Battery storage held back because regulators, ministers "not aware" | RenewEconomy

Battery storage held back because regulators, ministers “not aware”

Large-scale battery storage developers have expressed their frustration with Australia’s knowledge gap, saying regulators and ministers appear completely unaware the technology is being deployed at scale elsewhere in the world.



Leading battery storage developers have expressed their frustration that ignorance among regulators and energy ministers is holding the technology back, despite it being cost competitive.

They claim that Australian energy ministers and regulators are simply unaware that the technology has been deployed at scale around the world, and simply don’t appreciate what the technology can do to support the energy transition.

The lament is not a new one, but it got a public airing last week in devastating testimony at the Senate committee inquiry into the resilience of Australia’s energy markets.

And it is a particularly hot topic given the political row over blackouts and near-misses in recent months, and the frustration from battery storage developers that regulators have been slow to change rules that favour fossil fuel generators and disadvantage their technology.

Lyon Solar, which hopes to have 350MWh of battery storage in the South Australia market by the end of next financial year, told the inquiry that Australian authorities simply did not understand the potential of battery storage.

“Australia is still quite naive about batteries,” Lyon CEO David Green said. “In the discussions we have had with regulators, they were not aware that there were batteries like this are operational in other parts of the world.”

That ignorance extended to discussions with regulators and ministers as recently as November, in which Lyon Solar and its technology partner, AES Energy Storage, sought to remove a few “myths” about battery storage – the most prominent being that it hadn’t been deployed at scale.

“That has helped,” Lyon said. “I think one of those myths is: it is not happening anywhere. Well, it is happening, and the AES guys can talk about that. It has been happening for a long time. It has not happened in this market.”

These claims have great significance in Australia’s energy markets, which despite its adoption of rooftop solar in great quantities, and the high levels of renewable energy in South Australia, has been slow out of the blocks on “smart technology” such as battery storage, demand management and energy efficiency.

Energy experts blame this on the fact that the fossil fuel industry, which has been fighting policies favouring carbon pricing, renewable energy targets, energy efficiency schemes, and more recently rule changes that could encourage battery storage, has the ear of regulators and politicians.

This advice comes from the fossil fuel lobbyists, regulators, consultants and other energy executives  locked in 20th century technologies, who were either not aware of new products, or had a vested interested in keeping it quiet.

Regulatory battles have been full of incidences of proposed rule changes being rejected or delayed on the assumption that battery storage was not competitive. There are even proposals to ban battery storage inside homes and garages, a recommendation that goes against all advice anywhere else in the world.

The head of AEMO recently claimed that battery storage was two decades from being competitive. One state regulator refused to consider battery storage because it didn’t think anyone would install the units. Up to 50,000 households are expected to install them this year, and up to a  million by 2020.

But it is at the grid level that this blind spot is posing most frustration. Lyon says there are perhaps 20 different value streams for battery storage, including providing peak power, substituting for grid upgrades, and providing the fast response services that could have kept the lights on in recent blackouts.

The problems were alluded to in the Finkel Review, in which the Chief Scientist said that the technologies exist for the integration of high levels of renewables, but the policy measures supporting their deployment do not.

This issue is taking on added urgency given the rising cost of gas and gas generation, and the control that fossil fuel generators have over wholesale markets, a potent issue given the soaring wholesale prices in recent months, particularly in the coal dominated Queensland market.

One significant rule change, a proposal to change the settlement period on wholesale electricity market to 5 minutes from 30 minutes, to encourage more fast-response technology such as battery storage, has been further delayed.

AES Energy Storage, the US-based company whose energy portfolio is almost as big as Australia’s entire grid, has been using battery energy storage as a solution to electricity network issues for nearly 10 years, yet it said it found that Australian authorities had a number of misconceptions.

Praveen Kathpal, the vice president for global market development for AES Energy Storage, said Australian authorities appeared convinced that battery storage had not been deployed at scale, and it wasn’t cost competitive.

“AES has contracted a 100-megawatt energy storage array with an electric utility in California as an alternative to building a new gas-fired peaking plant, and we have over 400 megawatts across our portfolio in operations, construction or advanced development,” he told the Senate hearing.

“That  …  100-megawatt project was selected in a competitive tender, on an economic basis, as an alternative to new gas-fired peaking generation.

“The tender incorporated in its evaluation the many benefits provided by energy storage resources, including system level fuel-costs and operating-costs reduction. This project is planned to meet the utility’s needs over the life of a 20-year performance contract.”

Lyon Solar and AES pointed out that battery storage could provide market operators, transmission networks and distribution networks with resilience by serving as a network resource, as a provider of frequency control, voltage control or other needed reliability services.

