p234 renewables and battery storage final - the australia … renewables and... · ·...

Securingrenewables i

Securing renewables How batteries solve the problem of clean electricity

Batteryandotherenergystoragetechnologiesarereadytosolvetheproblemofvariabilityof

renewableenergy.

ResearchreportDanCassApril2016

ii Securingrenewables

ABOUT THE AUSTRALIA INSTITUTE

TheAustraliaInstituteisanindependentpublicpolicythinktankbasedinCanberra.Itisfundedbydonationsfromphilanthropictrustsandindividualsandcommissionedresearch.Sinceitslaunchin1994,theInstitutehascarriedouthighlyinfluentialresearchonabroadrangeofeconomic,socialandenvironmentalissues.

OUR PHILOSOPHY

Aswebeginthe21stcentury,newdilemmasconfrontoursocietyandourplanet.Unprecedentedlevelsofconsumptionco-existwithextremepoverty.Throughnewtechnologywearemoreconnectedthanwehaveeverbeen,yetcivicengagementisdeclining.Environmentalneglectcontinuesdespiteheightenedecologicalawareness.Abetterbalanceisurgentlyneeded.

TheAustraliaInstitute’sdirectors,staffandsupportersrepresentabroadrangeofviewsandpriorities.Whatunitesusisabeliefthatthroughacombinationofresearchandcreativitywecanpromotenewsolutionsandwaysofthinking.

OUR PURPOSE – ‘RESEARCH THAT MATTERS’

TheInstituteaimstofosterinformeddebateaboutourculture,oureconomyandourenvironmentandbringgreateraccountabilitytothedemocraticprocess.Ourgoalistogather,interpretandcommunicateevidenceinordertobothdiagnosetheproblemswefaceandproposenewsolutionstotacklethem.

TheInstituteiswhollyindependentandnotaffiliatedwithanyotherorganisation.AsanApprovedResearchInstitute,donationstoitsResearchFundaretaxdeductibleforthedonor.Anyonewishingtodonatecandosoviathewebsiteathttps://www.tai.org.auorbycallingtheInstituteon0261300530.Oursecureanduser-friendlywebsiteallowsdonorstomakeeitherone-offorregularmonthlydonationsandweencourageeveryonewhocantodonateinthiswayasitassistsourresearchinthemostsignificantmanner.

Level5,131CityWalkCanberra,ACT2601Tel:(02)61300530Email:[email protected]:www.tai.org.au

Securingrenewables iii

ACKNOWLEDGEMENTS ChrisFrancisgenerouslydonatedhisservicestoTheAustraliaInstitutetoeditthisreport.IamgratefultoNigelMorris(CEO,RoofJuice)andReeceTurner(ConsumerCampaigner,SolarCitizens)fortheiradviceonthefirstdraft.ThanksalsotomycolleaguesatTheAustraliaInstitute:RoderickCampbellformuchvaluablecounselonwhatmakesforimpactfulresearch,EbonyBennettandTomSwannforhelpwithpollinganalysisandBenOquistfortheproposalthatbecamethisreport.

Thankyoutothefollowingexpertsfortheirusefulpointers:

• MarkByrne,EnergyMarketAdvocate,TotalEnvironmentCentre• JohnGrimes,ChiefExecutiveOfficer,AustralianEnergyStorageCounciland

AustralianSolarCouncil• MaryHendriks,IndustryExecutive,AustralianEnergyStorageAlliance• RosemarySinclair,ChiefExecutiveOfficer,&DavidHavyatt,Senior

Economist,EnergyConsumersAustralia• KaneThornton,ChiefExecutive,CleanEnergyCouncil• DrMurielWatt,SchoolofPhotovoltaicandRenewableEnergyEngineering,

UniversityofNewSouthWales

Anyerrorsandomissionsaremyownresponsibilityofcourse.

FIGURES Thefollowingarethankedfortheuseoffiguresinthisreport:

• Figures1&2:Lazard,NewYork• Figure3:Citigroup,NewYork• Figures4,13:InternationalRenewableEnergyAgency,AbuDhabi• Figure10:AECOM,Melbourne• Figure12:ProfessorW.Antweiler,UniversityofBritishColumbia• Figure14:Younicos,Berlin

iv Securingrenewables

Summary

Criticsputforwardtwokeyargumentsagainstwidespreadadoptionofrenewableenergy:priceandintermittency.Solarandwindcostshavefallensorapidlyoverthepastdecadethattheyarenowcompetitivewithfossilfuels,sothepriceargumentislosingtraction.

Batteryandotherformsofstoragetechnologyarerapidlyovercomingthevariabilityargument.Asbatteriesbecomemorewidespread,thiswillanswerthefinalobjectiontovigorouslydevelopingourcleanenergyresources.

Likerenewableenergydevelopment,batterystorageispopularwiththepublic.NewpollingbyTheAustraliaInstituteisreportedhereforthefirsttime,aschapter2below,andshowsthatstorageisapopularoptionwithconsumers:

• 81%ofsolarownerssaytheyareconsideringbuyingbatteries• Interestinowningstoragebatteriesacrossthepopulationhasincreasedfrom

49%to63%over12months• 23%ofrespondentschooseunpluggingfromthegridasareasontoget

batteries• 39%ofrespondentschooseindependencefromtheirenergycompanyasa

reasontogetbatteries• 34%ofrespondentssaytheyarepreparedtoinvestinstoragebatterieswitha

paybackperiodof5yearsormore• 71%ofrespondentssaytheywouldconsidervotingforapartythatsupported

distributedsmall-scalesolarandstorage

Asstoragetechnologiesbecomecheaper,theycoulddeliversignificantcostsavingstoconsumersandthewholeeconomy.Theiradoptioncouldreduceemissionsfromtheelectricitysectorandcutlocalpollutioncausedbycoalandgasextractionandburning.

Allpartiesinthiselectionyearshouldcommittoopeninguptheenergymarkettofaircompetitionfromstorageanddistributedenergyandtosupportinnovationinthisarea.

Chapter1showsthereductionsincostsofstoragegloballyandinAustralia.

[T]helithium-ionbatteryisthetechnologyofour

timeTheEconomist

Securingrenewables v

Chapter3isaprimeronenergystoragetechnologiesandapplications.

Chapter4showcasesexcitingexamplesofbatterystorageproductsandapplicationsfromAustraliaandaroundtheworld.Itshowsoneaspectofourcompetitiveadvantage-wearealreadyinnovatorsinthisarea.

Chapter5explainstheobstaclesandrisksofcurrentpolicyandourfailuretorapidlytosupporttheemergingmarketrealityofcompetitivebatterystorage.Itexplainstheconflictbetweenthespendingon‘goldplating’theexistingelectricitynetworkandthebetterinvestmentsweshouldbemakinginstorage.Itexplainsthattheendingofstatebasedfeedintariffsin2016islikelytodrivemanysolarhomeownerstobetheearlyadoptersofbatteriesandtherisksofinvestmentinthewronginfrastructureleadingtoantheelectricityindustry‘deathspiral’.

TheParisclimateconferencesetanambitiousgoalofpreventingdangerousclimatechange,whichisadefactocommitmenttoreplacingmostfossilfuelswithrenewableenergyoverthenextfewdecades.Giventhattheelectricitynetworkisalong-terminfrastructureinvestment,wemusturgentlyshiftourinvestmentfocusfrom‘goldplating’theoldmodeltoacceleratingthenew.Storageisthelynchpinofthisshift.

vi Securingrenewables

Table of Contents

Introduction.....................................................................................................................1

Chapter1:Thatwasthen,thisisnow..............................................................................5

Chapter2:Pollingshowshighsupportforsolarstorage...............................................10

Chapter3:Primerontechnologiesandapplications.....................................................15

Chapter4:Showcase......................................................................................................24

Chapter5:Risksandopportunities................................................................................28

Conclusion......................................................................................................................33

References......................................................................................................................34

Appendix-Pollingquestions..........................................................................................38

Securingrenewables 1

Introduction

STORAGE SOLVES THE FINAL OBJECTION TO RENEWABLES Australiaisavast,sunnycountrywithabundantrenewableenergyresources.Asuper-majorityofthepopulationsupportrenewableenergyinpreferencetocoal.However,alackofleadershiphasledtousfallingbehindtheglobalracetowardsrenewableenergy.

Criticsofrenewableenergyhavehadtwokeyarguments;costandvariability.Overrecentyearsthecostargumenthaslargelybeensolved.Constantincrementalimprovementshavereducedthepriceofsolar,windandotherrenewableenergytechnologiesasshowninFigures1and2below:

Figure1:DeclininglevelisedcostofwindenergyinAmerica2009-2015

Source:Lazard,(2015b)Lazard’sLevelisedCostofEnergyAnalysis-Version9.0(November)Lazard:NewYork,p.10

LCOE Version 3.0 4.0 5.0 6.0 7.0 8.0 9.0 LCOE

Version 3.0 4.0 5.0 6.0 7.0 8.0 9.0

10

L A Z A R D ' S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S — V E R S I O N 9 . 0

No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard. Copyright 2015 Lazard.

Unsubsidized Levelized Cost of Energy—Wind/Solar PV (Historical) Over the last six years, wind and solar PV have become increasingly cost-competitive with conventional generation technologies, on an unsubsidized basis, in light of material declines in the pricing of system components (e.g., panels, inverters, racking, turbines, etc.), and dramatic improvements in efficiency, among other factors

Source: Lazard estimates. (a) Represents average percentage decrease of high end and low end of LCOE range. (b) Low end represents crystalline utility-scale solar with single-axis tracking in high insolation jurisdictions (e.g., Southwest U.S.), while high end represents crystalline utility-scale

solar with fixed-tilt design. (c) Lazard’s LCOE initiated reporting of rooftop C&I solar in 2010.

Crystalline Utility-Scale Solar LCOE Range(b)

Rooftop C&I Solar LCOE Range(c)

Crystalline Utility-Scale Solar LCOE Mean

Rooftop C&I Solar LCOE Mean

WIND LCOE

$101 $99

$50 $48 $45 $37 $32

$169 $148

$92 $95 $95 $81 $77

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$58

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$342

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$204 $204 $177 $193

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2 Securingrenewables

Figure2:Declininglevelisedcostofutility-scalesolarPVenergyinAmerica2009-2015

Source:Lazard,(2015b)Lazard’sLevelisedCostofEnergyAnalysis-Version9.0(November)Lazard:NewYork,p.10

Thesetwographs(Figures1and2)showhowquicklyrenewableenergycostshavedeclined.Lazard,afinancialadvisoryandassetmanagementfirm,hasshowninitslatestanalysisofAmericanenergythatthecostofwindhasplunged61%insixyears(toaboutUS$55/MWhLCOE)andthecostofutility-scalesolarPVhasplummeted81%insixyears.1Itisnowcheapertobuildrenewableenergythanconventionalenergyinmanymarketsaroundtheworld,includingAustralia.

