Renewable Energy Hub has announced the first transactions as part of its new ‘Virtual Storage’ electricity swap contract in Australia.
The financial instrument allows participants to buy and sell stored electricity, helping them to set spread between charge and discharge price from both battery storage and pumped hydro energy operators.
Energy supplier Hydro Tasmania has now used the tech company’s platform for sell power to the Macquarie Group and ERM Power.
Chris Halliwell, co-founder and head of markets at Renewable Energy Hub said that as energy markets change, financial markets are changing too.
“The Virtual Storage contract enables merchant storage operators to de-risk their energy arbitrage revenue, to move beyond complete exposure to spot prices and hedge their risk and capture more attractive revenue options in the forward market.”
Virtual Storage’s first transactions involved Hydro Tasmania selling the rights to the highest priced ‘discharge’ energy periods, as well as buying a fixed MW block of low-priced ‘charge’ energy, for the 2022 financial year.
Both charge and discharge periods are set to be the same MWhs, with a transaction price agreed for both bought and sold legs.
“The benefits of deep storage, currently being progressed as part of the Battery of the Nation initiative, are well understood in the context of providing firming capacity that will be needed as the energy market transitions and variable renewable energy becomes the dominant source of supply,” Hydro Tasmania executive general manager of commercial, Caroline Wykamp.
“The Virtual Storage hedge contract demonstrates the value of such trades to the financial market and that further liquidity in such trades can support investment needed to develop pumped hydro and other storage technologies that will ultimately support Australia’s renewable energy future – it’s a win-win.”
As most storage comes on the grid in Australia, the need to be able to effectively trade stored energy effectively is expected to become essential to capture reventue. Utilisation of Renewable Energy Hub’s Virtual Storage contract will grow over coming years therefore the company noted.
Virtual Storage is the latest project developed by the Renewable Energy Hub as part of an Australian Renewable Energy Agency (ARENA) funded project to develop a suite of innovative, standardised hedge contracts.