in a single day because its output was restricted.
The problem was often felt in the crucial early evening when the solar output reduces quickly as the sun sets, but it is difficult to fully optimise the half-hour settlements as there would be missed 5-minute periods where the solar farm would be producing more / less than forecasts. Automated trading systems could help address this, as may the 5-minute settlement periods.
It has been relying on solar forecasts provided by the Australia Energy Market Operator, but will now move to self-forecasting.
- “It is expected that a transition to the more accurate self-forecasting (and away from a reliance on AEMO’s forecast) will mitigate these challenges, as will the movement to more coordinated IT system interfaces,” it said.
The Tesla battery has delivered a round trip efficiency of around 86.2% for its 6-month period and 85.7% for the second 6-month period to February, with an availability rating of more than 97.8 per cent.