Thevariabilityargumentrestsontheobviousobservationthatwhenthesungoesdownandthewindstopsblowing,solarpanelsstopgeneratingandthewindturbinesstopturning.However,withrapidimprovementsinstoragetechnology,thiscriticismisbeinganswered.2

1Lazard,(2015b)Lazard’sLevelisedCostofEnergyAnalysis-Version9.0(November)Lazard:NewYork 2Itisimportanttonotethatthiscriticismhasbeenoverstatedbymanycritics.AccordingtotheCEOof50Hertz,aGermantransmissiongridcompany,Germanycansafelymanageuptoabout70%renewableenergywithsmartgridmanagement,beforerequiringanygrid-tiedstorage.(seeParkinson,Giles(2015e)‘Germangridoperatorsees70%wind+solarbeforestorageneeded’,RenewEconomy,(7

LCOE Version 3.0 4.0 5.0 6.0 7.0 8.0 9.0 LCOE

Version 3.0 4.0 5.0 6.0 7.0 8.0 9.0

10

L A Z A R D ' S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S — V E R S I O N 9 . 0

No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard. Copyright 2015 Lazard.

Unsubsidized Levelized Cost of Energy—Wind/Solar PV (Historical) Over the last six years, wind and solar PV have become increasingly cost-competitive with conventional generation technologies, on an unsubsidized basis, in light of material declines in the pricing of system components (e.g., panels, inverters, racking, turbines, etc.), and dramatic improvements in efficiency, among other factors

Source: Lazard estimates. (a) Represents average percentage decrease of high end and low end of LCOE range. (b) Low end represents crystalline utility-scale solar with single-axis tracking in high insolation jurisdictions (e.g., Southwest U.S.), while high end represents crystalline utility-scale

solar with fixed-tilt design. (c) Lazard’s LCOE initiated reporting of rooftop C&I solar in 2010.

Crystalline Utility-Scale Solar LCOE Range(b)

Rooftop C&I Solar LCOE Range(c)

Crystalline Utility-Scale Solar LCOE Mean

Rooftop C&I Solar LCOE Mean

WIND LCOE

$101 $99

$50 $48 $45 $37 $32

$169 $148

$92 $95 $95 $81 $77

0

50

100

150

200

$250

2009 2010 2011 2012 2013 2014 2015

LCOE $/MWh

SOLAR PV LCOE

$323

$226

$148

$101 $91 $72

$58

$394

$270

$166

$149 $104

$86 $70

$266

$186

$149 $126 $109

$342

$261

$204 $204 $177 $193

0

50

100

150

200

250

300

350

400

$450

2009 2010 2011 2012 2013 2014 2015

LCOE $/MWh

Wind LCOE Range

Wind LCOE Mean

$149


CRITICS ANSWERED FormerPrimeMinisterJohnHowardstatedthestandardvariabilityargumentin2007whenhesaidyoucan’trunpowerstationsonsolarandwindenergy;“Youeitherrunthemonthewaythey'rerunnow,it'spredominantlycoalorgasorsometimeshydro,oryourunthem,inthefuture,withnuclear.”3

AlaterPrimeMinister,TonyAbbott,reiteratedthisvariabilitytalkingpointtoradiobroadcasterAlanJonesin2013

you’vegottahavebackupsbecausewhenthewinddoesn’tblowandthesundoesn’tshine,thepowerdoesn’tflow.Sothisisanobviousproblemwithrenewableenergyintheabsenceofmuchmoresophisticatedbatterytechnologythanwehaverightnow.4

NationalsSenatorRonBoswellhaselaboratedonthevariabilityobjectioninsomedetailonanumberofoccasions,

Thewindonlyblowsstronglyenoughtooperatewindturbinesabout30percentofthetime,andthepowerindustrysaysthereliabilityfactorofwindpower,fromaplanningperspective,isaverylow8percentorless.5

Itisacceptedthatwindhasthecapacitytoworkaround30percentofthetime.Thatmeansfor70percentofthetimeitisuselessanditmeansyouhavetohavemassiveconventionalbackuptomaintainsupply.6

IndependentSenatorNickXenophon,whoadvocatesactiononclimatechange,hassaidthatweneedwhathecalls‘baseloadrenewables’,because‘Youarenotgoingtogetridofcoalfiredpowerstationsifyouhaveunreliableformsofrenewableenergy.’7

December)http://reneweconomy.com.au/2015/german-grid-operator-sees-70-wind-solar-storage-needed-35731Accessed6April2016.)

3‘Howardonglobalwarming,water,Hicks’,(2007)Lateline,5FebruaryAustralianBroadcastingCorporationABC1,presenterT.Jones,http://www.abc.net.au/lateline/content/2006/s1840963.htmAccessed2February2016

4Ewbank,L.(2013)‘TonyAbbottgetsitwrongonwindfarmsandrenewables’,RenewEconomy(12November2013),http://reneweconomy.com.au/2013/tony-abbott-gets-it-wrong-on-wind-farms-and-renewables-80014Accessed2February2016

5Boswell,R.(2013)‘Energytaxesarethenailinthecoffinoflocalmanufacturing’,TheAustralian(8May2013),http://www.theaustralian.com.au/national-affairs/opinion/energy-taxes-are-the-nail-in-the-coffin-of-local-manufacturing/story-e6frgd0x-1226637139010Accessed2February2016

6Cth.ParliamentaryDebates.Senate.21June2010,RenewableEnergy(Electricity)AmendmentBill2010;RenewableEnergy(Electricity)(Charge)AmendmentBill2010;RenewableEnergy(Electricity)(Small-ScaleTechnologyShortfallCharge)Bill2010,p.3741


Batteryandstoragetechnologyaddressestheconcernsofcriticsofrenewableenergy.ItalsofitswellwithPrimeMinisterMalcolmTurnbull’svisionforAustralia:

...isagile,thatisinnovative,thatiscreative.Wecan’tbedefensive,wecan’tfuture-proofourselves.Wehavetorecognisethatthedisruptionthatweseedrivenbytechnology,thevolatilityinchangeisourfriendifweareagileandsmartenoughtotakeadvantageofit.8

TherearesignificantcommercialopportunitiesforAustraliatoinnovateinthenewmarketsfor‘baseload’renewableenergystorage.9PrimeMinisterTurnbullshouldappreciatetheenthusiasmexpressedinTheEconomist,that‘thelithium-ionbatteryisthetechnologyofourtime’.10

Batteriesandotherstoragetechnologiesaresolvingrenewableenergy’svariabilityproblem.Formanyyearsthecriticswereright–storingrenewableenergywasdifficultandexpensive.Butthatwasthenandthisisnow.

7Cth.ParliamentaryDebates.Senate.12February2014,ClimateChangeAuthority(Abolition)Bill2013,p.179

8Turnbull,M.(2015)‘Transcript:VoteontheLiberalPartyLeadership’,MalcolmTurnbulMPl(14September),http://www.malcolmturnbull.com.au/media/transcript-vote-on-the-liberal-party-leadershipAccessed2February2016

9Hackett,S.(2015)‘Thenewpowergame’,Globalreportontechnologyandtheeconomy,Vol18,No.19(18May),StrategicNewsService

10Anonymous(2016)‘Aplugforthebattery’TheEconomist(16Jan2016)http://www.economist.com/news/leaders/21688394-virtual-reality-and-artificial-intelligence-are-not-only-technologies-get-excited-aboutAccessed19January2016.


Chapter 1: That was then, this is now

Thestoragetechnologygettingthemostattentionin2016isthemostcommonbatteryintheworld;thelithium-ionbatterythatpowerssmartphonesandlaptops.

Massproductionandcontinualinnovationhasbroughtthecostoflithium-ionconsumerbatteriesdown90%over16yearsfromUS$3,185/kWhin1995toUS$320/kWh2011,accordingtoCitigroup(seefigure3below).Costscontinuedtodeclinefrom2011-2014byalmostanotherthird.11

Figure3:Historicalcostsoflithium-ionconsumerandautomobilebatteries

Source:Citigroup(2015)Investmentthemesin2015:dealingwithdivergenceNewYork,NY:CitiGPS,p.54

Other,lesscommontechnologiesarealsomakingconsiderableprogress.Forexample,theAustraliancompanyRedflowisleadingthecommercialisationofa‘flowbattery’

11Kille,L.W.(2015)‘Electricvehicles,batterytechnologyandrenewableenergy:Researchroundup’Journalist’sResource,(9April2015)http://journalistsresource.org/studies/environment/energy/electric-vehicles-battery-technology-renewable-energy-research-roundupAccessed10March2016

Citi GPS: Global Perspectives & Solutions January 2015

© 2015 Citigroup

54

Figure 37. Historical price declines in consumer and automotive lithium-ion batteries

Note: We assume ¥100/$ for consumer lithium-ion battery prices. Source: Company data, TSR, METI, Citi Research

Battery Storage Economics - $230/MWh is the Medium-Term Target

One element that all academic research agrees upon when it comes to the economics of battery storage within an electricity system is the difficulty that exists in quantifying them. This is because a big portion of the benefits relate to opportunity costs, i.e. avoided expenditures, and also because battery storage can fulfill more than one role at the same time, e.g. it can be used to store electricity produced during low-price hours and sell it at high-price hours but also to delay the investment into a new peaking/ back-up power plant.

The simplest metric that is relevant for battery storage economics is the price differential at different times, e.g. peak vs. off-peak or winter vs. summer. The bigger the differential the stronger the incentive for battery storage to be developed. Looking at data for Europe and the US, it is clear that in Europe there is on average a €10/MWh margin to be had from pricing differentials at different times of the day and year. In the US that spread is closer to €15/MWh on average but varies by geography.

Beyond just time shifting in the wholesale market though, battery storage can also be utilized to avoid investment in new thermal power plants, which will be used only as back-up to renewables. In the retail market, it can be used in conjunction with solar, as a way to avoid reliance on the grid and therefore minimize bill payment. Excess output could then be sold to the grid generating extra income.

Socket parity (where the cost of getting electricity from solar is equivalent to the cost of getting electricity from the grid) was reached as early as 2013 in Italy, Spain, Germany, Portugal, Australia and the South West US while Japan is expected to reach parity shortly and both South Korea and the UK by the end of the decade. If we look at payback periods for solar PV systems, we find the global average at the end of 2014 is about 13 years for standalone systems. By 2020, the same solar PV system with battery storage falls to less than 12 years on average.

3,1852,945

2,860

2,485

1,7821,597

1,369994

820688

600 552 538 533435 366 320

1,5001,200

1,000830

600 540 486 437 394 354 319 2870

500

1,000

1,500

2,000

2,500

3,000

3,500

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

2009 2010 2011 2012 2013 2014E2015E2016E2017E2018E2019E2020E

($/kWh)

Consumer LiB price in METI statistics (1995-2011) Auto LiB price (2009-2020E)

It’s not just the cost of the system, but the opportunity cost that’s important in battery storage

Battery storage can replace investment in new thermal power plants and avoid reliance on the grid


design(seeChapter3)andclaimsithascutthecostofthistechnologybymorethan50%.

