Battery storage: “Shit, we need this in the market now”

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Industry calls for targets, urgent regulatory and market reform, to meet “immediate” need for energy storage on changing Australian grid.

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Aerial view of battery energy storage system multi-mixed energy power station
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Australia’s energy policy makers and regulators have been urged to get their act together to address the “immediate” need for batteries and other technologies – both existing and new – on the nation’s rapidly transforming grid.

In a panel discussion at the Australian Energy Storage Conference in Sydney on Thursday, industry and government representatives alike called for energy storage targets and urgent regulatory and market reforms.

The panel noted that Australia was rapidly approaching the point – and had already reached it in the case of South Australia – where the mass uptake of battery storage was necessary to match the penetration of renewables, particularly rooftop solar, and the exit of coal.

But while the technologies were, for the most part, ready to support this shift, the policy support, market structures, regulations and business cases for them were woefully behind where they needed to be.

“We seem to make a meal of even getting though the most basic things, in defining what storage is, and how it’s treated in the market,” said Darren Gladman, the director of smart energy at the Clean Energy Council.

“It’s years on and we’re still working on an installation standard for batteries… the AEMC policy process the wheels turn slowly, the rule-making process is very slow, COAG energy council is hostage to state-federal politics.

“You know, this is not a parlour game we’re playing. … Liddell (coal-fired power plant in New South Wales) shuts in 2022, I’m not sure that we’ve got enough storage in place.

“But it feels like in that policy regulatory standard space, it’s like walking through treacle, everything’s so slow.”

ARENA CEO Ian Kay said that the Agency was now starting to see, with the levels of renewable energy penetration around Australia, that the need for storage was becoming increasingly urgent.

“We’re going to see it coming in New South Wales quite soon, we’re seeing it coming in Queensland, we’re seeing it in W.A., where there’s very high penetration at the rooftop level.

“And we’re kind of seeing in South Australia, that we need that level of storage now, to support that level of renewable penetration,” Kay said.

“But actually these projects take a little bit of time to… go through the planning approvals, to get the connection agreement, and to actually install.”

Kay pointed to the example of Edify Energy’s ARENA and state government-backed big battery built alongside the Ganawarra Solar Farm in Victoria.

“Those guys actually went through hell to get that project up and running, navigating the AEMO rules, and the off-take model with EnergyAustralia.

“But there is, kind of following them, a pathway now on how you can get a battery connected to a solar farm, that hopefully people who are proposing batteries can take advantage of the learnings.

“What ARENA’s trying to do is help build the business models for those projects, and kind of front-running the immediate need of, ‘shit, we need this in the market now!’ Well, actually it’s going to take you 12 months, or 24 months, to get it done.”

“So we’re trying to … kind of foresee what’s going to be required in that two-year period – or that five-year period, in relation to pumped hydro; get it installed now and then allow the market to work out, well, what are the benefits that this particular storage technology brings? How do we reward (it) for the services it brings?”

Anna Kean, the director of energy infrastructure and emerging technologies at the NSW Department of Planning and Environment, said that state’s government was indeed feeling the pressure of bringing regulations and market structure up to speed with technology, in terms of energy storage.

“It’s absolutely going to happen, there’s no doubt about it. The technology is proven, it’s here, it’s available, it’s happening around the world…

“We’ve seen it with other technologies – it’s happening very fast… We never expected the growth of solar and I absolutely see batteries coming, it’s a no-brainer.

“Unfortunately the rules don’t keep up…. It will be sorted, like it or not, because we have got no choice.

“The (AEMO’s) Integrated System Plan says we need 10GW of storage by 2040 – not so far away, so it has to happen.”

Mark Higgins, the chief operating officer of consultancy Strategen and a native of California, stressed the importance of targets to guide the roll-out of energy storage.

“In California, the creation of an energy storage target was a very clarifying policy decision that the state made. It wasn’t a mandate… but it just said utilities need to look at storage, and provide this amount over the next few years, provided that it proves to be cost-effective in certain applications.

“So what that did, is it essentially forced the planners to start figuring out how storage could be integrated into the system.

“They had to come up with procurement mechanisms, they had to come up with planning, they had to come up with interconnection, all of the framework that allowed them to evaluate storage on an apples to apples basis with conventional technologies.

“And once the utilities in California were forced to start looking at storage, they started to realise how valuable it could be.

“And so I think it wasn’t so much the … target that was the positive that came out of it, but it was the change in mind-set of the grid operators, the utilities, the generators, to think about how we can use storage, how we can shift procurement from lowest cost, to highest net value.

“That was really the mindset shift that happened in California… that I think could be quite useful here, too,” Higgins said.

But Higgins also noted the importance of working towards the overarching and ultimate goal of electricity system decarbonisation – a target Australia’s federal government still struggles to commit to.

“If you start from system decarbonisation and work your way backwards, you can do the modelling and say, we’re going to need this much storage to accomplish these goals, and that can really help inform planning and the targets that you set.”

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