Australia’s Renewable Energy Agency (ARENA) released a hefty report on global energy storage and how it relates back to the domestic situation last month. The 130-page treatise, “Energy storage study: Funding and knowledge sharing priorities”, prepared by technical services company AECOM, focuses mainly on electrochemical storage batteries and lessons to be taken from leading world regions for energy storage. It also identifies which energy storage applications have the most potential within Australia.
According to the report , most of Australia’s current battery storage systems have been installed by off-grid customers using a combination of batteries, PV and wind, all supported by diesel fuel generation. A wider uptake of energy storage technologies has been restricted by cost, but falling battery prices over the next ten years are expected to lead to strong growth in the sector, with behind-the-meter applications being the market with the highest potential.
The report states: “The high-value of the end-user installation is largely due to the ability to increase the behind-the-meter utilisation of solar power, offsetting consumption from the grid. This is the largest and most tangible revenue stream ($/kWh) available to storage projects in the current market as well as in the foreseeable future.”
However, Craig Chambers, market sector director, power generation, AECOM, says that for the moment, behind-the-meter storage applications may not actually stack up from a financial perspective, because storage devices on the market for AU$6.5-7,000 (US$4.7-5,100) can still take 7-15 years or more on payback periods. Nevertheless, there will still be some early adopters of the technology.
“Economics are not the main driver for consumers in taking up these products”, says Chambers. “Many people will be seeing them as a means to more autonomy and hedging their costs going forward. I suspect people will take them up just because of the interest in trying to maximise the use of solar on their roofs and to offset their peak tariffs.”
Sam Wilkinson associate director, solar supply chain and energy storage at IHS technology explains that retail electricity rates in Australia vary significantly throughout the day, with prices generally low in the day time and higher during the evening period of peak tariffs.
The cost of generating one’s own solar electricity in Australia is highly competitive compared with retail electricity rates, adds Chambers.
Rooftop PV is now installed in 13% of dwellings across Australia in more than a million homes. Uptake from a per capita perspective has also been huge, says Chambers, outstripping even Germany and California, with concentrations of PV uptake especially high in the states of Queensland (20%) and South Australia (22%).
However, the fact that, as mentioned by Wilkinson, electricity prices vary by region, utility and time of day, makes it difficult to make a general analysis for solar and storage in Australia, says Chambers. Even solar incentives vary regionally. For example feed-in-tariffs (FiTs) close at the end of 2016 in New South Wales but not until 2028 in Queensland.
PV Tech Storage reported last week that the closing of FiTs in New South Wales presents a perfect marketing opportunity for energy storage retailers, with around 160,000 homes affected. Chambers says some of the affected households will have inverters that are coming to end-of-life. This means battery suppliers can use that opportunity to offer to install new inverters, upgrade meters to net-meters, and provide a battery system simultaneously.
On another note, the report cites that energy storage can be used to reduce capacity requirements on the network. This is valuable because distribution network costs are the largest contributor to electricity prices in Australia.
In general, these grid-balancing benefits are most easily conferred using large-scale storage. Chambers says there is plenty of interest in larger-scale energy storage applications in front of meter for grid-balancing in Australia; however, the report states that at present, “economic drivers such as wholesale arbitrage and ancillary services are difficult to monetise without an aggregator or retailer”.
Under the aggregator model, several small-scale storage devices are connected together to make a larger distributed energy ‘asset’ that can perform several tasks, such as grid balancing. Trials of other so-called Virtual Power Plants are taking place elsewhere in the world, including Germany and California.
To support this technology, ARENA announced this month AU$400,000 support for Ergon Energy Queensland to trial a ‘virtual power plant’ model, which aggregates 33 storage systems across residential rooftops in Cannonvale, Toowoomba and Townsville, Queensland. Each system includes a 4.9kW SunPower PV array and 12kWh/5kW Sunverge battery storage and control system.
ARENA chief executive Ivor Frischknecht said: “This will show whether systems can be effectively co-ordinated to add value to the network by managing the supply of renewable energy into the grid, performing demand management and reducing network peak load.”
One other notable storage opportunity in Australia is in the off-grid market due to the number of remote mines and remote communities that are running on diesel grids. While only 2% of Australia’s population live in off-grid areas, over 6% of the country’s total electricity is consumed in these areas.
Another key question is which energy storage products will be taken up, now that there are numerous suppliers already in the Australian market, such as LG Chem, Tesla, Bosch and Chinese suppliers coming to the market alongside Japanese tech company Panasonic.
“I think Australia is seen as a test bed from a number of OEMs looking to push their product into the market” says Chambers. “You've got well-developed legislation and markets are relatively mature, however, the population is relatively small and so it is a good market entry opportunity to test products in the out-of-home country market.”
To give a pointer of where the sector is heading, IHS predicts that over 200MW of residential PV systems in Australia will have energy storage added over the next five years.