Batterystorageisbecomingcompetitivewithconventionalgeneration.GilesParkinsonandothershavepredictedthat2016istheyearinwhichresidentialbatterystoragewill‘explode’ontotheAustralianmarketwithtwenty-foldgrowth.12InAustraliatheinitialnaturalmarketforgrowthisprobablygoingtobedomesticstorage.Solarconsumerswillusestoragebatteriestomaximisethebenefitoftheirownhome-madeenergy,bystoringwhattheydonotneedduringthedayandconsumingitduringevenings.

TheAustralianEnergyMarketOperatorhaspredictedthatwemightseeupto40%ofAustralianhomesinstallbatterystoragewithintwentyyears,evenwithoutadedicatednationalpolicytodrivethetransitionfromcoalandgastoarenewableenergypoweredsmartgrid.13Thiswouldrevolutionisetheelectricitysector.

TheAustralianEnergyMarketOperator’sNationalTransmissionNetworkDevelopmentPlancontainstwoscenariosforchangeintheenergysectorupto2035.TheGradualEvolutionscenariopredictsresidentialbatterystoragewillgrowto3,858MW(8GWh)installedcapacityby2035.TheRapidTransformationscenariopredictsthat40%ofAustralianhomeswillgetbatteries,atotalof11,188MW(19.1GWh)installedcapacity.

USInvestmentbankLazardproduceditsfirstanalysisofstoragecompetitivenessintheUSinlate2015.14Itsaysthatstorageisalreadycostcompetitiveinmanygrid-tiedandalsoremoteoff-gridapplicationsinAmerica.Lazardsaysthatstoragecancompetewithconventionaltechnologiesinseveralmarkets:

• Peakerreplacement:utility-scaleinstallationsofstorageontheelectricitynetworkcanreplacepeakingplants.Theseprovidequick-startgenerationtoprovideelectricitytocopewithfastrisesindemandsuchasduringheatwaveswhenmillionsofhouseholdsandcommercialbuildingsareusingairconditioningorintheearlyeveningswhenresidentialsolarisnotproducingandhouseholdsareatpeakconsumption.

• Networkinvestmentdeferral:utility-scaleinstallationsofstorageatvariouspointsonthenetworkcanminimisetheexpensive‘goldplating’upgradestobothlocaldistributionandlongdistancetransmissionnetworks

12Parkinson,G.(2015d)‘Homebatterystoragemarketexpectedto“explode”inAustraliain2016’,RenewEconomy,(13November2015)http://reneweconomy.com.au/2015/networks-to-spend-another-50bn-on-australias-dumb-and-dumber-grid-26649Accessed11January2016.

13AustralianEnergyMarketOperator(2015)NationalTransmissionNetworkDevelopmentPlan,(November)AEMO:Melbourne,p.4,10,42,44

14Lazard,(2015a)Lazard’sLevelisedCostofStorageAnalysis-Version1.0(November)Lazard:NewYork


• Demandchargemanagement:alargenumberofsmallstorageinstallationsathouseholdsandbusinessesallowsthoseconsumerstosmoothouttheirdemandpeaksinordertokeeptheirtotaldemandpurchasedfromthegridbelowthelevelatwhichtheywouldincurhigher‘capacity’charges

• Ancillaryservices:utility-scaleoraggregationsofmanysmallinstallationsprovidefrequency,‘spinningreserve’andothercontrolservicesthatmaintainthequalityofelectricitysupply,whichweretraditionallyprovidedbyfossilfuelplants

• Dieselmicro-grids:medium-scaleinstallationspaireddieselgeneratorsatremote‘off-grid’communitiesincludingminingoperationscanpreventthehighcapitalexpenseofbuildinglongdistanceinterconnectionstotheelectricitynetwork

TheLazardcalculationsareconfirmedbyotherauthorities.Forexample,twoUSenergyutilities,SouthernCaliforniaEdisonandSanDiegoGas&Electric,haverecentlyconfirmedtheLazardanalysisthatbatteriesarenowcompetitivewithconventionalpeakerplants.15

TheInternationalRenewableEnergyAgencynotesthatbatteriesarebetteratprovidingancillaryservicestobalancethequalityofenergyinthegridthanthefossilfuelgeneratorsthathavetraditionallyprovidedtheseservices.IRENApointsoutthatifenergymarketsareopeneduptofaircompetitionthenthissegmentwillgrownaturallywithoutexpensivesubsidies.16

Australia’slargegeographicalareamakesusagreattestsiteformicro-grids,includingthosethatintegraterenewableenergysotheydonotrelysolelyondiesel.AECOMhascalculatedthatthevalueofenergystoragepairedwithsolarinremote,off-gridlocationsis$120/MWh.Thisislessthanhalfthecostofconventional,diesel-onlygeneration(whichAECOMcalculatesat$346/MWh,assumingadieselpriceof$1.30perlitre).17

15Chediak,M.(2015)‘BatteryMakersSeeaBigBreakComingNo,SeriouslyThisTime’(19October)http://www.bloomberg.com/news/articles/2015-10-16/batterymakers-see-a-big-break-coming-no-seriously-this-timeAccessed14January2016.

16Kempener,R.andBorden,E.(2015)Batterystorageforrenewables:Marketstatusandtechnologyoutlook,InternationalRenewableEnergyAgency,AbuDhabip.40

17Christiansen,C.&B.Murray(2015)EnergyStorageStudy:fundingandknowledgesharingpriorities,AECOM,Sydney,p.69


BloombergNewEnergyFinancepredictsthatby2020,11.3GWofbatterystoragewillbeinstalledglobally.18Giventhatbatterystorageiscurrentlyaverysmallsector,mostlylimitedtoremotetelecommunicationsapplications,thisisimpressiveexponentialgrowth.Toputthisinperspective,considerthatNavigantResearchfoundthattheglobaltallyofstorageprojectsannouncedin2014-15waslessthanoneGW(700MW).19TheInternationalRenewableEnergyAuthorityhascompileddatatoshowthatinstalledcapacityislikelytodoublealmostfourtimesoverbetween2016and2023(seeFigure4below).

Figure4:Globalforecastofbatterystoragecapacity(MW)andannualrevenue(USD)forutilityscaleapplications2014-2023

Source:Kempener,R.andBorden,E.(2015)Batterystorageforrenewables:Marketstatusandtechnologyoutlook.InternationalRenewableEnergyAgency,AbuDhabip.24

In2015,MorganStanleypredicted2.4millionAustralianhomeswillinstallstorageby2035.In2016,MorganStanleyupdatedthispredictionto3millionhomes.20

18Chediak,M.(2015)‘BatteryMakersSeeaBigBreakComingNo,SeriouslyThisTime’(19October)http://www.bloomberg.com/news/articles/2015-10-16/batterymakers-see-a-big-break-coming-no-seriously-this-timeAccessed14January2016.

19NavigantResearch(2016)‘EnergyStorageTracker1Q15’http://www.navigantresearch.com/research/energy-storage-tracker-1Q15Accessed13January2016.

20Parkinson,G.(2016)‘Incumbentutilitiesandbatterystorage:Theystilldon’tgetit’,RenewEconomy,(24March)http://reneweconomy.com.au/2016/incumbent-utilities-and-battery-storage-they-still-dont-get-it-23531Accessed24March2016.

BATTERY STORAGE FOR RENEWABLES: MARKET STATUS AND TECHNOLOGY OUTLOOK24

the market. Further, regulations are beginning to move away from an approach to grid services centred on fossil fuels. All these factors will continue to drive the use of battery storage in the electricity grid to unprecedented levels, albeit starting from a very low baseline.

The battery storage market in the power sector has seen significant growth in recent years. For utility-scale applications (excluding battery storage installed behind-the-meter), global 2014 revenue was around USD 220 million, according to Navigant research. Asia Pacific, Europe and North America are first movers in the market. A country analysis, including drivers, is presented in section 5.3.

This market is expected to grow in coming years. Figure 14 shows Navigant’s worldwide sales estimate for cells used in utility-scale projects (data excludes batteries with solar PV system behind the meter). The annual revenue for all applications is expected to increase from USD 220 million in 2014 to USD 18 billion in 2023. An-nual battery storage capacity will rise from 360 MW to 14 GW over the same period. For utility-scale projects, Navigant expects battery use for renewables integration

in 2014 to comprise 29% of the total. This is followed by peak shaving (20%),10 load shift (18%, similar to the energy supply shift application discussed in this report), ancillary services (17%) and other applications (16%). Renewables integration is expected to remain a primary application in 2023, providing 40% of cell-based rev-enue. This will be followed by load shifting application (37%), peak shaving (15%), ancillary services (3%) and others (5%) (Jaffe and Adamson, 2014). However, these numbers do not include household solar PV installa-tions, which represents a significant market opportunity.

The strong upward trend is noteworthy, although future revenue will differ from figure 15 estimates above due to the complexity of predicting energy sector develop-ment. Several steps are needed to manufacture and sell the batteries. This involves many industry players, as illustrated in figure 16.11 12

10 Peak shaving refers to utilisation of battery storage to reduce a facility’s peak demand. The application is primarily for commercial and industrial customers in developed grids who face high peak demand charges.

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Figure 15: Worldwide forecast of battery storage capacity (MW) and annual revenue (USD) for utility-scale applications

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Source: Data from Navigant Research (Jaffe and Adamson, 2014)


Akeypointaboutthesegrowthmarketsforbatteriesisthattheyuseinformationandcomputertechnologytoextractthemaximumvaluefromthestorageassets.ThisisarichfieldforinnovationandprovidesasignificantopportunityforAustralia.Wehavetheworldslargestinterconnectedelectricitynetwork,whichmeansweareparticularlywellsuitedforstorage.IfAustraliaissmartthenwecancreatelocaljobsandgenerateexportopportunitiesrightacrossthevaluechain,fromthestoragehardware,tocontrolsoftwareandincreativenewfinanceandbusinessmodelsthatcanpowerthesmartgridofthefuture.

Thisisgoodnewsforpolicymakersandpoliticians,becausemanyAustralianhomeshavealreadyinvestedinsolarPVandsolarhotwaterandasupermajorityofthepublicsupportsrenewableenergygenerally.NewpollingbytheAustraliaInstituteshowsahighlevelofsupportforstorage(seeChapter2).Itshouldbeeasytogetcross-partysupportforgoodpoliciesthatsupporttheriseofstorageandsmartgrids,createjobs,improveproductivityandreducepollution.


