The development and operational costs of solar and wind energy in South Australia are making it less profitable for fossil fuel operated power plants.
While this is good news from a cleaner environment point of view, there is one very critical piece missing from the puzzle - the state’s insufficient energy storage capacity.
Without this, the state is unable to harness the true potential of its natural resources. Environmental responsibility aside, the problem goes even further than this. Because of there being an inability to use this power around the clock, the state has been faced with critical shortages of electricity in the past few months.
But, recent developments within the sector may create the solution that the state desperately needs.
One development is the competitive atmosphere that Tesla has stirred up as a result of its offer to solve the state’s grid storage problem in record time.
Another separate development is Clean Energy Finance Corporation’s (CEFC) agreement to work alongside the South Australian Government to help create a financing package to support the delivery of a grid-scale battery storage project, Australia’s largest.
Both developments have highlighted the need for innovation in energy storage.
The project forms part of the South Australian Government’s AU$150 million ($115 million) Renewable Technology Fund which supports investment in clean, flexible and cost-effective power.
There is currently a two-week Expression of Interest period for interested national and global companies to build the 100MW battery.
According to CEO Oliver Yates at CEFC, vendors have been showing an interest in building a large-scale battery for the state for some time now so the Expression of Interest should attract the attention of many applicants.
These applicants will now have the opportunity to bid against each other in the tender, which South Australian treasurer Tom Koutsantonis says will be held as soon as possible to ensure the installation is completed within the year. Among those competing will be Tesla, Zen Energy (with Greensmith), Lyon Solar (with AES) and Perth-based Carnegie Clean Energy. Others are also expected to join.
Yates adds that a project like this which can be implemented rapidly is likely to complement a range of longer-term storage projects which are already under consideration.
These could include a Snowy Mountains Scheme 2.0; the proposed Kidston pumped hydro development in Queensland; the proposed Cultana pumped hydro project on the Eyre Peninsula in South Australia and potential improvements to Tasmania’s electricity system centred around its long established hydro facilities.
Building a strong and flexible grid with energy storage
Energy storage and grid-scale batteries are an essential part of building a stronger electricity system of tomorrow. Storage solutions are supporting the integration of higher volumes of clean energy into the grid, creating a more sustainable future and cleaner environment.
CEFC’s submission to the Independent Review into the Future Security of the National Electricity Market, commonly referred to as the Finkel Review, supports this view and outlines how its investment activities will support the development of a resilient, balanced and secure electricity system, including large-scale renewable energy, and energy storage.
The CEFC says that a number of areas would benefit from reform, including market design to support security and reliability, technology to transform the electricity sector, and investment barriers.
“Australia’s electricity system is seeing significant new investment, with clean energy solutions entering the market at increasing scale and price competitiveness as we look to achieve an energy system that is secure, affordable and sustainable,” says Yates.
“We are confident that Australia’s energy mix can incorporate higher levels of clean energy with strengthened transmission, better demand management systems and increased storage capacity, through a planned and coordinated approach.”
Essential digitisation of Australia’s power systems
According to Yates, South Australia is well aware that today’s power systems have to be digitised, with rapid and sophisticated control systems that apply across the network. He adds that the electricity sector should recognise that regulatory systems have to stay ahead of the rapid pace of technology developments so as to support the adoption of new solutions that solve new challenges.
South Australia, the current leading state of renewable generation, is set to become the leading state for the adoption of these new solutions.
Yates says that the CEFC, with its considerable expertise in the area of large-scale storage and flexible financing solutions, is confident that it can create a model that can be used in other states as they work towards integrating a higher level of renewable energy onto the grid.
As Koutsantonis says: “Storage is the next phase of the evolution of renewable energy” and it looks as if South Australia is embracing the next step in its quest to develop an energy future that the rest of Australia can aspire to.
There has been a great deal of investor uncertainty around Australia’s renewable energy goals in the past but South Australia’s success could create the investor confidence that the country’s renewable energy sector really needs.