New Zealand’s first big battery is already pushing down prices, market operator says

The first big battery in New Zealand is already keeping a lid on prices since it first started bidding into the market in late July, according to a report by the country’s market operator.

The 100 MW, 200 MWh Ruakākā battery, built next to a 130 MW solar farm south of Whangārei, in Northland, was commissioned in May, and began bidding into the country’s “reserve capacity” market in late July.

According to Transpower, which runs the market and infrastructure in New Zealand, it has already had a softening impact on prices on both the North Island and the South Island, despite its relatively small capacity.

“While it is still early days, we’ve had an initial look at the reserve prices before and after the introduction of the Ruakākā BESS, as shown in the charts below,” it writes in a market updated.

“Here we see a downward trend since the BESS began offering in late July.”

The commissioning of Australia’s first big battery at Hornsdale, way back in 2017, had a similar impact on parts of the electricity market, particularly on the frequency control and ancillary services market.

But recent experience shows that big batteries – now mostly owned or controlled by the generation companies that dominate the wholesale electricity market – are now feeding higher prices into the grid, particularly in the evening peaks.

“Even though it has limited energy capability, the benefits of BESS are that they can respond rapidly to changing system conditions (such as under-frequency events),” Transpower says.

“This makes them ideal for providing instantaneous reserves to the market. Additionally, increases in reserve supply help to bring down reserve prices.

“As we expect more BESS to enter the market, we expect this trend to continue with more reserves and downward pressure on reserve prices. This also helps free up capacity of generators to provide energy, helping overall security of the system.”

New Zealand’s electricity supply is dominated by renewables – 91 per cent in the last week according to TransPower. But most of this comes from hydro (55 per cent), followed by geothermal (21 per cent), with wind providing 14 per cent in the most recent week and thermal generation just 8 per cent.

Genesis has started construction of a 100 MW, 200 MWh battery at Huntly, also on the North Island, and expects to expand this to a 400 MW facility.

Meridian Energy, which owns the Ruakākā battery, says it plans more big batteries, including at Manawatū, and several others that are progressing through consenting processes and which will be incorporated into a number of new solar projects.

Meridian’s battery partner for Ruakākā is Saft, which is also providing the batteries for the Huntly project. “We love our big battery, and it seem to already be making an impact!” Meridian noted in a LinkedIn post.