Big boost for battery storage in new rules that reward fast response on grid

The business case for battery storage in Australia has been given a major boost with proposed new rules that would reward the technology for its ultra fast response to disturbances on the grid and the key role it can play in keeping the lights on.

Wind and solar farms will also benefit from the draft rules on fast frequency response drawn up by the Australian Energy Market Commission, which signal a significant evolution in the grid as regulators and rule-makers accept that new inverter based technologies can and will replace the services offered by traditional synchronous generators.

The ability of battery storage to respond at hitherto unimagined speed to help keep the lights on has been apparent since the original Tesla big battery at Hornsdale in South Australia first began operations in late 2017, and quickly intervened to help manage the unexpected trip of one of the country’s biggest coal generators.

That intervention, and the speed, accuracy and flexibility demonstrated by battery storage in many events since, has convinced market players, operators and regulators that battery storage will play a significant role in grid security.

But like many things that battery storage installations can do, there was no market to ensure that payments for such services could be made. Hence the push led by Infigen Energy, which operates the Lake Bonney battery in South Australia, to create a new market for fast frequency response.

The AEMC’s draft ruling, issued after a year of consultation and review, proposes to create a market for technologies that can respond to changes in frequency in less than two seconds, significantly quicker (in grid terms) than the current fastest market, which is for six seconds.

It will be open to technologies that can deliver this fast response – battery storage, wind farms, solar PV and from energy users through various demand response mechanisms.

“The foundation of a low-carbon future for the energy sector is building new ways to keep the system in balance and stable through the transition,” AEMC chief executive Benn Barr said in a statement.

“Our draft determination … paves the way for valuing new types of fast-response services that can keep the system in a secure operating state – balancing electricity supply and demand in real time. Achieving that balance through stable frequency means the system can ride through most power disturbances.”

Frequency varies when electricity supply and demand don’t match – it must stay within a range of around 50 hertz to avoid blackouts. Small variations are common and easily managed, but bigger variations – such as the increasingly common sudden trips of a coal or gas generator, or network faults – are more serious.

The important part of this decision is the recognition that the energy system is moving away from traditional services of inertia – normally produced by spinning machines in coal, hydro and gas-fired power stations – to a new system dominated by inverter-based technologies (wind, solar and batteries) where faster frequency control services are needed.

This is particularly being felt during the day, when the enormous amounts of rooftop solar is putting pressure on existing generators, and sidelining many of the big coal generators during daylight hours.

The AEMC says this will be the first of many new markets that will be put in place to value system services and it will allow the Australian Energy Market Operator (AEMO) to procure fast frequency response services to better tailor the speed of response in the power system.

AEMO is preparing to introduce the switch to 5-minute settlements on the electricity market later this year. The much delayed change from 30 minute settlements will boost the earnings capacity of battery storage and is designed to end some of the rorting that has plagued the market.

AEMO and various state governments have also introduced new programs that draw on the many layers of battery capabilities, including acting as an emergency back-up, helping protect the grid in case of major network outages, and increasing transfer capacity between states.

The next step will also be to focus on “primary” frequency response. This was supposed to be delivered by existing coal, gas and hydro generators, but many players effectively abandoned the market by relaxing their “governor controls” so they could make more money in other parts of the market.

New rules that required all generators provide “primary” frequency response were introduced, but the AEMC – at the request of AEMO – is also looking to create a new market, again designed to appeal to the new inverter-based technologies such as battery storage, wind and solar. A draft is expected by mid-September.

Barr told RenewEconomy that the new rule on fast frequency response would be aligned with the re-design of the market to be unveiled next week.

“As we see more and more thermal plant retire, and those generators that provide inertia leave the market, this becomes more important,” he said. “We see it as a critical and fundamental reform.”

The new fast frequency response rules will not, however, be in place for another three years. Submissions to the draft rule are due in early June, but the rules will not be in place until AEMO has been able to develop a product specification and make required IT and system changes.