The electricity market is in the midst of a transition. Increasing shares of variable renewable energy generation have elevated the important role energy storage will play to support power system reliability and security. However, to enable new services and ensure the security of the power network, the market will need to adapt.
Large Scale Battery Storage (LSBS) is an emerging industry in Australia with a range of challenges and opportunities to understand, explore, and resolve. To meet the challenges, it is important that learning opportunities are drawn from each project undertaken to increase the chances of success for future projects, bolster business cases, and realise the full potential of LSBS.
There are a number of technical, commercial, and regulatory opportunities that the market has already identified and is beginning to explore. Key areas identified for further technical development are:
- simulated/synthetic inertia – typically available as a function from voltage source inverters (i.e. those with grid forming capability), with other innovations also emerging involving a comparable operating mode in parallel with current source inverter control
- system strength – improved knowledge of capability of different battery inverters to provide system strength support
- power system modelling – modelled demonstration of the capability of high performance battery inverters to support increasing Variable Renewable Energy (VRE) penetration and/or further technical developments or performance specifications required to facilitate the transition
- bidding algorithms – development of customisable and potentially supplier agnostic bidding tools to maximise revenue streams and the commercial returns for battery projects in a complex energy market
- flexible warranties – further development of battery degradation warranty structures that provide flexibility to battery operators while also managing supplier risk
- degradation management – further development of strategies and contracting structures to extend project life
- decentralisation and islanding – further development of how battery storage can support increasing levels of islanding and embedded microgrids at various scales of islanded network.
Commercial viability of battery projects requires further development of market structures and incentive mechanisms to recognise and value the services batteries can provide, including for Fast Frequency Response (FFR) and simulated inertia.
Proponents also continue to develop innovative solutions to extract value from the potential for batteries to operate within the existing market structure, including for curtailment management and minimising Causer Pays costs.
Regulatory reform in a number of areas, such as a new registration category for bi-directional resource providers (including energy storage) is on-going, to develop future-ready market structures and rules that are technology agnostic and will facilitate the procurement of the range of services that will be required to ensure a secure power system through the transition to higher VRE penetration.
This report summarises the key lessons and innovation opportunities for LSBS projects in Australia based on specific project insights gathered through the Australian Renewable Energy Agency (ARENA), Aurecon’s industry experience, and publicly available information.