Store that thought: Batteries enter the energy mainstream

Energy storage, mostly batteries, and actually mostly Tesla batteries, has entered the mainstream. That was the overwhelming conclusion of day 1 of the Australian Energy Storage conference in Sydney this week.

We know this because no one is arguing whether batteries work or don’t work, we are down in the nitty gritty of use cases, technical standards and policy goodwill.

Still listening to the difference batteries will make to power prices in 2030 or 2040 is frankly a little dull, and equally 15 presentations of duck or platypus curves restating  old ideas is just a trifle boring. (Although, I should not that with two different streams operating and having played a tough game of tennis in the morning, I may have missed a couple of great presentations).

That said:

1. Has there ever been a more aptly named NSW Energy Secretary than Ben Franklin? Its hard to imagine. Ben provided some sparks by speaking very positively about the NEG and his aspiration that NSW be the easiest place in the OECD to start a new energy project.

This sounds terrific, but talk is cheap and we heard the same things from Don Harwin a few years ago and ended up with next to nothing accomplished. In fact, as Fiona Orton from Transgrid pointed out later, and as everyone knows, NSW has no spare transmission capacity, somewhat restrictive wind farm rules and only trivial financial support.

There is a $30 million budget for putting batteries in schools and hospitals, which is great, but that is just 0.5% of the $6 billion that NSW received from its share of the Snowy Hydro sale.

The NSW Government has hardly put $1 into helping Transgrid get the transmission built and no details are yet available on the zero interest loan home solar and battery plan. I can cut some slack on that latter  point as it does take time to get these things organized, but the essential point that NSW is still way off the pace remains.

2. A couple of presentations demonstrated how batteries do work in flattening out household load (pass the valium, I need a good lie down).Actually Greg Abramowitz from AGL did a great job showing the recent installation acceleration and early results of  AGL’s South Australian 5 MW virtual power plant, which now will be expanded to other states.

His presentation and numerous others I’ve seen emphasize the role that software is going to play in pulling all the parts together in an increasing fragmented system that will still sound like a great orchestra if conducted correctly.

As in virtually every photo I saw of a battery the name Tesla was written on it. I don’t think its just the price of the Tesla battery, but its functionality that makes it the product of choice. Greg said that once AGL moved to Tesla and lowered the price of the systems sales took off (price works, pass the valium).

3. Along the same software lines, Harley Mackenzie from HARD Software did a great job in showing how software to dispatch the Hornsdale, Tesla battery had been written in the 100 days working within the existing market rules.

However, Harley’s throw away remark at the end of his interesting presentation that its’ time for Australia to look at Nodal pricing struck a real chord with me and I plan to follow through. Avid listeners to the Energy Insiders podcast may recall Bruce Miller, another genuinely knowledgeable person in the industry, making a similar comment.

4. Transgrid’sFiona Orton also raised the idea of using batteries as virtual transmission lines. Readers may recall I talked just before last Christmas about how Powerlink and Transgrid had included a battery as one of the “serious” options to be considered for upgrading the NSW- Queesnland line.

In the end I doubt that will be the preferred option, but as I say having tramsission companies treat it seriously shows that batteries are indeed arriving.

5. Not that many of today’s presenters will have read it but the path breaking work in identifying use cases for batteries and considering the problem of how to deal with creating value but not getting paid for it was the Massachusetts Govt 2015 State of Charge report. I’d encourage anyone to read that report not much has really changed and its just as applicable in Australia.

However….

6. The Day 1 ITK award for most interest presentation showing a working example of  how to extract maximum value from a battery goes to West Australia’s Synergy/Western Power for the discussion of the “Powerbank; a community storage project”.

This project has a Tesla  Powerpack installed in a street in Mandurah. Just sits there  pretty much on the pavement looking pretty.

The distributor, Western Power, owns the battery and obtains value in terms of managing voltage spikes, avoiding substation augmentation. It subtracts an estimate of the NPV of those values from the battery cost and then charges the retailer Synergy  a capacity fee on the net value of the Powerbank.

Synergy allows 52 households that signed up for a $1 per day cost to export 8 KWh of solar from their house to the  Powerpack and then import it back at night.  About 45 of the households, are better off financially.

ITK likes this project because (i) it takes advantage of the fact that Powerpacks are about 30% cheaper on a $/KWh capacity basis than individual household Tesla Powerwalls.

(ii) it cuts out lots of electricians. Western Power installs it and makes sure it works. This saves households a lot of installation and metering hassles that are a feature of both the AGL VPP and the United Energy similar example. At the same time it still preserves the idea of keeping storage at the fringe of the grid where it is most valuable.

(iii) The value of the battery to the distribution company is explicitly recognized. In our view it helps that the West Australian Govt owns other the retailer and the distribution company and, as I understand it, essentially asked management t to make it work.

In any event they plan to expand the concept and to go out to tender. Well done West Australia. Gold Star.