Chapter 2: Polling shows high support for energy storage

NewpollingbyTheAustraliaInstituteshowsthatthereissignificantpublicsupportfordistributedsolarpowerandbatterystorageasaconsumerchoiceandanationalpolicypriority.Between29Februaryand8March2016TheAustraliaInstituteconductedanationalopinionpollof1412peoplethroughResearchNow,withnationallyrepresentativesamplesbygender,ageandstateorterritory.Thefulltextofthequestionsaskedisincludedintheappendixtothisreport.

Keyresults

• Interestinowningstoragebatteriesacrossthepopulationhasincreasedfrom49%to63%inoneyear(Figure5)

• 81%ofsolarownerssaytheyareinterestedingettingbatteries(Figure6)• 23%ofrespondentschooseunpluggingfromthegridasareasontoget

batteries(Figure7)• 39%ofrespondentschooseindependencefromtheirenergycompanyasa

reasontogetbatteries(Figure7)• 34%ofrespondentssaytheyarepreparedtoinvestinstoragebatteries

withapaybackperiodof5yearsormore(Figure8)• 71%ofrespondentssaytheywouldconsidervotingforapartythat

supporteddistributedsmall-scalesolarandstorage(Figure9)

InMarch2015MorganStanleycommissionedpolling,includingbothsolarownersandhouseholdswithoutsolar(Figure5).Theirsurveyfoundthat49.4%ofpeoplesurveyedwereinterestedingettingasolarPVandbatterystoragesystem.21

OursurveyinFebruary2016found64%ofpeoplesurveyedwereinterestedingettingasolarPVandbatterystoragesystem.22

2120.5%percentofrespondentsanswered‘Yes,mostdefinitely’tothequestion‘Wouldyouconsiderinstallingsolarpanelsandbatterystorageinyourhousehold?’and28.9%answered‘Yes,maybe’,foratotalof49.4%.12.1%answered‘Don’tknow’,20%answered‘No,probablynot’and18.5%‘No,definitelynot’,asreportedinParkinson,G.(2015b)‘MorganStanleysees2.4mAustraliahomeswithbatterystorage’,RenewEconomy,(20May).http://reneweconomy.com.au/2015/morgan-stanley-sees-2-4m-australia-homes-with-battery-storage-20668Accessed13January2016


Figure5:Highandrisinginterestinstorage

Sources:MorganStanley,TheAustraliaInstitute.

Solarownersareevenmoreinterestedingettingbatterystoragethanthegeneralpopulation,with81%sayingtheyareconsideringmakingthisadditiontotheirsolarsystem.23

Figure6:Solarconsumersmoreinterestedingettingbatterystorage

Source:TheAustraliaInstitute.2264%answered‘Yes’tothequestion,‘WouldyouconsiderinstallingsolarPVandbatterystorageinyourhousehold?’21%answered‘No’and14%answered‘Don’tknow/Notsure’.Samplesize1030.

2381%answered‘Yes’tothequestion‘Storagebatteriesareanemergingtechnologythatallowshomeownerstostoreelectricitygeneratedbytheirsolarpanelsduringthedayanduseitatnightorduringtimeswhentheyareconsumingalotofelectricity(e.g.runninganairconditioneronahotday).Wouldyouconsiderinstallingbatterystorageinyourhousehold?’8%answered‘No’and11%answered‘Don’tknow/Notsure’.Samplesize382.

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Theseresultsareconsistentwithotherrecentresearch.Inlate2015EnergyConsumersAustraliacommissionedpollingofsolarhouseholdsandreportedthat‘Inasignofamajordisruptiontothecurrentbusinessmodelofnetworks,81percentofhouseholdswhohaveinstalled,orarelookingtoinstall,solarpanels,arealsolookingtoaddbatterystoragetoenhancetheeffectivenessofthesolarPV.’24

Ourpollingaskedpeopletonominatereasonsfortheirinterestinbatterystorage.Themostpopularreason,citedbythreequartersofrespondents(74%),istosavemoney(seeFigure7).Otherpopularresponseswerereducingfossilfuelpollutionandrapidpayback,bothatalmosthalfofrespondents.

Figure7:Costisthekeydriverofsupportforstorage

Source:TheAustraliaInstitute.Question(34)Which,ifany,ofthefollowingthingsareimportanttoyouwhenconsideringwhethertoinstallbatteriestostoresolarpowerinyourhome?

Fourintenrespondentswanttogainindependencefromenergycompanies.Thedatashowsthatalmostonequarterofrespondents(23%)saytheirreasonforconsideringwhetherornottoinstallstorageistodisconnectfromthegridentirely.

Theseresultsarearejectionofbusiness-as-usualintheelectricitysectorandshowthatAustraliansarekeentousetechnologiesthatthreatenestablishedenergycompanies.

24EnergyConsumersAustralia(2015).‘9in10householdsturningtotechnologytotackleexpensiveelectricitybills’,(5November)http://www.energyconsumersaustralia.com.au/media-releases-1/nov-5-2015-media-statementAccessed12January2016.

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Noneofthese


Wealsoaskedpeoplehowlongtheywouldbepreparedtowaitforabatterystoragesystemtopayforitself.Ourresultsfoundthatearlyadoptersofstoragearelikelytobeasignificantmarket,drivingdowncostsandincreasingcommunityawarenessofthebenefitsofthetechnology.Uptooneinten(9%)ofrespondentsarepreparedtowaitfortheirbatterysystemtopayitselfbackover8ormoreyears(seeFigure8).

Animpressive34%ofpeoplesurveyedarepreparedtoinvestinahomebatterystoragesystemthattakesmorethan5yearstopayitselfoff.

Figure8:Earlyadoptershaveconfidenceinstorage

Source:TheAustraliaInstitute.Question(35)Overtimebatterystoragecanpayforitselfinsavingsonyourelectricitybill.Ifyouweretoinstallahomebatterystoragesystem,whatisthelongesttimeyouwouldbepreparedtowaitforittopayforitself?1.Lessthan5years2.5-7years3.8-10years4.Morethan10years5.Don’tknow/Notsure.Notethattotalmaynotsumto100%duetorounding.

OuropinionresearchalsocomparedsixpoliciesthatwoulddriveanincreaseincleanenergyinAustraliaandfoundthatsmall-scale,distributedenergyisthemostpopularoption(seeFigure9).Whenaskedwhetherrespondentswouldbemorelikelytovoteforpartieswithparticularpolicies,distributedsolarandstoragecameoutontop,withalmostthreequartersofpeoplesupportingthesetechnologies.

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Figure9:Distributedsolarandstoragearethemostpopularcleanenergypolicies

Policy Muchmorelikely

Morelikely

Totalsupport

Investinlarge-scalesolarandwind 26% 41% 67%GraduallytransitionAustraliato100%renewableenergyby2030

24% 40% 63%

Ensuresolarisinstalledoneveryhomethatissuitableandonbuildingslikehospitalsandschools

28% 44% 72%

Acceleratetheuptakeofelectricvehicles 13% 32% 45%

Helpsolarconsumersgetbatterystoragesothepowertheygeneratecanbeusedaroundtheclock

24% 47% 71%

Source:TheAustraliaInstitute.Question(40)Wouldyoubemorelikelyorlesslikelytovoteforapartywhichhadthefollowingpolicies?Questionresponseoptionslistedintableabove.


Chapter 3: Primer on technologies and applications

Thereareavarietyofenergystoragetechnologiesandsomeareparticularlywellsuitedforparticularapplications.Thevariousfactorsthatdeterminethebestroleforastoragetechnologyinclude:

• capitalexpenditure(capex)andoperatingexpenditure(opex)• ratedpower:theamountofenergystored• speedofdischarge• sizeandweight• safetyandsustainability

TheAECOMchartreproducedbelowcomparesseveralstoragetechnologies(seeFigure10).Forexample,thehorizontalaxisshowsthatlithium-ionbatteriesaresuitedtoaverywiderangeofstoragecapacities,from1kWhouseholdstoovertensofMWinutility-scaleinstallations.

Figure10:Storagetechnologiescomparisonacrossapplicationtypes

Technologiesgraphedtoshowkeyapplications,withpowercapacityonthehorizontalaxisanddischargetimeontheverticalaxis.Source:Christiansen,C.&B.Murray(2015)EnergyStorageStudy:fundingandknowledgesharingpriorities,AECOM,Sydney,p.27


Theverticalaxisshowsthatlithium-ioncandischargeoverawidetimerange,fromsecondstohours.Thecolouringpurpleindicatesthatlithium-ionhashighefficiency,inthe85%+range.Thischartisonlyindicativeofcourse,asthetechnologiesareevolvingrapidlybutitshowshowimportantitisforAustraliatogainexperienceacrossarangeoftechnologiesifwearetomaximisethevalueofstorage.

WIDELY DISTRIBUTED, SMALL-SCALE BATTERIES Therearemorethan1.5millionAustralianhouseholdswithsolarPVsystems.Thisislikelytobethefirstmajormarketforstorage,regardlessofwhetherwehaveasupportivenationalplanforthedevelopmentofthistechnology.Thisuptakewillshifttheenergysystemfromtheoldcentralisedmodeltoanewdecentralisedmodelbasedaroundrenewableenergy,whichwillofferimprovedcompetition,increasedenergysecurityaswellaslowerpollution.AstheInternationalRenewableEnergyAgency(IRENA)says‘Theuseofbatteriesforself-consumptionofrenewablescouldrevolutionisetheelectricitysystem.’25

Thecentralisedmodelwasdesignedaroundasmallnumberoflargecoal,gasandnuclear,‘base-load’generatorsthatprovideasteadystreamofenergyandgaspeakingplantsthatproviderapidincreasesingenerationduringspikesindemand.Thenewdistributedenergymodelseesgenerationspreadacrossmillionsofhouseholdsandbusinesses,whoareconnectedbycleverinformationandcomputertechnologytoallowthemtocoordinateoutputtomatchever-changingconsumption.Sometraditionalenergycompanies,suchasthemultinationalutilityEngie,arepromotingthistransitionfromcentralisedtodecentralisedgeneration.Engiepredictsthatstoragewillfacilitatethisprocessandresultindecentralisedenergyaccountingforabout50%oftotalcapacity.26

Electrochemicalbatteriesareexpectedtodominatethemarketforsmallhouseholdandcommercialstoragesystems.Themostcommonformisthelithium-ionbattery,ofthekindusedinsmartphonesandlaptops.ThewiselypublicisedTeslaPowerwallisthebestknownoftheselithium-ionbatteriesbutthereareactuallymanycompaniesalreadyofferingsimilarproductsandcompetitionisexpectedtokeeppressureonpricesandspurtechnologicalinnovation.

25Kempener,R.andBorden,E.(2015)Batterystorageforrenewables:Marketstatusandtechnologyoutlook,InternationalRenewableEnergyAgency,AbuDhabip.2

26Parkinson,G.(2016)‘HazelwoodownerEngielaunchespushfor1,000GWofsolar’RenewEconomy(19January)http://reneweconomy.com.au/2016/hazelwood-owner-engie-launches-push-for-1000gw-of-solar-36363Accessed19January2016.