“As an example, battery energy storage can provide resilience to electricity networks through its fast response capability—that is, its ability to quickly respond to sudden power system needs by injecting power into the network,” Kathpal said. This would have been useful in the recent blackout events.

lyon solar storage

Lyon was involved in working in the early development of a small facility near Cooktown, and has since  announced a major project in Lakeland in north Queensland and in South Australia, where it plans to build a 100MW solar plant with 100MWh of AES battery storage near Roxby Downs.

It also intends to announce within the next two week two further projects that will take its total planned to be completed in 2017/18 to 350MWh.

“We will announce two more projects for South Australia in the next couple of weeks, where we have been able to source the land and put in the application for network connection,” Green said.

“They will be 150 to 170 megawatts solar and 50 megawatt batteries. We have done that with no assistance and not discussing it with government. We are just getting on with that.”

Green also spoke of the need for new players in the market.

Independence is important in this market as it enables developments to be undertaken where they are needed and connected to the network where they are needed, rather than incumbents seeking to develop in a part of the market that will shore up asset values and their portfolio in another part of the market.

“There is plenty of academic work indicating the benefits of battery storage; however, if we are going to move forward to capture these benefits, we need projects on the ground.”

Green said it had been difficult to bring the local network owner Ergon Energy on board, partly because of a lack of awareness about battery storage, and partly because of the “cultural, systematic and institutional issues that made it nearly impossible to introduce new technologies.

“When we first worked through our project in Queensland and we went to put in a network connection application for our solar-plus-battery project, there was nowhere on the application form where you could tick ‘battery.'” he said.

“It threw the system out – delaying, delaying. I think it took us two-and-a-half years to work through those issues with Ergon,that need to be addressed.”

Print Friendly, PDF & Email

  1. 小杜 (xiao du) 4 years ago

    Laugh, Denigrate, Deny, Embrace.

    We’re up to Deny now, so not long to go.

    • Rod 4 years ago

      I don’t know. My local weasel, Christopher Pyne, was spouting a whole heap of anti RE BS today in question time.

      • john 4 years ago

        Rob as you know he has a nice smile and can be summed up simply as not exactly across the detail

        • Rod 4 years ago

          More like a sneer.
          Rather than joining in the LNP attack on RE in SA he should be working on solutions to our energy “crisis”.
          Maybe he’s not across the very high penetration of PV in his electorate (> 30% in some suburbs) and how they support RE

  2. David leitch 4 years ago

    An excellent article. However companies such as Lynas and AES could help themselves a bit by putting up more financial data about the cost and value stream of batteries.

      • David leitch 4 years ago

        Thanks there is a lot of reading to be done there. My point I think is that AES publish next to no details of the capital costs of their Advancion products. For instance not of the costs of the capacity in the Aliso Canyon replacement project have been published. The Ireland battery capital cost wasn’t published.

        Tesla has provided bid in tariff for its recently announced Hawaii project but provided no details on the capital cost of the storage component.

        I can make some guesses and I think they are pretty well informed but its not the same as the Company themselves telling everyone its $X to install a system.

        • Ray Miller 4 years ago

          Yes it makes things difficult but I suspect at this early stage of the technology at scale and for this application all the players are holding their cards close to their chest. It will not be until the scale increases will we see the costs. I also suspect that the unknowns in the equation are many and just as the example of trying to get network approvals was a painful (expensive) exercise. I’m also sure the smart companies should be going into this with wide eyes and many sticks testing the waters for the many sink holes.

  3. Ray Miller 4 years ago

    17 years ago I was part of group trying to get PV connection agreements in Queensland with Energex (brother of Ergon), we had exactly the same experience and came to the same conclusion. The advisers and state government public servants have a revolving door with the generator and distribution companies. Alarm bells should be ringing loudly we seem to have a excess of blacksmiths but no one with imagination and skills for the present.
    I question the money being paid to a whole sweet of energy industry executives and board members, how can they possibly keep their Jobs?

    • john 4 years ago

      Ray i feel if everyone who has a PV array which is larger than their daylight usage they should put in a storage battery, which should cut off the Duck Tail and contribute to cheaper power for everyone.

  4. howardpatr 4 years ago

    Check out EOS and ViZn – Possible winners in the large scale energy storage space.

    Of course your won’t hear them mentioned by the responsible minister or the present PM.

    Imagine a DC transmission line from Adelaide to Brisbane to integrate wind, PV and large scale storage – seemingly beyond the imagination of the LNP?

    • DJR96 4 years ago

      We don’t need more transmission lines. Solar and storage can be scaled and built where it is needed.

