Battery capacity in Australia during 2021 totalled about 0.4 gigawatts but it marked a year of major construction projects beginning and much of this is expected to come online this year, Rystad Energy data shows.
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| Batteries such as the Victorian Big Battery undercut the argument that gas is needed for grid stability. |
With many large-scale projects set to be operational, utility-scale battery
capacity will top 1.1 GW by the second half of 2022, Rystad expects.
Costs are declining and operators are being incentivised by energy arbitrage, which is storing energy when it is cheap and providing it when prices are high.
“This is the era of the utility-scale battery, but everyone is talking about hydrogen,” said Gero Farruggio, head of Australia and global renewables at Rystad Energy.
“Over the last 12 months, barring COVID, hydrogen has been grabbing all the headlines, but the reality is there has been this intense build-out of batteries.”
The surge in grid-scale battery capacity will intensify pressure on Australia’s coal power generators that are already struggling to compete against cheaper renewable energy.
Coal – Australia’s largest energy source – has suffered from weak demand in recent months, as rooftop solar installation rapidly increases and, with cooler temperatures, decreased demand for things such as air conditioning.
As a result, the Australian Energy Market Operator said, quarterly average demand for power from the grid fell to the lowest level for a fourth quarter since 2005.
Wholesale electricity prices were at zero or below more than 16 per cent of the time during the last three months of last year.
The financial strain has already forced some coal-powered plants to close, and many others have announced a timetable to follow suit. AEMO expects coal-fired power generators will have exited the NEM substantially by 2030 and entirely by 2043, up to a decade faster in some cases than previously anticipated.
The decline of coal has stoked concern within some quarters about the social and economic impact on regional mining communities. Others have questioned the stability of Australia’s energy grid during periods when it relies heavily on renewable sources that are intermittent in supply.
Still, renewable energy generation is expected to continue to soar, depressing demand on traditional fossil fuel sources. Low demand on the grid can require AEMO to direct plants such as gas-fired generators to come online to help keep the system stable.
Prime Minister Scott Morrison has said gas – which is far more flexible than coal in supply – will be needed to stabilise the grid.
But huge batteries – such as the 150 megawatt battery, which can produce one hour of energy at its maximum output, at the former Hazelwood coal-fired power station in Victoria – undercuts the argument that gas is needed.
“On any feasible cost-benefit analysis, batteries have overtaken gas turbines,” said Bruce Mountain, director of Victoria Energy Policy Centre. “Almost all the private sector investment has been in batteries. The one or two gas turbines that may be proceeding have only got there with a lot of government subsidies and the only gas turbine is being entirely financed by the government.
“It raises very big questions for gas, and it raises very big questions for transmission augmentation. Why is it that we are contemplating these enormously expensive transmission augmentations?”
The government’s Natural Gas Infrastructure Plan, released late last year by federal Energy Minister Angus Taylor, envisages at least one new gas basin being brought online before 2030 to meet east coast demand.
However, the plan would require new pipeline infrastructure, in some cases involving more than one pipeline, to allow gas to flow to where it is needed by customers.
But analysts say new pipelines are unnecessary and the business case is “poor”.
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Costs are declining and operators are being incentivised by energy arbitrage, which is storing energy when it is cheap and providing it when prices are high.
“This is the era of the utility-scale battery, but everyone is talking about hydrogen,” said Gero Farruggio, head of Australia and global renewables at Rystad Energy.
“Over the last 12 months, barring COVID, hydrogen has been grabbing all the headlines, but the reality is there has been this intense build-out of batteries.”
The surge in grid-scale battery capacity will intensify pressure on Australia’s coal power generators that are already struggling to compete against cheaper renewable energy.
Coal – Australia’s largest energy source – has suffered from weak demand in recent months, as rooftop solar installation rapidly increases and, with cooler temperatures, decreased demand for things such as air conditioning.
As a result, the Australian Energy Market Operator said, quarterly average demand for power from the grid fell to the lowest level for a fourth quarter since 2005.
Wholesale electricity prices were at zero or below more than 16 per cent of the time during the last three months of last year.
The financial strain has already forced some coal-powered plants to close, and many others have announced a timetable to follow suit. AEMO expects coal-fired power generators will have exited the NEM substantially by 2030 and entirely by 2043, up to a decade faster in some cases than previously anticipated.
The decline of coal has stoked concern within some quarters about the social and economic impact on regional mining communities. Others have questioned the stability of Australia’s energy grid during periods when it relies heavily on renewable sources that are intermittent in supply.
Still, renewable energy generation is expected to continue to soar, depressing demand on traditional fossil fuel sources. Low demand on the grid can require AEMO to direct plants such as gas-fired generators to come online to help keep the system stable.
Prime Minister Scott Morrison has said gas – which is far more flexible than coal in supply – will be needed to stabilise the grid.
But huge batteries – such as the 150 megawatt battery, which can produce one hour of energy at its maximum output, at the former Hazelwood coal-fired power station in Victoria – undercuts the argument that gas is needed.
“On any feasible cost-benefit analysis, batteries have overtaken gas turbines,” said Bruce Mountain, director of Victoria Energy Policy Centre. “Almost all the private sector investment has been in batteries. The one or two gas turbines that may be proceeding have only got there with a lot of government subsidies and the only gas turbine is being entirely financed by the government.
“It raises very big questions for gas, and it raises very big questions for transmission augmentation. Why is it that we are contemplating these enormously expensive transmission augmentations?”
The government’s Natural Gas Infrastructure Plan, released late last year by federal Energy Minister Angus Taylor, envisages at least one new gas basin being brought online before 2030 to meet east coast demand.
However, the plan would require new pipeline infrastructure, in some cases involving more than one pipeline, to allow gas to flow to where it is needed by customers.
But analysts say new pipelines are unnecessary and the business case is “poor”.
Links
- Power records fall on solar surge, cool weather
- Early coal power exit demands $12.5b transmission spend
- 2021 National Gas Infrastructure Plan (pdf)
- (AU ABC) Victorian Government Commits $14 Million To Battery Facility, Regional Hydrogen
- (AU) World's First Domestic Hydrogen Battery Developed By Australian Firm
- (AU) Shared Community Battery May Be Trialled In Solar-Powered Canberra Suburb To Stabilise Energy Supply
- Build A Better Battery For Wind And Solar Storage, And The Energy Sector Will Beat A Path To Your Door
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