The smallest of Australia’s growing ranks of big battery installations on the country’s main grid has ended up delivering the biggest bang for megawatt hours of storage in the crucial and most lucrative grid services markets they now operate in.
According to the latest research from Cornwall Insight Australia, the 30MW/8MWh Dalrymple North battery in South Australia, located next to the Wattle Point wind farm and operated by AGL, was the best performing battery in terms of the Frequency Control Ancillary Services (FCAS) in 2020.
It was a big year for batteries in the FCAS market, with revenues more than doubling for the three South Australian big batteries, largely as a result of the windfall payments received when they played a key role in keeping the local grid stable after it had become isolated after a storm blew down the main link to Victoria.
Dalrymple boasted an increase in revenues of more tan 230 per cent, according to Cornwall, and was also the best performing because it delivered more than $575,000 per MW installed and over $2 million on a $/MWh installed basis.
The 30MW/30MWh Ballarat battery in Victoria and the 25MW/50MWh Lake Bonney battery in South Australia returned $210,000 and $230,000 per MWh installed respectively over 2020.
The FCAS market has been a profitable venture for big batteries, and they have displaced much of the gas generators (in South Australia) and coal generators in other markets.
But it is not their only source of revenue: They also earn money from arbitrage – buying low and selling high (and represented in light green in the graph above – and for other grid services (which are direct contract payments and not represented in the graph above), and are exploring new markets such as synthetic inertia that may be included in the new market design.
They are also expected to benefit from the introduction of five minute settlements later this year because of their speed and versatility.
“The nature and duration of contingency events will continue to drive significant variations in battery storage returns over the next decade,” said Ben Cerini, the principal consultant of Cornwall Insight Australia.
“However, expected increases in energy spot market volatility will likely see a considerable increase in the percentage of revenues generated from the energy market.
“While new battery projects will bring increased supply to FCAS markets, potentially driving prices lower, we can reasonably expect two things; similar levels of contingency events in the future and new spot markets for storage that will likely be implemented as part of the ESB (Energy Security Board)’s 2025 market design.