      • Tom 4 years ago

        Depends on the storage.

        Put it this way – if Tassie’s dams were all full to the brim, the energy in storage would be equivalent to 100 million Tesla Powerwall 2s, yet it is only enough to supply the whole country for about a month.

        (Yes, 100 million Powerwall 2s would be much more useful because they can all recharge in a day, whereas it would take a year of rain to get our dams 50% full, but it puts it in perspective).

        Will batteries supply all of Australia’s domestic and storage needs? Not sure. Maybe if there is a big breakthrough with batteries (and I’m sure there will be, and it’s likely that the “graphene” lattice will be a part of it).

        We’d probably need the equivalent of a Tesla Powerpack 2 in every second home in Australia, both buying and selling to the grid, for the interconnectors to be scaled back.

        • DJR96 4 years ago

          My point was that we have some transmission capacity and capability now, and any new infrastructure added to the network can be designed and placed such that we don’t need to add more transmission lines. In the meantime we make full use of what we have. They will continue to be an important part of the network.

      • David leitch 4 years ago

        Its like the internet. Nearly every study of 100% renewables has lots more transmission. Mind you those same studies tend to ignore distributed generation and storage.

    • David leitch 4 years ago

      This transmission line has been more than imagined. There is a Queensland acadenic study looking at just such a possibility using DC transmission. I reviewed it in one of my notes last year.

      • DJR96 4 years ago

        Over a long distance there is no doubt that HVDC transmission is the way to go.
        But it’s still BIG dollar investment that is a) not necessarily needed, and b) those funds could install an awful lot of storage that will be more useful and serve us better in the future.

        The investment urgency is in storage, not transmission.

  5. Michael Gunter 4 years ago

    It concerns me that lots of activity in the market is bankable primarily because of price volatility. Batteries will buy for charging when prices are low, and sell power as fast as possible when prices are very high, assuming they want max ROI and are exposed to the spot market.

    OTOH to have most impact on reducing CO2 emissions, ideally they would buy 100% solar/wind when it’s sunny/windy, and feed power to the grid when it’s cloudy/calm.

    …so the dilemma here is why are we bothering to plug batteries into a fossil-fuelled grid with its associated dysfunctional, volatile and overpriced spot market? Surely averting climate catastrophe means eschewing short-term commercial “imperatives” and instead driving the battery’s buy/sell import/export triggers EXCLUSIVELY for optimal CO2 reduction. — in the public interest i.e. not frying billions of customers worldwide with the industry’s toxic and uncosted waste products.

    • Rod 4 years ago

      Here in SA at least, the times when wind and pv are strongest is when energy is very cheap. Quite often negative, meaning battery owners get paid to charge their batteries. And usually when RE is lowest we are gouged by the gas generators so spot will be very high. So, what is good for CO2 reduction is good for the prosumer.

    • MaxG 4 years ago

      “bankable”… exactly… why I don’t care about large scale batteries.
      There is no benefit for the consumer, never has been, never will under the current set-up. Why I also opted to do my own thing… and forget about the rest.
      Selfish? Yes, Working? Yes.

      • Michael Gunter 4 years ago

        … the right locational signals could white ant the #GreenhouseMafia ‘s rural networks from the edges and replace all SWER lines with a multitude of on-site SAPS. Widely dispersed former captive customers of the monopoly supply chain are liberated from captivity and liberated from risk of bushfire ignitions on the next catastrophic fire risk day: #BlackSaturday ‘s reprise/redux. SAPS + zealous negawatts = very cost-effective CO2 emissions abatements, eroding incumbent’s monopoly power strategically, excellent for competition and innovation: holds true to COAG’s stated objectives in 1990s deregulation: economic efficiency and new ENERGY market entrants.

    • DJR96 4 years ago

      We really need not be too concerned about emissions reductions, that will pretty much take care of itself in time.
      There will never be another coal-fired power station built in Australia ever again.
      The economics alone simply don’t stack up even now. The existing fleet all have a use-by-date and will retire over the next few decades. We still need them in the meantime for capacity as renewables continue to rollout, eventually there will be enough capacity and they simply won’t be needed.
      Security and stability can best be achieved with battery storage – better than what the synchronous generators can do now.
      All that is needed is regulatory reform that will enable and encourage investment in larger scale storage.

  6. Cooma Doug 4 years ago

    Great write Giles.
    The change in market rules from 30 min to 5 min settlement is essential for renewable and technology development. However there are some other essential adjustments required.

    To sell voltage control and rapid response frequency control in a renewable market is not possible as market rules now stand. When we approach 75% renewable we will need to have a bidding market for these products that is sharper and faster than we now have.

