Big battery projects are often cited as a solution to the bottlenecks that can heavily restrict the output of wind and solar farms – and some major projects, like the new Waratah Super Battery, are designed and contracted specifically to relieve congestion on the grid.
But a new report from Modo Energy has found that other big battery projects – usually focused on energy arbitrage and other grid services such as frequency control – are finding themselves constrained by grid bottlenecks.
The report is paywalled, but some snippets made available to Renew Economy highlight the fact that some big battery projects in NSW are the most heavily constrained in times of high prices – when ideally they would want to be cashing in on the energy they have stored.
“Over the past 12 months, many batteries in the NEM (National Electricity Market) have seen substantial reductions in potential revenue due to constraints and MLFs (marginal loss factors),” the report says.
The six batteries most affected by revenue reductions due to location are all connected to the same transmission network in South and South-West New South Wales (Canberra, the Riverina, and Broken Hill).
These batteries are the Broken Hill battery located at the end of a long single line, the Capital and Queanbeyan batteries in and around the ACT, and the three batteries at the Riverina/Darlington complex in the south-west of the state,
“Limited transmission capacity and excess generation in the area expose assets to higher levels of curtailment and less favourable MLFs (marginal loss factors),” the report says.
Modo says the cost to the battery project is highly dependent on connection location and supporting grid infrastructure, varying from asset to asset. It says Riverina 1 has experienced the largest revenue impact, with potential earnings reduced by $35k/MW due to constraints and a further $40k/MW from MLFs.
Data from Modo Energy shows that in one high priced event, on April 9, output from the Capital, Queanbeyan, and Broken Hill batteries were either completely or heavily constrained, just when the batteries would be looking to cash in. They were simply unable to get their product to market.
Modo’s Wendel Hortop says the situation highlights the conflict between what’s best for the grid (batteries being built in areas of high constraint/weaker parts of the grid) and what’s best for the business case of a battery (being built in least constrained/highest MLF areas).
He says this is partially being offset right now by support from government agencies and the Australian Energy Market Operator, but it’s not clear how sustainable this is in the long term. “Perhaps the Nelson review can bring in something to bridge this gap,” he says.
