FUTURE ENERGY
GEARING UP FOR THE ENERGY STORAGE ERA by Michael Bradley, Executive General Manager, Retail and Wholesale Markets and Victoria Mollard, Executive General Manager, Security and Reliability, AEMC As batteries continue to play an increasingly important role in Australia’s evolving energy system, the Australian Energy Market Commission is laying the foundations for the best ways to integrate batteries – and distributed energy sources – into our grid.
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hether they sit in our smartphone, garage remote control or laptop, batteries are integrated into our everyday lives. As battery technology is increasingly used in consumer gadgets and electric cars, it has also gotten cheaper. The costs of lithium ion batteries fell sharply by 89 per cent between 2010 and 2020 -- a trend that is set to continue, according to Bloomberg New Energy Finance research. Battery technology is becoming more economic and more ubiquitous. And batteries, along with other energy storage technologies, will play a more critical role in Australia’s future power system too. The Australian Energy Market Operator’s 2020 Integrated System Plan forecasts an influx in storage across the grid: capacity is expected to be about eight times higher within the next two decades. Meanwhile, state and territory governments across the southeastern and eastern states that make up the national electricity market (NEM) have rolled out policies to incentivise storage. More households with solar batteries are expected. So too are more grid-scale storage systems and the emergence of innovative new business models that combine different technologies behind a connection point to both consume and export electricity.
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To be sure, storage systems are not new in the Australian electricity grid. Part of the iconic Snowy Hydro scheme, Tumut 3, was built in 1973 as a pumped-hydro unit that can store energy. Since the 2017 connection of the Hornsdale Power Reserve in South Australia, four further grid-scale batteries have been hooked up to the NEM. Others are planned. Underscoring the potential for hybrid facilities, North Queensland’s Kennedy Energy Park – the nation’s first project to combine solar, wind and battery storage behind a connection point – has recently started sending electricity to the NEM. Given the forecast influx of energy storage, the time is right to look at how changes to the national energy rules can accommodate the exciting new storage era that is upon us. The Australian Energy Market Commission has been working on a slew of complementary projects that will get the market ready for a future where batteries have a pivotal role to play – to back up the cost benefits of a burgeoning fleet of weather-reliant renewables, soak up excess solar power from rooftop PV, and provide important system services as aging coal-fired generators retire. These projects include our draft plan to integrate storage into the NEM, our final decision to create a fast frequency response service that rewards providers like batteries for providing ultra-quick frequency control, and our work to smooth how we embed distributed energy into the system so that all energy consumers benefit.
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