New ARENA funding round to help plug one of last gaps to 100 pct renewables grid

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The Australia Renewable Energy Agency is expected to launch a new funding round of around $100 million in early December that will support the roll out of grid forming batteries, one of the last remaining gaps to fill for a 100 per cent renewable energy grid.

Grid forming inverters – mostly likely hosted in battery storage installations – are seen as crucial to supply the system strength and other key grid services traditionally delivered by coal, gas and other spinning machinery.

If they are rolled out at significant scale it means that the country’s remaining fossil fuel generators can be phased out once there is enough renewables to supply the actual energy needs.

Grid forming inverters are also considered to be a smarter and more modern alternative than synchronous condensers, big spinning machines that do not burn fuel which have been installed in South Australia to reduce the need to direct gas generators on line, and more randomly in other parts of the grid.

The Australian Energy Market Operator has recently identified grid forming inverters as a top priority for the grid, but in a presentation to stakeholders last week ARENA noted that it remains challenging for such projects to reach financial close.

“Grid-forming batteries are viewed as being a key enabler to operating whole NEM (National Electricity Market) regions at 100 per cent instantaneous renewables,” the presentation said.

It also noted that such batteries could address other grid needs such as emergency interventions, provide “virtual transmission” (increasing the capacity of links between states) and help deal with falling levels of minimum demand.

ARENA says the purpose of the new funding round is to boost the capability to maintain system security at a regional level (i.e. across an entire states) as the broader power system operates with few synchronous generators.

It says the funding round will accelerate the demonstration of grid forming inverters at scale, and improve industry understanding of how the technology can support system stability during periods of high inverter-based generation (wind and solar).

Some batteries already provide this service, but only at relatively small scale, such as Dalrymple North, the newly expanded Hornsdale Power Reserve, the new Wallgrove battery in NSW, and another four even smaller projects that are yet to reach financial close.

AEMO, however, wants to see these grid forming batteries to be operating at bigger scale, so it can confidently move ahead with the new protocols that will allow 100 per cent renewables to be reached at certain times by 2025, and consistently by 2035.

It says that further funding is needed because grid scale battery deployments that incorporate grid forming technologies carry costs and risk for project developers, and although there are some 5,000MW of new battery storage projects in the pipeline, there is little incentive to incorporate grid forming capabilities.

ARENA is hoping to support at least three different projects (and battery suppliers) across the NEM and the Western Australia grid, and between 500MW and 1000MW of new large scale batteries.

(The length of storage will be decided by what other services these batteries provide, but generally only a shorter time frame is needed for this function).

The proposed ARENA round would be launched in December, with applications due in July, a decision in september and financial close in mid to late 2023.

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