In2015therewasonly1.9MWofbatterystorageinstalledinAustralianhomes,butaspricesdrop,thisissettoriseexponentially.AsourpollinginChapter2showed,therearemanyconsumerswhoarepreparedtofinancetheirownstoragebatteriesonrelativelylongpaybacktimes,drivenbymotivationsthatarenotpurelyeconomic.

MorganStanleypredictsthatpaybacktimesfora7kWhTeslabatteryanda3kWsolarsystemareaslowas4.7yearsinthecaseofretrofitsofstorageontosolarhouseholdsinSouthAustraliawhoareonanEnergyAustraliatariff.27Earlyin2015UBSpredictedthatapaybacktimeforresidentialstoragesystemscouldbeasfastasabout6years.28

Thereasonthatpaybackperiodsarebecomingattractiveattheresidentiallevelisbecausesolarconsumerspayfarmorefortheirelectricityconsumption(the‘residentialprice’)thantheygetpaidforelectricitytheygenerate(the‘exporttariff’).

Somesolarconsumersareonhighfeed-intariffprogramsthatweredesignedtoincreasetheupdateofrooftopsolar.Butwhentheseexpiresolarhouseholdswillbepaidfortheenergytheysendtothegridattheexporttariffrate.Exporttariffratesvarybetweenstatesandretailers.(Thereisalsoaddedcomplexitybecauseofarangeoffixedandvariablecharges.)BloombergNewEnergyFinancegivesanindicativerangeofthenominalprices(seeFigure11).

Akeydriverforuptakeofstoragewillbetheexpirythisyearofstatebasedfeedintariffs,particularlythepremiumtariffswhichpaidsolarhouseholdupto60c/kWhfortheenergytheyexportedtothegrid.Theseprogramsareexpiring:

• Victoria’sTransitionalandStandardNetmeteringprogramsendon31December2016,

• SouthAustralia’sCustomerGroup4Netmeteringprogramendson30September2016and

• NewSouthWales$0.60/kWhand$0.20/kWhSolarBonusSchemeendson31December201629

27Parkinson,G.(2015b)‘MorganStanleysees2.4mAustraliahomeswithbatterystorage’,RenewEconomy,(20May)http://reneweconomy.com.au/2015/morgan-stanley-sees-2-4m-australia-homes-with-battery-storage-20668Accessed13January2016.

28Parkinson,G.(2015a)‘UBS:TeslaPowerwallcandeliver6-yearpaybackinAustralia’,RenewEconomy,(19May)http://reneweconomy.com.au/2015/ubs-tesla-powerwall-can-deliver-6-year-payback-in-australia-63386Accessed13January2016.

29GlobalSustainableEnergySolutions(2015)‘Solarfeed-intariffprogramsendsoon.Sowhathappensnext?’(9December2015)OneStepofftheGridhttp://onestepoffthegrid.com.au/solar-feed-in-tariff-programs-end-soon-so-what-happens-next/Accessed14January2016.


Figure11:Nominalresidentialconsumptionandexportpricegapforelectricity2015

Exporttariff(c/kWh)

Residentialconsumptionprice(c/kWh)

Pricedifference

ACT 8.5 19 124%NSW 7.7–12.9 26 238%NT 25.6 26 2%QLD 6.0–6.5 26 333%TAS 5.6 29 418%VIC 8 27 238%WA 7.1–50 25 252%

Thepricedifferenceisthe%maximumdifferencebetweenconsumptionandexportprices.Source:KobadBhavnagri(2015),EconomicsofEnd-userenergystorageinAustralia,BloombergNewEnergyFinance:Sydney(NB:SAexcludedinoriginaldata)

Lithium-ionalsofacesanimportantcompetitorforsmall-scaleandalsolarge-scaleapplicationsfromflowbatteries(seeFigure12).Flowbatteriesareaformofbatterythathaspropertiesofafuelcell,wherethechargeisstoredinliquidform.Therearecompetingflowbatterytechnologiesbuttheyallconsistoftwoelectrolyteliquidswhichcirculateinseparatecircuitsandexchangeions,generallyacrossamembrane.30

Thelithium-ionbatteryisa‘power’battery-itisparticularlysuitedtodeliveralargeburstofenergy,suchaswhenacceleratinganelectriccar.Theflowbatteryisan‘energy’battery,whichisparticularlywellsuitedtoconstantinputandoutputofenergy,beingfullydischargedandfullychargedmanytimesperday.TheAustraliancompanyRedflowhasbroughtaflowbatterytomarket(seeChapter4).

30EnergyStorageAssociation(2016)‘Flowbatteries’,http://energystorage.org/energy-storage/storage-technology-comparisons/flow-batteriesAccessed19January2016.


Figure12:Schematicdiagramofaflowbattery

Source:Antweiler,W.“Canflowbatteriessolvetheelectricitystorageproblem?”Blog,UniversityofBritishColumbia,September28,2015,http://strategy.sauder.ubc.ca/antweiler/blog.php?item=2014-09-28Accessed19January2016.

LARGE-SCALE STORAGE Evenaswemakethetransitionfromcentralised‘baseload’modeltoadecentralisedsmartgridmodel,therewillbemanysituationswherelarge-scaleorutility-scalestorageisuseful.Large-scalestorageislikelybesuppliedbyarangeoftechnologiesotherthanlithium-ionbatteries.Large-scale,grid-tiedstorageaddressesthemarketnichesraisedbytheLazardreportquotedinChapter1:gaspeakerreplacement,networkinvestmentdeferralandancillaryservicessuchafrequencycontrol.

Oneofthetechnicaladvantagesofstorageoveranyformofgenerationisthatstorageisatwowayprocess;itcanbothexportenergyandimportenergy.Figure13givesusahypotheticalcomparisonbetweena100MWgasturbineandsay,abatterystack,withthesamenominalcapacity.Ifalargegasturbinehasanoptimumoperatingoutputof75%andaminimumoperatinglevelof50%thenitsoperationalrangeis50MW.Itwillbegeneratingenergyatthemostefficientandcheapestratewhenoutputting75MW.


Figure13:Flexibilitycomparisonbetween100MWbatterystorage(left)versus100MWgasturbine(right)

Source:Kempener,R.andBorden,E.(2015)Batterystorageforrenewables:Marketstatusandtechnologyoutlook,InternationalRenewableEnergyAgency,AbuDhabi,p.21

Thebatteryhowever,candischargeacrossitsfull100MWrangebutfurthertothat,unlikethegasturbinewhichcanonlyproduceenergy,thebatterycanimportenergy,acrossa100MWrange.Itthereforehasatotalrangeflexibilityof200MW,versusthe50MWofthegasturbine.Thisshowsanimportantwaythatstoragecanbeasuperioralternativetoconventionalfossilfueltechnologies.

Attheotherendofthetechnologicalandcapacityspectrumfromlithiumbatteries,morethan99%ofglobalstoragecapacityisprovidedbyaphysicalstoragemedium:water.Pumpedhydrostorageusespumpstomovewateruphilltoareservoir.Whenenergyisrequiredthewaterisreleasedandflowsthroughaturbine,whichgenerateselectricity.About200largepumpedhydroinstallationsaroundtheworldaccountforabout127,000MWofcapacity.31

Arangeofelectrochemicalbatteriesarelikelytobecompetitiveforlarge-scaleapplications.Sodiumsulphurbatteriesoperateatahightemperatureandareusedforlarge-scaleapplications.Japanhasover190installations,ranginginsizeuptothe34MW(245MWh)systematRokkashowhichisusedformultipleor‘stacked’services:smoothingoutputfroma51MWwindfarmandprovidingfrequencyresponsetothenetwork.32

31EnergyStorageCouncil(2015),GlobalEnergyStorageMarketOverview&RegionalSummaryReport2015,EnergyStorageCouncil,MawsonACT,p.5

32InternationalRenewableEnergyAgency(2015)Casestudies:batterystorage,IRENA:AbuDhabi,p.13

BATTERY STORAGE FOR RENEWABLES: MARKET STATUS AND TECHNOLOGY OUTLOOK 21

charge and discharge energy in seconds or less, faster and more accurately than thermal power plants.

An electricity system benefits in several ways from the fast, accurate ramping provided by battery storage. The battery can quickly and accurately compensate for short-term output deviations from variable renewable energy generators in order to maintain system fre-quency. This concept is illustrated in figure 12. It shows wind output in the Texas system and corresponding regulation employed to maintain a frequency of 60 Hz., the system target in the U.S.

Figure 12 illustrates the concept of frequency response in an interconnected system. It shows significant downward ramps of wind in the Electric Reliability Council of Texas (ERCOT) system. These start at around 9 am and 1.30 pm. It also shows the required deployment of rapid response reserves or primary frequency response. The red line depicts system frequency. This is seen to fall as the slope of aggregated wind generation resource output decreases, indicated by the blue line. The purple line illustrates primary frequency response deployed (rapid response reserve) due to the decline in frequency from the 60 Hz target. The need for this short-term regulation is probably related to errors in forecasting peaks and troughs in the wind resource. Though the rapid response reserve depicted

here is probably not battery storage, batteries are well suited to this application. Other types of regulation are also being deployed by fossil fuel plants. This is the aggregate amount indicated by the green line. This application occurs at the aggregated grid level and is therefore distinguished from variable renewable energy smoothing (as displayed in figure 10) which is employed at the renewable energy installation site. Texas has around 12 GW of wind capacity according to the Energy Information Administration (EIA, 2014a) and peak demand of 50-70 GW (winter and summer) (ERCOT, 2014).

Battery storage offers its full negative and positive capacity for regulation, as well as a faster ramp rate than fossil fuel power plants. By contrast, a fossil fuel plant is constrained by a minimum operating level requirement below which operation and maintenance costs would suffer (see figure 13).

The battery resource needs less capacity than its fossil fuel regulation equivalent due to its positive regulation attributes. This is because battery storage is faster, more accurate and able to provide its full capacity8 for positive

8 The actual economic range of operation provided by a battery depends on the technology (cycle life, DoD limitations etc.) and how remuneration for these services is calculated.

Figure 13: 100 MW Battery storage (left) versus 100 MW gas turbine (right)

-100 MW

+100 MW-25 MW

+25 MW

+50 MW

50 MW flexible range

Minimum operating level

Source: Vassallo, A. (2013)


Interestingly,themanufacturerNGKInsulatorsboughtthesodiumsulphurintellectualproperty(IP)fromFordMotorCompanyinthe1960s.In2014NGKhad48%oftheglobalmarketshareofutilityscaleinstallations.33Fordhasworkedonthebatteryforthepurposeofpoweringelectricvehicles,whichitanticipatedwouldbeaprofitablemarketsegmentintheeventoffederalsubsidiesforzeroemissionsvehicles.In1966Fordclaimedthatitssodiumsulphurpoweredelectriccarshadanumberofadditionaladvantagesoverpetrolpoweredcars:fasteraccelerationoverthefirstfourseconds,quietness,lowerpotentialoperatingcost.34Fordfailedtostayattheforefrontofelectricvehicledevelopment.

