Grid-scale battery storage: can it happen in Australia?

David Leitch’s article Battery storage: Bad advice about costs is fooling Australian governments reviews two American reports on grid-scale battery storage in the states of Texas and Massachusetts. He says the reports:

    are detailed, professionally modelled and far more forward looking and sophisticated than anything so far produced by traditional Australian electricity consultants such as Jacobs, Frontier, IES, Ernst & Young or ACIL Allen.

Leitch, the principal of ITK says in their view:

    Australia is being held back, in part, because consultants in Australia provide advice to federal and state governments based on expensive models that are basically out of date. The models don’t, and in fact can’t, take an integrated (whole of system) view.

The basic problem is that we have a fractured system in which renewable generation and distribution are considered as add-ons to the existing system. Also a modern model requires access to a large amount of transmission and distribution information, which is typically privately owned and not made available to the public.

Hence there is a huge bias towards the status quo, rather than starting with a vision of a very different future.

In Queensland the state owns the distribution system and a significant portion of the generation capacity, which should present an opportunity to overcome this problem.

ITK says the two American reports came to essentially the same conclusion:

    Adding storage of between 5 per cent and 15 per cent of the state’s maximum demand is economic, even considering the lower levels of renewable penetration and the lower electricity prices in those states, relative to Australia. However, it’s only economic if the benefits to both the generation and network are jointly accounted for. Neither the generation or the network system alone can get a sufficient return. (Emphasis added)

A further problem is that in the basic Australian system energy is energy, no allowance is made for social or environmental good.

The need for storage grows as the proportion of renewables in the system grow. In ITK’s view:

    as the amount of renewable generation on a grid grows, the amount of storage to maximise benefits also increases. In the extreme, for a grid that was 100 per cent PV-based storage needs to be about 70 per cent of final demand. We would say that the more PV there is, the more the need for storage. PV-centric systems likely need storage more than wind-centric systems.

In Queensland the present government policy was to combine the state-owned distribution companies, Energex, which serves SE Queensland, with Ergon, which covers the rest of the state, together with generators Stanwell and CS Energy. After conducting a review when in Government, a decision was made to combine distribution into a new company, Powerlink, but to retain the existing brands, Energex and Ergon.


    “After close consultation with the Australian Competition and Consumer Commission (ACCC), we have decided to retain CS Energy and Stanwell as separate generation businesses, delivering efficiency savings without compromising the market.

In other words, to merge generation and distribution is not possible within the current national structure. Whether this compromises grid-scale storage is not clear, but a joint venture would seem theoretically possible.

Queensland generation is actually quite fractured and diverse. A quick count shows at least five other than CS Energy and Stanwell with greater than 500MW capacity.

Clearly, I think, grid-scale planning needs to take into account the future of consumer-generated power, principally roof-top solar, the development of joint-use off-grid systems and the future of the grid itself.

Now Australia’s main network lobby, the Energy Networks Association (ENA), has commissioned a report that offers a “stand alone power system” discount, which can provide an incentive for most of these to stay, thereby avoiding added costs to other consumers, who would be required by networks to pick up the revenue lost from households leaving the grid.

The intention is to make the grids sustainable because:

    if people do leave the grid, they will no longer be contributing to the networks’ regulated asset base, thereby forcing those networks to recoup their revenue from remaining customers.

    That, in turn, leads to more defections, more price rises, and chaos and the so-called death spiral ensues.

I can’t wrap my mind around this “stand alone power system” (SAPS) discount proposal. It is supposed to work by requiring those with significant solar and battery storage arrays to disconnect from the grid at times of “critical peaks”, effectively acting as a load-shedding feature on the grid.

Consumers with back-up reserves to cover “critical peaks” would, I think, be rare, and if they are so well-provisioned the incentive for them to stay at other times would need to by high.

Also I’m a bit tired of people like Giles Parkinson standing by and picking off the evil networks as they struggle to survive in system where market incentives based on the price of electricity are supreme and the cards seem stacked in favour of those who own their own homes and have the capital to secure their energy future with the devil taking the rest.

I think authorities should start with a vision of zero emissions power, with a smart grid connecting all except those who are too remote, so that power can move from anywhere to anywhere, within reasonable technical and economic constraints. I think we are all best served if we stay connected, so I’d legislate for that and start the conversation from there. It seems to that maintaining a grid with all connected is only way to provide equitable access to power for all. The alternative is to charge those leaving a penalty, then use it to maintain the service to those who have no choice. Higher taxes together with increases transfer payments to those in need is another approach, but I’m assuming we won’t go there.

Of interest, the ENA report, compiled by Energeia has very different assumptions from the CSIRO about likely grid defection rates. Energeia:

    forecast of a 10 per cent defection rate by 2050 contrasts sharply with recent work by the CSIRO through its Future Grid scenarios, which suggested that one-third of consumers could leave the grid by 2040 unless the network operators changed their business models.

They also assume that only the very remote would find it cost effective to go off-grid, whereas already we have just seen Alan Noble, the Google executive, who found it more economic to install solar with Redflow ZCell batteries than connect to the grid which came to the corner of his 100-hectare property.

There is more to be said about desirable energy futures and the policies to get us there.

5 thoughts on “Grid-scale battery storage: can it happen in Australia?”

  1. Thanks Brian

    Just a brief anecdote re your last paragraph. Several decades ago when State Election Commission supplied Vic, owning both generation and grid here, SECV was obliged to connect every new customer, at SECV cost.

    An engineer, young at the time, had the daunting task of presenting to General Manager, the case that it was cheaper in the case of new rural home with long driveway, to set up the house with on-site generation (diesel then?) than install line from road. Manager saw the financial logic, agreed.

    Anecdote has echoes now…..

  2. Thanks BilB

    King Island is a great example, with their thriving agriculture, seaweed harvesting, fishing and small scale tourism. Importing fuel very expensive, being girt by sea.

  3. A few things to keep in mind about renewables and battery storage:
    1. The marginal cost of wind and solar is essentially zero. We should be looking for uses for this very low cost surplus electricity. This is the opposite of what happened for large coal fired power stations where industries like aluminium got very low prices because the demand of aluminium smelters was steady.
    2. Batteries are not 100% efficient. Any power that goes through a battery will result in some loss unless the heat generated by this loss can be used. (Moving power through long power lines also results in loss.)

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