Batteries hold key to grid’s thorniest problems, but regulations block the way

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Outdated rules, and the slow pace of regulatory change, are hampering the roll out of large-scale battery storage solutions on Australia’s grid.

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Outdated rules, and the slow pace of regulatory change, are hampering the roll out of large-scale battery storage solutions on Australia’s grid, even as those solutions are ready to solve some of the National Electricity Market’s thorniest problems, including high prices and reliable supply.

Battery storage project developers and manufacturers told the All-Energy Australia conference on Thursday that the booming uptake of both small and large-scale renewables nationally meant that the need for storage was gaining urgency.

But while the industry was ready to go, Australia was still stuck in “pilot” mode, held back by clunky market rules that made developing projects almost impossible, commercially.

“Australia’s still … we’re in trial mode, (rolling out) programs and initial programs” said Jaad Cabbabe, senior manager of business development at Fluence, which in Australia is behind the 30MW/30MWh grid-connected battery that will soon be commissioned at the Ballarat terminal station in Victoria.

“We’re well beyond that. World-wide these projects are happening, and these rules need to change so we can actually just get on with it,” he said.

In particular, the industry is frustrated by the current inability for large-scale battery projects to make a commercial case out of what they do best: rapid response to increasingly dynamic changes in both supply and demand.

“Ramp rate… is where batteries really come into their own,” said Cabbabe, pointing to “the edges” of demand profiles like Australia’s with increasing amounts of solar – both in farms and on rooftops – and wind farms, where consumer demand suddenly drops, or renewable supply suddenly increases, and thermal generators can’t keep up.

“We’re seeing in the edges here, when the rate of change is high, we start to see the power price going high,” explained a Tesla spokesman. “And it’s those edges where batteries really participate in the market. So where we have a mismatch, we’re automatically able to discharge to smooth that grid out.”

But that sort of agility takes some adjustment in a grid built around slow-moving, centralised coal and gas generators.

And that means missing out on potentially valuable revenue streams – such as Tesla has experienced at Hornsdale – and for the grid, not incentivising what are already recognised as hugely valuable services for all parties (except perhaps for coal generators.)

As things stand now, batteries move too fast for the market, and that’s creating problems all round.

“We were actually told by AEMO to slow down our response to the market and how fast we can respond, to avoid creating more issues than we solved,” Cabbabe said of Fluence’s Ballarat battery system.

“If we think about what’s happening in Australia and the need for storage… these can be incredibly versatile and powerful assets.

“But things are moving so fast that regulations can’t keep up, the network can’t keep up, AEMO can’t keep up,” he said.

For Edify Energy, which has been installing the Gannawarra Energy Storage System next to the solar farm of the same name, also in Victoria, there has been a similar experience.

“Where the technical or commercial… solution might be really obvious, it’s often the regulations and the practicalities of bringing these projects to market that are not so obvious,” said Edify’s Andrew Stiel.

“I think there’s a bit of work to do to remove these barriers and impediments to investment today.

“Almost every presentation (at All-Energy this year) is mentioning storage in one way or another… it’s a key enabler for more renewables in the system

“That sort of begs the question, for me, if energy storage is so important, if it’s so useful to us, why then are we not seeing more of it? What are we waiting for, in terms of bringing it to market?”

Stiel said the project at Gannawarra – essentially a retrofit of a battery to an existing project – offered a “classic example” of the pace of technology change outperforming that of regulation.

“The regulatory arrangements (for Gannawarra) was a really sort of interesting and challenging feature of this particular project,” he told the conference.

“We spent a long long time working very closely with AEMO, the Australian Energy Regulator, the AEMC, PowerCor and the NSP, the equipment providers, EnergyAustralia…

“It was very much a case of square peg round hole.

One of the key problems Stiel identified was the separation of the battery and the renewable energy generator as two separate assets: the battery as a scheduled generator, the solar farm as semi-scheduled.

Stiel said that ideally, the solar farm with its variable output, and the battery, with its fast response, would “perfectly offset” that variable output.

“But because the battery is formally classified as a scheduled generator, if it was to operate in a converse way to the solar farm, it would actually be breaching its dispatch obligations for particular dispatch intervals, and therefore get a non-conformance breach from the Australian Energy Regulator.

“So it’s a little bit of a perverse outcome at the moment because it sort of limits our ability to use batteries truly as these firming agents for renewables in the market, which is clearly probably not in the best market interest, but is a current construct of the rules.

“So I think reform is probably needed to perhaps introduce new classifications such that we can begin to unlock the dispatchability attributes of batteries,” he said.

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