Tesla wants grid blue-print to reflect lower battery costs, greater flexibility

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Tesla says grid blue-print should reflect lower costs for batteries, as well as longer life-span and greater efficiencies.

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Gannawarra solar farm and battery storage facility. Source: Wirsol
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Tesla is pushing for Australia’s 20-year grid blue-print to reflect the rapid technology developments in battery storage, saying it needs to acknowledge that batteries are cheaper, last longer, and are more efficient than thought.

In its submission to the Australian Energy Market Operator’s consultations about its next version of the Integrated System Plan, Tesla suggests batteries should be modelled to reflect 15 years of life rather than 10 years, a 90 per cent round trip efficiency rather than 81 per cent, and cheaper costs that will mean it can readily compete in delivering four hours of storage.

The Tesla submission suggests that battery storage – both at grid level and “behind the meter” – is poised to play a greater role in Australia’s future grid than acknowledged by many who focus mostly on technologies such as pumped hydro, and mega-projects such as Snowy 2.0 and Tasmania’s Battery of the Nation plan.

The question over battery storage emerges as one of the key themes from AEMO’s consultations on the next version of its 20-year planning blue-print.

The biggest one, of course, came from the near unanimous push to recognise the need to plan for more ambitious emissions reductions – including the “real” Paris target of 1.5°C, and not just the modest down-payment of the current government.

The main fossil fuel generators’ lobby group and the major network owners support this and have also called for a reality check over the life of the country’s remaining coal fleet. Even the coal generator owners themselves acknowledge that these plants will not be around for as long as assumed.

The question then, for modellers and grid planners, is what replaces these ageing assets. AEMO’s first shot at the ISP was widely admired as one of the most important documents to emerge from the wreckage of Australia’s policy debate over the last decade. Finally, someone had a plan, and a reasonable one at that.

Now, the big and smaller players are urging tweaks that will include more flexibility in some of the scenarios, and recognise the dynamic shifts that are occurring in the industry. That will result in a “step change” scenario that is equivalent to a de-facto 100 per cent renewable energy target, as it will have to acknowledge zero emissions target by 2050.

This is important.

Other grid operators, such as UK’s National Grid, are openly dialling in scenarios that prepare for 100 per cent renewables. New analysis, such as the report released this week by Finland’s LUT University and Germany’s Energy Watch, call for the need to shift everything electric and power it with renewables. They note it will be cheaper and more efficient.

Australia’s toxic energy politics make that more difficult for local institutions and regulators, but AEMO is showing a willingness to take these recommendations on board.

Tesla’s observations highlight the need to reflective rapid shift in technologies. Indeed, the LUT study suggests that the vast majority of storage needs in a grid dominated by wind and solar will be served by battery storage.

Tesla would like to see a “fast-change” scenario where both distributed energy resources, (known as DER and which include rooftop solar, battery storage and demand management, and large-scale renewable storage uptake are maximised.

“A ‘fast change’ scenario could then be viewed (as it is most likely to be interpreted) as an outlook that sees high growth in demand-side settings (strong uptake of rooftop PV, demand-side participation, EV and aggregated behind the meter storage) as well as strong supply side cost reductions at the utility scale,” Tesla says.

“As recognised by AEMO, and supported by Tesla’s experience to date, more rapid uptake of behind-the-meter battery storage will help drive faster reductions in utility-scale battery costs and as such are highly correlated.

Tesla says cost assumptions around battery storage also need to be updated. For instance, it suggests that assuming having twice the capacity and therefore twice the costs in a single installation is wrong, because the fixed costs are more or less the same.

It also notes AEMO previous observations that the whole “value stream” of batteries needs to be better reflected. This is the responsibility of the market rule-maker, the AEMC. AEMO has said that only one third of battery services are recognised by the market.

Tesla’s observations about battery life and efficiency are also interesting, as are its signal that battery deployment will start to move to the four-storage range. So far, most projects in Australia have reflected one hour of storage, or two hours at most.

On efficiency, Tesla says: “Deployments to date are already achieving greater than 90% efficiencies – as such we support AEMO in updating parameters for battery charge and discharge efficiency to at least 90%.”

    • On technical life, Tesla says: “We understand modelling will include a 10-year lifetime for battery storage.

“However, it is important to note that this is often based on a guaranteed energy provision warranty from manufacturers, where the market is already seeing the shift to 15 year warranties being offered as standard.<

“Moreover, beyond this 10-15 years storage assets are not worthless and will still be able to provide value to the market, albeit with declining levels of energy. This should be equivalent to assumptions made around ageing coal and gas plants that are likely to see increasing levels of full/partial outage rates and expanding de-rate factors prior to retirement.”

And on duration, it notes: “Market participation is fundamentally an opportunity cost assessment – using dispatch models and forecasting software to optimise when, in what markets, and how much to bid the limited energy capacity that is available in order to maximise returns.

“This is where longer duration battery storage of 4 hours will allow for greater flexibility in market bidding strategies (to capture peak price events) and the additional energy capacity can also be used to provide additional ancillary services to deliver higher project revenues (‘revenue stacking’).”

It also notes the role that batteries could play in alleviating problems such as cuts to “marginal loss factors”, the amount of output that are credited to various generators. Many in congested areas are seeing a significant downgrade.

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