Electricvehicles(EV)areaveryimportantdevelopmentbecausetheyarepushingthedevelopmentoflithium-ionbatteryandenergymanagementtechnologies.Theyalsoprovidealargebaseofstoragebatteries.Whenthecarsareparkedandthesebatteriesarepluggedin,theycanprovidestoragefortheelectricitynetwork.Thiscouldbemonetisedthrougharbitrage-buyingelectricitywhenitischeapandsellingwhenitisexpensive.

WearealsostartingtoseeasecondarymarketinusedEVbatteries.Thesecouldbevaluableforlargegrid-tiedapplicationsbecausealithium-ionbatterypackinacarwillloseitsvaluetothedriverinamatterofyears,becauseitlosesitsabilitytoprovidemaximumaccelerationasa‘powerbattery’.Butthisbatterypackisstillusefulasan‘energybattery’,whereitcanprovidelessintenseenergyoutput,whichissuitableforgridapplications.

Inadditiontopumpedhydrostoragethereareotherphysicalstorageprocesseswhichcanbeutilisedforlarge-scaleapplications.Pumpedheatelectricitystorageusesargongastoheatcrushedrock.Thegascirculatesbetweenthishotstoreandacoldstore.Whenenergyisintroducedtothesystemitisstoredasheatandwhenenergyisdispatchedfromthesystem,thegascoolsandexpands,drivingagenerator.

ASouthAustralianinnovationusessand,whichisobviouslyarelativelycheapandabundantresource,tostoreanddispatchheat.Thesystemisbeingdesignedtoprovidearangeofstorageservices,fromsmall-scaletouptohundredsofmegawatts,

33EnergyStorageCouncil(2015),GlobalEnergyStorageMarketOverview&RegionalSummaryReport2015,EnergyStorageCouncil,MawsonACT,p.7andKempener,R.andBorden,E.(2015)Batterystorageforrenewables:Marketstatusandtechnologyoutlook.InternationalRenewableEnergyAgency:AbuDhabip.24

34Berman,B(2011),‘Ford’sElectricCarBatteryBreakthroughfrom45YearsAgo’,(BradBerman·27October2011),PluginCars,http://www.plugincars.com/ford%E2%80%99s-electric-car-battery-breakthrough-45-years-ago-109417.htmlAccessed7March2016


forgridandoff-gridapplications,includingarbitrage,renewablesintegrationandcommercialheat.35

Aircanbeusedtostoreenergyatalarge-scale.Itcanbecompressedandstoredinlargeareasunderground,includingdisusedminesorinspeciallymadepipeswhichcanbeinstalledwheretheenergyisneeded.Aircanalsobeusedtostoreenergyinaphasechange,bycoolingairuntilitliquefiesandstoringthisinatank.Theliquidairisbroughtbacktoitsgaseousstatebythewarmthofambientairorcogeneratedorindustrialwasteheatandtheresultingexpansionforceusedtodriveaturbinewhichgenerateselectricity.

Flywheelsuseaspinningrotor,whichisoftenmadeofcompositematerialsandismachinedtoveryprecisespecificationssoitcanspinrapidlyandsmoothly.Itismountedinanevacuatedcylinder.Itisspuntoahighspeedandcanstoreenergywhenitischeapandthendispatchenergybydrivingageneratorwhenenergyisindemand.NextDC’sdatacentreinMelbourneusesacombinationofsolarpanelsandaflywheelinitsenergymanagementsystem.

Concentratingsolarpowerisautilityscaleapplicationthatfocusestheheatofthesunusingmirrorstosuperheatair,steamormoltensalt.Therearearangeoftechnologieshere,fromthetallpowertowerssurroundedbyamassivefieldoftrackingmirrors,toparabolicdishesthatlooklikemirroredradiotelescopes.AustraliahasastrongtrackrecordinthisareaandtheAustralianRenewableenergyAgencyandCSIROareleadingonR&Defforts.

AswellasR&D,Australiaisalreadycommercialisingutilityscalestorage.ErgonisinstallingtwentystorageunitsinremoteQueenslandtoimprovereliabilityanddefertheneedtoinvestinnetworkupgrades.36EachoftheGridUtilitySupportSystems(GUSS)willcomprise50Lithium-Ionbatteriesandsupply100kilowatthoursnominalcapacity.Thesebatteriesarecosteffectivenow–withoutsubsidy.Itisimportanttonotethatthesewillalsoprovide‘stacked’servicesinadditiontodeferringnetworkupgradecosts,bycontributingtoahigherqualityserviceforconsumers.Thisincreasestheeconomicvalueofthestorageassets.

Ergon’sstorageunitsarebeinginstalledonSWER(singlewireearthreturn)lines.Thesearethesinglewireelectricitylinesthatarecommoninremoteareasaroundthe35Spence,A.(2015)‘Sandysolutionforrenewableenergystorage’TheLead(10November2015)http://www.theleadsouthaustralia.com.au/industries/research-development/sandy-solution-for-renewable-energy-storage/Accessed19January2016.

36ErgonEnergy(2015)‘BatterytechnologyonelectricitynetworkanAustralianfirst’(3July2015)Ergon,https://www.ergon.com.au/about-us/news-hub/media-releases/regions/general/battery-technology-on-electricity-network-and-australian-firstAccessed14January2016.


world.Theyareverysimpleandrelativelyunstablecomparedtohighervoltage,multi-wirenetworks.Ergonmaintainsanincredible65,000kilometresofSWERnetwork,whichservicesover25000propertiesinQueensland.Batterystorageisveryvaluableonthesesparsenetworks,becauseitisamorecosteffectivewayofimprovingreliabilitythanbuildingbiggersubstationsandmorecomplexlines.

VictoriannetworkownerPowercorannouncedinAugust2015thatthisyearitwillinstallthelargestbatteryinAustralia—a2MWlithium-ionunittobedeployedonitsregionalgridnearBallarat.37Thebatterywillbeusedtoreducestressonthenetworkonpeakdays,improvereliability,andreducecapitalexpenditures.Againthisiseconomicnowwithoutsubsidy.

Inadditiontodelayingtheneedfornetworkupgrades,Powercor’sbatterywillprovideadditionalstackedservices.Byincreasingthesupplyofelectricityduringpeakloadsitshouldminimisebrownoutsandblackouts,resultinginimprovedqualityofservicestocustomers.Itshouldalsoreducestressonexistingcomponents,thusreducingmaintenancecostsfornetwork.

TheRockyMountainInstituteisaleaderinenergyinnovationandisworkingoncasestudiesandtheoreticalapproachestofullyexploittheeconomicvalueof‘stackedservices’.Thisiswherebatteriesareusedtodelivermultiplebenefits,suchastheowner‘behindthemeter’andthenetworkandtheseareappropriatelyremuneratedtomaximisethereturnoninvestment.38

Australianeedstomoderniseourenergymarketstothatownersofbatteriesgetpaidforthefullvalueoftheseassets,usingastackedservicesmethodology.

Australiahasaclearroletoplayinthedevelopmentofstoragetechnologiesatallscales.Itwillbenefitresidentialconsumerswhoinstallsmallbatteryunitsandlargeindustrialusersandthenetworksthemselves.Wecanusebatteriestocreatenewindustries,generatejobsandexportincomeandhelpimprovetheperformanceofourelectricitynetwork,atthesametimesasreducinggreenhouseemissions.

37Powercor(2015)‘PowercorinstallsAustralia'slargestbatteryinBallaratSouth’(20August)https://www.powercor.com.au/news-and-media/latest-news/powercor-installs-australias-largest-battery-in-ballarat-south/Accessed14January2016.

38Fitzgerald,Garrett,JamesMandel,JesseMorris,andHervéTouati.(2015)TheEconomicsofBatteryEnergyStorage:Howmulti-use,customer-sitedbatteriesdeliverthemostservicesandvaluetocustomersandthegrid.RockyMountainInstitute,September2015.


Chapter 4: Showcase

Teslahasreceivedthelion’sshareofcoverageonstorageforitsPowerwalllithium-ionbatterybuttherearemanyotherdevelopmentswhichmaybemoreimportantinthelongrunandsomeofthemarebeingcreatedinAustralia.

REDFLOW - A NEW BATTERY ON THE MARKET TheAustraliancompanyRedflowhascommercialisedazincbromide‘flowbattery’,originallydevelopedbytheUniversityofQueensland.Itiswellsuitedforgridapplicationsfromhouseholdstoutility-scale.Flowdesignsarecharacterisedasan‘energy’batterytodifferentiatethemfromthelithium-ion‘power’batteryusedincomputersandelectricvehicles.Wherethepowerbatteryissuitedtodeliverthesprintoflargeburstofenergy,theenergybatteryissuitedtothemarathonofconstantcharginganddischarging.

Grid-scalebatterieshavetobecosteffectivewhichmeanstheyshouldbemanufacturedoutofrelativelycommonmaterialsandbeintrinsicallyrobustandrequirelowmaintenance.Flowbatteriesmeetthesecriteriaandhaveadditionalbenefitsintermsofreliability,becausetheycanbechargedanddischargedfullyoveralargenumberofcyclesandtheycanstoreenergyintheelectrolytesolutionsforlongperiods.

WhilethetechnologicalprinciplesofflowbatteriesarenotnewRedflowisleadingthemarketwithacommerciallyavailableproduct.Redflowisalsotargetingthehouseholdmarket,withthe10kWhZcell.

EachstandardindividualRedflowbatteryinitsmainproductlineisazincbromidemodule(ZBM),abouthalfthesizeofafridge,weighsabout240kgandstorages11kWh.Togetthestorageratinguptogrid-scale,60ZBMsareintegratedintoastandard20footshippingcontainer,whichequatesto660kWhofstorage.

Redflowsaysthatithasmorethanhalvednominallevelisedcostofenergy(LCOE)ofitszincbromidebatteries,bringingittoabout$US0.20c/kWh.39

39Vorrath,S.(2015)‘Redflowtooffer‘plugandplay’homebatterystorage,aftercuttingcostsby50%’,RenewEconomy(26August),http://reneweconomy.com.au/2015/redflow-to-offer-plug-and-play-home-battery-storage-after-cutting-costs-by-50-19431Accessed19January2016.


YOUNICOS: PIONEERING GRID STORAGE SOFTWARE AND BUSINESS MODEL YounicosisaGermancompanywhichbuiltSchwerinBatteryPark,Europe’sfirstcommercialgridstorageutility,in2014.Thecompanyistechnologyagnosticintermsofbatteryhardwarebuthasitsownsoftwareforenergymanagementandtrading.TheirphilosophyandbusinessmodelwasdevelopedinresponsetotherapidriseofrenewableenergyinGermanyandtheneedtooptimisethefluctuatingproductionfromwindandsolar.Theyhavepioneeredtheuseofbatteriestoprovidefrequencycontrolingridswherethereisahighproportionofrenewableenergy.

