Batteries, hydro, hydrogen: What are Australia’s best options for renewable storage?

New analysis on energy storage technologies commissioned by the Australian Renewable Energy Agency suggests that the cost of storage is lower than most people might think.

The report emphasises that there is no silver bullet to cover all the storage needs – different technologies are suited to different time frames – but there is no reason to think that it will be any more expensive than using fossil fuels. In fact, it’s likely going to be much cheaper.

The study, titled “Comparison of Dispatchable Renewable Electricity Options: Technologies for an Orderly Transition, finds that whatever the storage need – be it one hour, five hours, 24 hours, several weeks – there is a renewable storage option that does not cost more than 1.5 and 2 times the cost of wind and solar itself.

And that is significant, given the expectation that wind and solar costs will continue to fall – and quite dramatically by the time that storage is needed in bulk as the grid nears the target of zero emissions, and likely 100 per cent renewables. Hopefully, this will happen by 2050, if not sooner.

The report confirms what many might think to be obvious: battery storage married with solar PV or wind is the cheapest option for short time-frames (and for many grid services), while pumped hydro is the cheapest option from about 6-24 hours, competing with solar thermal. And for long-term storage, hydrogen and biomass emerge as the cheapest options.

The report makes clear that the grid is changing from the “old world” dominated by (mostly coal) baseload and topped with more expensive gas, to one dominated by renewables topped with more expensive storage or dispatchable generation. It is what Michael Liebreich has described as a system built around “base-cost” renewables.

But the good news is that this modern, renewables-based system is cheaper than the fossil fuel version, and without the risks associated with fuel and carbon price.

“If you started with a clean sheet of paper, it would be unlikely that a mix of high capacity coal and gas would be cheaper than a mix of variable renewable energy and dispatchable renewables,” ITP Power’s Keith Lovegrove, one of the lead authors, told RenewEconomy ahead of a presentation on Tuesday evening.

The study also challenges the idea that one can be “technologically neutral”, which is particularly relevant as the federal Coalition government embarks on a rushed process to deliver new “dispatchable” generation – different storage times will deliver completely different answers.

“There is no single winner, and at each timescale there are multiple options that fall within a general least-cost band,” the report finds.

But Lovegrove goes further, saying that in a period of transition, of the type highlighted in the graph above: “There is no earthly argument for building a new coal-fired generator in this country, even if you didn’t care about emissions.”

This report follows much other work from the CSIRO and Alan Finkel, which looked at the levels of storage needed as the system shifted to more and more renewables.

This latest study focuses on the costs. And it should be noted that because the report has taken so long to see the light of day, it is based on 2017 numbers that put the average cost of solar at just over $60/MWh. Solar and wind have likely fallen another 10 per cent, if not more, since then.

Still, the results are promising, and give huge confidence to the ability to effect this transition without anywhere near the sort of costs decried by technology sceptics.

Lovegrove says the biggest surprise from the research was that there was always something less than twice the cost of variable renewables for any timescale. “We not trying to pick winners, we trying to find as big a list of options as possible.”

In the shortest timeframe, batteries pared with individual wind or solar farms, or located in strategic locations on the grid to “balance” those variable renewables, emerge as the best option – particularly at a storage level of around half an hour. And battery storage costs are expected to fall significantly as production increases.

“This illustrates that short duration batteries are particularly suitable to the smoothing of wind and PV electricity generation to reduce ramp rates in the case of sudden changes in resource levels,” the report says. “In comparison to other options, batteries remain in a competitive range out to about three hours of storage.”

Pumped hydro – charged by solar PV, wind and grid VRE – is particularly competitive beyond six hours of storage, and while it is a mature technology that does not offer much in the way of future cost reductions, the cost of the whole package will fall because the cost of wind and solar will fall.