Supporting Victorians to buy home batteries and hook them into a virtual power plant (VPP), as part of a suite of initiative – including more big batteries and deeper storage – to help the state manage its transition from coal and meet its ambitious renewable energy targets.
The recommendation for home batteries – an initiative that could cost up to $50 million a year by 2030 – is one of 50 from the state’s draft 30-year infrastructure strategy, which sees Victoria potentially needing 20 times more coordinated battery storage than it has today by 2035.
The state has a legislated target of 95 per cent renewables by 2035, by which time the last of its three remaining coal fired power stations will be all but gone. It is looking to build out multiple gigawatts of wind and solar, including offshore wind, but storage and dispatchable capacity will be key.
With Victoria’s Solar Battery Loans program running out this year, the state should create new support for home batteries and provide incentives for people to join a virtual power plant, the draft report says.
What that support should look like it leaves blank, saying only that the opportunity might avoid around $10 billion in distribution networks investment by 2040, and $4.1 billion grid-scale investment across the National Electricity Market.
“Virtual power plants are a mechanism that can support this,” it says.
The draft strategy is open for public consultation as it goes through its five year update, and will be tabled in parliament later this year.
The full suite of energy storage recommendations may be difficult for the state to swallow, coming as they do with a total price tag between $346 million and $587 million.
Commit to CER
The strategy doesn’t focus heavily on consumer energy resources but gives a nod to the new national roadmap that state and federal energy ministers committed to in June last year, saying Victoria should keep implementing it.
The National Consumer Energy Resources Roadmap will consider taking a national approach to the rules governing assets such as rooftop solar, home battery storage and electric vehicles.
Victoria has in the past run subsidy and loan schemes to switch heating, hot water and gas ovens to electric, but it’s yet to support options to integrate these into the electricity network in ways that will lower grid investments and electricity bills for all.
The strategy also wants to ban replacing gas space heating and hot water with new gas appliances, saying new appliances must be electric.
But that was a strategy the Victorian government shied away from last year following a vociferous campaign from the gas industry, when reversed on a proposal to ban replacement gas cooktops.
Support transmission with neighbourhood, big batteries
But home batteries aren’t the only answer: the draft strategy calls for an expanded neighbourhood battery scheme and for Victoria to play a role in testing new tariffs that will allow customers to benefit without up front costs.
Big batteries’ role should be to reduce transmission loads and provide backup power.
“The government should facilitate more investment in them now, as backup if major transmission projects are delayed. It should prioritise areas where transmission congestion is likely to remain a problem, such as north-west and central Victoria,” the strategy recommends.
This is helped along by the state’s storage goals of at least 2.6 GW by 2030 and 6.3 GW by 2035.
The cost of expanding a neighbourhood batteries program to 2030 is estimated at $25 million to $35 million.
The same investment in big batteries would need $300 million to $500 million by 2030.
“Actioning this by 2030 will better manage the risk of potential delays to transmission infrastructure. The Victorian government should facilitate more private sector investment in big batteries, with costs added to electricity bills as happens now,” the strategy says.
“The Victorian government has also already committed $1 billion in funding to the State Electricity Commission to invest in areas where the market is uncertain, including for big batteries.”
Get cracking on long duration – now
With gas shortages set to begin really biting next year, Victoria is keen to get off the fossil fuel.
But the strategy says if the state can’t start getting behind long duration storage very soon, it will need to rely on gas power plants – a risky proposition given those gas shortages – and energy imports from other states once its coal fired power plants shut down.
The next coal power station to close is in 2028, and the final is slated for 2035 when AGL’s Loy Yang A is closed.
The state should be supporting long duration storage options that can supply electricity for eight hours, with options including pumped hydro, compressed air as is being installed in Broken Hill, molten salts and advanced battery systems.
Victoria’s largest battery under development right now are four hour batteries, with ground breaking on the first last week at Wooreen.
But efforts to bring long duration storage into the Victoria grid need to start immediately.
“The government can work with other jurisdictions to develop market signals that encourage developers to invest in long duration energy storage,” the strategy suggests.
“It can also set targets for different duration storage requirements and develop procurement to support them, like some other jurisdictions… For instance, New South Wales uses Long-Term Energy Service Agreements.
“Another option the government can consider is direct support through grants or targeted tenders.”
Just the planning to include long duration storage in the Victorian grid will cost an estimated $1-2 million over two years – but it needs to start now and be ready by 2027.