Younicos’sSchwerinBatteryParkuseslithium-ionbatteriesandhasacapacityof5MWh,whichcanbeupgradedto10MWh.Itincludescontrolsoftwareandhardware,including5transformers,whichisdesignedtomaximisethedeliveryoffrequencyservicestothegridatthesametimeasoptimisingtheoutputandlifeofthe

Figure14:BatteryrackatYounicos2.6MWbatterysystemonGraciocaIsland


batteries.40Younicossaysitcanrespondtogridfrequencyfluctuationsin200milliseconds,whichis3,000fasterthanaconventionalpowerplant.41

REPOSIT: MAKING A HOUSEHOLD AN ENERGY COMPANY RepositisanAustralianenergyandinformationtechnologystart-upwhichisleadingtheworldinturningindividualhouseholdswithsolarandstorageintovirtualenergycompanies.Repositdoesnotmanufactureuniquebatteriesorsolarpanels,itisessentiallyasoftwareandbusinessmodelinnovator.TheRepositpowermeterandsoftwarecommunicateswiththegridandthesolarproducer-consumer(‘prosumer’).Itsellsbackenergytothegridattimesofhighdemandandhighpricesandcreditsthistotheprosumer.42

In2016manyAustraliansolarhouseholdswilllosetheirpremiumfeedintariffpayments.Theywillstarttobepaidverylowratesforthesolarenergytheyexport.Sincetheyalreadyownthesolarpanelsitwillmakeeconomicsense,andemotionalsenseasinnovators,forthemtoinvestinstorage.ThisinvestmentcouldwellbeasystemlikeReposit’s,whichallowssolarconsumerstoearnahigherpricefortheirenergyexports(seeFigure11above).

STEM - AGGREGATING BATTERY STORAGE CONSUMERS USING INFORMATION AND COMPUTER TECHNOLOGY StemisanAmericanstart-upwithfundingfrommajorplayersinenergyincludingtheEuropeanutilityRWE,Japan’sMitsuiandGEVentures.Itusesbehindthemeterstorageandnewbusinessmodelstocreatethefinancialvaluetosupportlargebatteryinstallationsattheconsumerendofthegrid.LikeYounicos,itisrelativelyagnostictechnologically,buyinglithium-ionbatteriesandinvertersfromotherprovidersandintegratingthesewithitsownsoftwareandcontrolhardware.

40Younicos(2014)‘SchwerinBatteryPark’,http://www.younicos.com/download/Younicos_Reference_Project_Schwerin_US_Web.pdfAccessed19January2016.

41Younicos(2016),‘Batteryparks’,http://www.younicos.com/en/solutions/battery_parks/Accessed19January2016.

42Reposit(2016)‘Repositpower’,http://www.repositpower.com/Accessed19January2016.


TheuniquesellingpointoftheStemsystemisthatitconstantlymonitorsabuilding’senergyusageforpeaksinconsumptionandevenlearnsaboutpatternsofconsumptionandpredictsfuturepeaks.Itdispatchesbatteryenergytocoincidewithconsumptionpeaks,whichpreventsthemfromcausingaspikeinpowerdrawnfromthegrid.Bypreventingspikesinpowerimportedfromthegrid,userscanavoiddemandchargesthatareleviedinrelationtothemaximumspikesindemand.InCalifornia,HawaiiandNewYorkalmosthalfacommercialuser’selectricitybillcanbedemandcharges.43

StemhasbeencommissionedbyPacificGas&ElectricandCaliforniagridoperatorCAISOtoprovide85MWofdistributedbatteriesaspartofademand-responsepilotproject.Theaimistoaggregatehundredsorthousandsofindividualconsumersitesintoavirtualpeakerplant.44

43StJohn,J.(2015)‘Germany’sRWELeadsFundingRoundforStem’sBehind-the-MeterBatteries’GTM(13August2015)http://www.greentechmedia.com/articles/read/germanys-rwe-leads-30m-round-for-stems-behind-the-meter-batteriesAccessed19January2016.

44Wesoff,E.&St.JohnJ.(2014)‘StemWinsBigWith85MWofEnergyStorageinSCEProcurement’GTM(5November2014)http://www.greentechmedia.com/articles/read/Stem-Wins-Big-With-85-MW-of-Energy-Storage-in-SCE-ProcurementAccessed19January2016.


Chapter 5: Risks and opportunities

TherapiduptakeofbatteriesisgoingtodriveaveryAustralianenergyrevolution.Itisbeingdrivenbygrassrootsconsumerdemandratherthanaconsistentnationalpolicy.Itwillgathermomentumbecauseofthevastsizeofourelectricitynetworkandrelativelylowpopulationdensity,consumerself-interest,unpredictabletechnologicalinnovation,environmentalconcernandperversely,aconservativeelectricityindustrythatisgenerallyresistingthetransitiontothesmartgridfuturethatstoragetechnologiesenable.Consumersaregoingtoturntostoragewhetherornotreformstotheelectricitysectorencouragethem.

Theendingoffeedintariffsin2016willprovideincentivesforsolarhouseholdstobetheearlyadoptersofbatteries.Ifsolarhouseholdsdoembracebatterystoragethenthiswillleadtolowerpricesforfuturemarketsegments,whicharelessadventurous.

Unfortunately,Australiadoesnotyethaveaframeworkinplacethatwouldallowstoragetocompeteonalevelplayingfieldwithcoalandotherconventionalenergyassets.Regulatorsareyettoacknowledgethisofficially,butprivatelytheyseethatbatteriesareradicalandbeneficialdisrupters,becausetheycanenablegenuinecompetition.Forexample,DrRonBen-David,ChairpersonofVictoria'sEssentialServicesCommission,gaveaspeechinapersonalcapacity,whichheprovocativelytitled,‘IftheretailenergymarketiscompetitivethenisLaraBingleaRussiancosmonaut?45

Storagepresentsarangeofopportunitiestoimproveelectricitysectorproductivityandcompetition,whichwillbenefitconsumers,theeconomyandtheenvironment.ThefederalgovernmenthassetatargettoimproveAustralia'senergyproductivityby40%by2030,whichissupposedtodeliveredbytheCOAGEnergyCouncil,throughtheNationalEnergyProductivityPlan.

InhisForwardtothePlan,JoshFrydenberg,MinisterforResources,EnergyandNorthernAustralia,says‘Newtechnologies,innovativeservices,thetransitiontoalow

45Ben-David,R.(2015)‘IftheretailenergymarketiscompetitivethenisLaraBingleaRussiancosmonaut?’,paperwrittenforNEMFutureForum2015(25June2015)http://www.esc.vic.gov.au/getattachment/fc947897-7d4f-4772-97c9-959e3baad0db/If-the-retail-energy-market-is-competitive-then-is.pdfAccessed1February2016.


carboneconomy,andchangingconsumerdemandsareallmajordriversofthischange.’46

Whenstorageisintegratedwithrenewableenergyandsmartgridtechnology,itallowsustointegrateaveryhighconcentrationofvariablerenewableenergy.Thisisthekeyenvironmentalbenefitofbatteriesandotherstoragetechnology;itwillallowustoreplacecoalandgaswithcleanenergy.IfAustraliaandotherwealthycountriesaregoingtomeetourobligationsundertheParisclimateagreement,thenwearegoingtohavetoworkquicklytoslashemissionsfromourelectricityandthatrequirestherapidgrowthofstorage.

Muchofthenewcleanenergygenerationandstorageassetswillbedistributedacrossthenetwork,rightdowntomillionsofindividualsolarhouseholdsandbusinesses.Thiswillshiftusfromtheoldcentralised,one-wayenergymodeltoadistributedenergynetwork.

Over1.5millionhouseholdsalreadyhavesolarPVanditmakessensethattheearlyadoptersamongthemwillbemanyofthefirstbuyersofbatterystorage.Thekeymotivationdrivingthemispriceandotherconsumersentiments,suchasunhappinesswithenergycompanies(seeFigure8above).Thisthreatensthebusinessmodelandprofitsoftheincumbents.Forexample,MorganStanleysaysthatthesolarconsumerrushtostoragecouldcostOriginandAGL$100millioninearnings(beforetaxandinterest)in2020,only4yearsaway.47

Thereisariskthatvestedinterestswillhaveanundueinfluenceoverthereformprocessandevenholdbackconsumersandotherswhowishtoinvestinstorage.AstheInternationalRenewableEnergyAgency(IRENA)warns‘Onerousregulatorybarriersplayasignificantroleinthismarket.’48AccordingtoeconomicswriterJessicaIrvine,Australia’sreformprocessesarebeingfrustratedbya‘DavidandGoliathbattle’foughtbyincumbentswhoprofitfromtheoldbusinessmodelandusetheirpoliticalandpolicyinfluencetoholdbacktheinevitabletransformationtosmarter,cleanerenergy.49

46COAGEnergyCouncil(2015),NationalEnergyProductivityPlan,Canberra47Parkinson,G.(2015b)‘MorganStanleysees2.4mAustraliahomeswithbatterystorage’,RenewEconomy,(20May)Accessed12January2016.http://reneweconomy.com.au/2015/morgan-stanley-sees-2-4m-australia-homes-with-battery-storage-20668Accessed13January2016

48Kempener,R.andBorden,E.(2015)Batterystorageforrenewables:Marketstatusandtechnologyoutlook.InternationalRenewableEnergyAgency,AbuDhabip.2

49Irvine,Jessica(2015)‘DavidtacklesGoliathintribunalbattlethatwilldecideelectricitybills’,SydneyMorningHerald,(26September),http://www.smh.com.au/action/printArticle?id=1000810372Accessed13January2016


AkeyflawinAustralia'selectricitysystemisthatnetworkbusinessesandthecoalandothergeneratorsmakehigherprofitsthelessefficientlythatconsumersuseelectricity.Forexample,whenlargenumbersofhouseholdsinstallairconditioners,thisputsacostonthewholeelectricitynetworkbecauseithastobeupgradedtoprovideahigherflowofelectricityonhotafternoonswhenpeoplearecoolingtheirhouses.Networksbusinessesbenefitbecausethemorethattheirnetworksare‘goldplated’,thehighertheprofitstheyareallowedtomake.Likewise,whentherearemoreandhigherdemandpeaks,thepriceofenergyintheenergymarketismoreoftenattheregulatedmaximum,whichproduceswindfallprofitsforelectricitygenerators.50

Thiscreatesasignificantmoralhazard,inwhichconsumersandthetaxpayerareforcedtopayfordecisionsmadebyenergycompanies,thatincreasewasteanddecreaseproductivity.Ifthefederalgovernmentisseriousaboutits40%productivitygoal,itwillhavetobevigorousinitseffortstoreformmarketsandtechnicalsystems.

