Corbell slams AEMO’s “conservative” view on battery storage

ACT climate change and energy minister Simon Corbell has criticised the Australian Energy Market Operator for its conservative estimates on the value of battery storage, saying it highlights the institutional barriers faced by Australia as it seeks to redesign the energy market towards a low-carbon grid.

Corbell says he was surprised when the chair of AEMO, told the pivotal COAG energy ministers meeting in Canberra a fortnight ago that it may be 10-20 years until battery storage would be able to exert an influence on grid stability and support.

“I was amused,” Corbell told the Energy Disruption conference co-hosted by RenewEconomy in Sydney on Wednesday.

“It was a remarkably conservative and pessimistic view of a technology that is showing a trend of rapid cost falls …. And it highlights some of the challenges we face in the design of our energy markets when that sort of presentation is being made to decision makers at COAG level.”

Corbell pointed to the ACT’s own program, which will see 36MW of battery storage installed in 5,000 homes and businesses in Canberra, and which would avoid $200-$220 million of infrastructure costs (from grid upgrades and maintenance).

However, Corbell said that he was confident that change was afoot at COAG level – despite what he saw as resistance from AEMO and the main policy maker, the Australian Energy Markets Commission.

“The recent meeting of COAG energy ministers was widely reported as emphasising the importance of gas distribution and competition in gas markets, to manage intermittency.

“A more significant decision was that for the first time every state and territory agreed that the NEM (National Electricity Market) has to be affordable and reliable for consumers, and it has to be sustainable.

“That sort of language would have been unheard of 18 months ago,” he said. “That was a step change in terms of the culture and environment of the COAG meeting. Whether that will be realised in terms of policy making remains to be seen, but it is clear that transition is under way.”

Corbell said he did not think that gas would have a major role in the transition, and its role would be more limited than some believe to addressing intermittency issues in the short term. “Rather than a bridge to a low-carbon economy, perhaps it will just be a stepping stone.”

Indeed, Corbell announced on Tuesday a $180 million investment program from the likes of Siemens, Hyundai, Union Fenosa and Neoen to research and develop hydrogen energy initiatives in the ACT, including a fleet of 20 hydrogen cars and an electrolyser.

Corbell said the ACT was not making a call on whether hydrogen would be the answer, but was happy to provide the policy environment that attracted the investment.

This, he said, was the key to approaching the energy transition that was already afoot. “The debate is about the cost of the transition but it should be about the economic opportunity.”

He said ACT’s program to provide 100 per cent renewable energy, delivered through a series of reverse auctions, would attract more than half a billion dollars of investment.

Four major renewable energy developers had established headquarters in the ACT, and the hydrogen investment is another example.

“We are not reaching a view that this technology will win over others. It’s a way to seize the opportunity to attract investment from major companies – like Hyundai and Siemens – to grow our capacity and innovation.

“Canberra will never be a manufacturing hub. But we can export ideas, innovation and skills. That’s why we are supportive of these opportunities.”