    As the rate of change of frequency speeds up, as each fossil fuel gen retires, the value of fast response battery storage for grid voltage management as well as frequency control increases. Changing the market now so that ancillary service products are not just made available as is now, but bid into the 5 min market as is the energy.
    This is a complex topic but a major pin in the reliability and security issues. When the rules incentivise the technology on either side of the meter, security events will begin to disappear and the cost of it will fall.

    • DJR96 4 years ago

      Long before we get to 75% renewable generation, we need battery storage and inverters capable of delivering (and absorbing) about 20% network capacity (say 6GW and 3GWh). This would be capable of forming the grid. Setting and maintaining the frequency so that it is no longer a variable at all, and managing the voltage. Effectively they would provide all the current ancillary services (although FCAS would be obsolete). All generation, including the remaining synchronous units, would follow the grid just as existing renewables have to now.

  7. Alan S 4 years ago

    The naivety of some politicians and others in the public eye in Australia is astounding. This morning Dick Smith was on the radio spruiking nuclear energy generation simply because ‘we mine uranium here’ – and had the usual jab at renewables for good measure. It would have been useful if the interviewer had asked Dick whether, because we also mine iron ore and coking coal, we should expect to have a buoyant steel industry.

    • john 4 years ago

      Obviously Dick Smith is a person who is out of his depth.
      Rather a pity actually.
      We sell Iron Ore for say $80 a tonne and Coking Coal for say $100 a tonne it takes say 1.7 tonnes of coke to make one tonne of steel from iron ore.

      Cost ex door is $236 well round it up to $500 a tonne.
      So we buy it back at $500 plus upwards to $1000 a tonne

      • Brunel 4 years ago

        The Greens should have put in a national metal recycling scheme.

    • Miles Harding 4 years ago

      Overall, I would say that Dick is one of the good guys except for nuclear fixation.
      Like many in the community, Dick’s information is out of date.

      Nuclear is becoming progressively more expensive as renewable costs continue to decline steeply. It’s more expensive still when the environemntal cost of obtaining the fuel and eventual decommissioning is included.

      I don’t think this important compared to operational issues of an increasingly renewable dominated energy environment. Neither Nuclear nor coal can respond sufficently quickly to the swings of demand as renewables wax and wane throughout the day.

      This makes an agile backup power system a far better bet. The likes of hydro, pumped hydro, gas, biofuel and battery are very good at supplying this sort of short and medium term backup.

      As the build costs for renewable fall, more can be built before they overtake the cost of a coal (and nuclear) based ‘business as usual*’ energy system. Studies have suggested that this point is currently about 85% renewable and increasing as the cost gap between fossil and sustainable widens.

      * as usual for the 1960s!! 🙂

      • Alan S 4 years ago

        Agreed that Dick is one of the good guys. He has the guts to address population head on.

    • RobSa 4 years ago

      How anyone could support nuclear power after the continuing meltdowns in Japan is beyond me.

  8. Malcolm M 4 years ago

    Under-investment in this area appears to be because of the lack of a market mechanism to make a return on a battery investment. Yet even one of the incumbants are making such investments on their own private grids. In Alinta’s Sustainability Report it said, “Install a 30MW battery storage facility at the Newman Power Station to improve efficiency and reduce reliance on thermal spinning reserve to achieve the required security of supply, and improving operating efficiencies”.

  9. Mike-at-goodbyegrid 4 years ago

    Do you think this is just bureaucratic hurdles? Or deliberate attempts to foil non-coal resources at any stage? We have a government that acts in contravention to the advice of almost everyone, apart from a few lunatics – even industry captains. What’s their agenda? Certainly not to further the welfare of Australia as whole. Trump, at least, claims to put America first. Turnbull puts Australia last!

    • Calamity_Jean 4 years ago

      Trump claims to put America first, but he’s lying.

  10. Richard 4 years ago

    This shows how important it is for the renewable energy and storage industry to have a well crafted lobbying and fact providing machine that can sway public opinion. I think we are winning(just) but it’s a tough battle. Our forces need to be better organized on a collective level.
    At the moment fossil fuels are getting away with murder in the mainstream news outlets and propaganda machines.

  11. Radbug 4 years ago

    By Christmas 2018, there will not be a single small car manufactured, in the world, that will not be powered by lithium or sodium batteries. What will the regulators do then, ban the import of all small cars?

  12. onesecond 4 years ago

    Ignorant, unaware and paid-off, I would add.

Comments are closed.

Get up to 3 quotes from pre-vetted solar (and battery) installers.