AccordingtoGilesParkinson,editorofRenewEconomy,wearegoingtospendover$130billionoverthe2000-2020period,on‘polesandwires’expenditurethatlocksusintotheoldmodelofcentralised,high-emissionsbase-loadgeneration.Parkinsoncallsthisinvestment‘purefolly’.51Imaginehowmuchwecouldachieveinthetransitiontoacleanenergyeconomyif$130billionwasinvestedinstorage,smartgridandrenewabletechnologies.

Solarconsumersarenotpaidafairpricefortheenergytheyexporttothegridandwhilethiswillacceleratetheriseofstorageitalsocarriesrisksthatpeoplewill‘defect’fromthegrid.Asdetailedabove(inChapter3),residentialconsumersarepayingvastlymoreforenergytheyimportthanforenergytheyexportfromtheirsolarpanelsorstoragebatteries.Insomecasesasolarconsumerispayinghundredsofpercentmoreforenergytheybuythanenergytheysell.Putanotherway,theenergythattheygenerateontheirroofearnsthemseveralcentsperunit(kWh)andwhenitissoldtotheirneighbours,thepricehasmysteriouslyincreased400%.

Thispricegapmayencouragesomeconsumerstodisconnectfromthegridandeffectivelybecomeamicrogridofonehousehold.Thisisaproblemfortworeasons.Firstlyitmeansthatthosehouseholdswillhavelessenergysecuritythanthosewhichremainconnectedtothegrid.Secondly,itisawasteofaveryexpensivecommunityresource-thenetwork-andalsoasub-optimaluseoftheprivatelyownedassetofthe

50Thisappliesdirectlyto‘merchant’saleofenergyinthewholesalemarket,whichcoversasignificantproportionofenergysoldbymostgeneratorsintheNEM.

51Parkinson,G.(2015c)‘Networkstospendanother$50bnonAustralia’sdumbanddumbergrid’,RenewEconomy,(30October)http://reneweconomy.com.au/2015/networks-to-spend-another-50bn-on-australias-dumb-and-dumber-grid-26649Accessed11January2016


batteryandsolarsystem.Solarbatterysystemsareofmorevalueintegratedproperlyintoafairenergymarket,wheretheycansupportqualityofsupplyforthebenefitofthecommunity.

Protectionismofincumbentenergywilldrivegriddefection.Alreadythereistalkofa‘deathspiral’intheelectricityindustry.JeremyLeggettdetailsthatthisdeathspiralhaswipedalmosthalfatrilliondollarsofftheassetsofthetoptwentyEuropeanenergyutilities,asrenewablesandenergyefficiencyrise.52Ifalargenumberofhouseholdsunplugfromthegrid,thenthiswillforcepricesupforeveryonewhoremains,whichwilldrivemoretodefect,makingthedeathspiralworse.

ThecentralpolicychallengeforAustraliaistoallowstorageanddistributedrenewableenergy(andalsoenergyconservationor‘demandmanagement’)tocompeteagainstbusiness-as-usualassets,includingboththecoalandgasgeneratorsandalsothenetworksthemselves.

52Leggett,Jeremy(2016)Thewinningofthecarbonwar,SolarAid,London,p.23


CALIFORNIA’S STORAGE PLAN California’sstorageindustryprogramsofferausefulcasestudyforAustralia.Thenon-residentialstoragemarketinCaliforniaisalready24timesbiggerthanallotherUSstatescombined.

Californiahasatargetof33%renewableenergyby2020(comparedtoAustralia’stargetofaround23%by2020)and50%by2030.Inordertoreachthesegoals,Californiahaspoliciestorapidlyacceleratethedeploymentofbatteryandotherstoragetechnologiestointegraterenewablesintothegrid.

FirstlythereisaSelf-GenerationIncentiveProgrammandaterequiringthepurchaseof1325MWofstorageby2020,whichisthelargestsuchprogrammeinAmerica.

Secondly,thereareprogramstoleadthedevelopmentoftechnologiesandbusinessmodels.TheserangefromventurecapitalstimulationthroughCalCEF,throughtotheCaliforniaEnergyCommission’sR&Danddeploymentprogrammes,stakeholdercoordination,regulatorydevelopmentandpublicoutreachwork.

TheSelf-GenerationIncentiveProgramwasoriginallycreatedtoreducepeak-loaddemandinCalifornia,inresponsetotheenergycrisisof2000-2001.Since2011itisalsofocusedonreducinggreenhousegasemissions.

SGIPsubsidisesdistributedgenerationtechnologiesownedbycustomers–includingstorageanddemandmanagement–tooffsettheirelectricitydemand.Itprovidesincentivesforcleanandefficientdistributedgeneration,currentlyworthUS$83millionannually.TheCaliforniaPublicUtilitiesCommissionmanagestheprogramandfundsaredisbursedviatheinvestor-ownedenergyutilities.

California’sthrivingstoragesectoralsobenefitsfromtheFederalpolicies.TheSunShotinitiativeaimstomakesolarwithstoragecompetitivewithconventionalenergyby2020.TheFederalInvestmentTaxCreditisbeingreformedtoincludeguidelinesforstoragetoreceivefunding.

Ø AustraliashouldmandateanationalstoragetargetandprogrammestoaccelerateR&D,deploymentandsectordevelopment

Sources:CentreforSustainableEnergy(2016),‘SGIPBackground’https://energycenter.org/programs/self-generation-incentive-program/backgroundAccessed23March2016;CaliforniaPublicUtilitiesCommission(2016),‘CaliforniaRenewablesPortfolioStandard(RPS)’,http://www.cpuc.ca.gov/RPS_Homepage/Accessed23March2016;GTMResearch/EnergyStorageAssociation(2016)U.S.EnergyStorageMonitor:2015YearinReviewExecutiveSummary,Massachusetts


Conclusion

Australiafacesacombinationoffactors,whichwilldrivetherapidupdateofbatterystorage.ThenaturaldriversforstorageinAustraliainclude:

• highvaluesolarresource• highandrisingretailelectricityprices• largenumberofhouseholdswithsolar• endingoffeedintariffpaymentsforsolarhouseholds• large,sparsegrid

StoragewillenhanceenergyproductivityandhelpusmeetourclimateobligationsfollowingtheParisclimateconferenceinDecember2015.

Ifwearesmartthenwewillgetaheadofthecurveandhaveawell-informednationalconversationabouthowtoembracestorageandthedramatictransformationtosmartenergygridthatitsenables.

Criticsofrenewableshavelongbasedtheirconcernsonthevariabilityofsolarandwind,sotheyshouldembracestoragebecauseitprovidesenergysecurityandcleanenergysimultaneously.

PollingbytheAustraliaInstitutehasconfirmedthatthepublicisenthusiasticaboutthepotentialofbatterystorageandwanttoinvestinit.Thisprovidesagreatopportunityforpolicymakers.

PrimeMinisterMalcolmTurnbullhascalledforustobeagileandinnovative.WhetherornotheagreeswithTheEconomistthat‘thelithium-ionbatteryisthetechnologyofourtime’,heshouldhelpusharnesstherapidprogressofstoragetechnologiesforhisinnovationagenda.WealreadyhaveR&Dandcommercialisationeffortsunderway,fromstart-upstolargeprojectsbyestablishedenergycompaniessuchasErgonandPowercor.

Inthis2016electionyearwewillseemanysolarhouseholdslosegenerousfeedintariffsandbeforcedtoacceptlowerpricesfortheenergytheygenerate.Thisisapoliticaltimebombandallpartiesshouldharnessitinthenationalinterest,bysettingoutstrongpoliciesthatpushourtransitiontoasmarterenergyfuture.


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Appendix - Polling questions

Between29Februaryand8March2016TheAustraliaInstituteconductedanationalopinionpollof1412peoplethroughResearchNow,withnationallyrepresentativesamplesbygender,ageandstateorterritory.

Theextractbelowprovidesallthequestionsthatwerecitedinthisreport:

[SECTIONINTRO]Wearenowgoingtoaskyouafewquestionsaboutrenewableenergy.

ASKALL,SR

Q31. DoyouhaveasolarPVsystemathome(i.e.rooftopsolar)?

Pleaseselectoneresponseonly

1. Yes[GOTOQ32]2. No[SKIPTOQ33]3. Don’tknow/Notsure[SKIPTOQ33]

ASKIFCODE1INQ31,SR

Q32. Storagebatteriesareanemergingtechnologythatallowshomeownerstostoreelectricitygeneratedbytheirsolarpanelsduringthedayanduseitatnightorduringtimeswhentheyareconsumingalotofelectricity(e.g.runninganairconditioneronahotday).

Wouldyouconsiderinstallingbatterystorageinyourhousehold?


1. Yes2. No3. Don’tknow/Notsure

ASKALL,SR

Q33. Storagebatteriesareanemergingtechnologythatallowshomeownerstostoreelectricitygeneratedbytheirsolarpanelsduringthedayanduseitatnightorduring


timeswhentheyareconsumingalotofelectricity(e.g.runninganairconditioneronahotday).

WouldyouconsiderinstallingsolarPVandbatterystorageinyourhousehold?


1. Yes2. No3. Don’tknow/Notsure

ASKALL,MRRANDOMISE

Q34. Which,ifany,ofthefollowingthingsareimportanttoyouwhenconsideringwhethertoinstallbatteriestostoresolarpowerinyourhome?

Pleaseselectallthatapply

1. Independencefromenergycompanies2. Savingmoneyonelectricitybills3. Reducingpollutionfromcoalandgaspowerstations4. Disconnectingfromthegridaltogether5. Paysforitselfrapidly6. Noneofthese

ASKALL,SR

Q35. Overtimebatterystoragewillcanpayforitselfinsavingsonyourelectricitybill.Ifyouweretoinstallahomebatterystoragesystem,whatisthelongesttimeyouwouldbepreparedtowaitforittopayforitself?


1. Lessthan5years2. 5-7years3. 8-10years4. Morethan10years5. Don’tknow/Notsure


ASKALL,SR/ROW

Q40.Wouldyoubemorelikelyorlesslikelytovoteforapartywhichhadthefollowingpolicies?

Pleaseselectoneresponseperrow

RANDOMISEROWCODES Much

morelikely

Morelikely

Makesnodifference

Lesslikely

Muchlesslikely

Don’tknow/notsure

Apolicytoinvestinlarge-scalesolarandwind

1 2 3 4 5 99

ApolicytograduallytransitionAustraliato100%renewableenergyby2030

2

Apolicytoensuresolarisinstalledoneveryhomethatissuitableandonbuildingslikehospitalsandschools

3

Apolicythatacceleratestheuptakeofelectricvehicles

4

Apolicythathelpssolarconsumersgetbatterystoragesothepowertheygeneratecanbeusedaroundtheclock

5

p234 renewables and battery storage final - the australia … renewables and... · ·...

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