Grid-scale batteries on the cusp of rapid roll out after rocky start

Four years ago it took bets between billionaires and a statewide energy crisis to get a grid-scale battery built. Now there are scores planned across Australia.

Elon Musk during his presentation at the Tesla Powerpack Launch Event at Hornsdale Wind Farm on September 29, 2017.

This time four years ago, when Australia’s first grid-scale battery was being constructed in South Australia’s Far North, it was not just novel, but controversial.

Now, with more than 20 large-scale battery storage projects under construction or having reached financial close across the nation, many of which are much larger than the SA project - at the time the largest in the world - the industry shows all the signs of having matured rapidly.

In four short years the construction of grid scale batteries has receded from an issue being debated fiercely on the front pages of our newspapers to one which is increasingly the domain of more sober debate about return on investment - albeit not still without its ardent detractors.

And the Clean Energy Council, which held a forum this month on the future of energy storage in Australia, says the commercial case for batteries will only continue to improve, with chief executive Kane Thornton saying improvements in battery technology and also energy markets would drive further uptake.

Precipitated as its commissioning was by the total collapse of the South Australian electricity grid in 2016, following huge storms which wracked the state, the Tesla’s big battery - correctly the Hornsdale Power Reserve - became, for those with a particular ideological bent, a symbol of renewable zealotry gone too far.

The tale had all the requisite drama. There was a bet, instigated on Twitter, between Australian billionaire Mike Cannon-Brookes and Tesla founder Elon Musk, that the battery would be installed in 100 days or it would be done for free,

A cheeky challenge from Atlassian co-founder Mike Cannon-Brookes helped kickstart the process to build Australia’s first grid-scale battery.

This followed Tesla’s country lead claiming the battery firm could solve SA’s power problems within that time frame.

Politicians, including our current Prime Minister and Deputy Prime Minister rubbished the idea in general.

Deputy PM Barnaby Joyce likened its impact to “ a grain of sugar” saying “it doesn’t make a hell of a lot of difference’’.

Scott Morrison, then the Treasurer, said at the time it was “so at the margin it barely is worthy of a mention’’.

“I mean, honestly, by all means have the world’s biggest battery, have the world’s biggest banana, have the world’s biggest prawn like we have on the roadsides around the country, but that is not solving the problem,’’ he said.

There was plenty of hyperbole of both sides. A single grid-scale battery was never going to “solve” anything and the battery was designed to supply grid stability rather than just power supply during blackouts - a nuance either unknown or glossed over by many commentators.

Nor was it simply a marketing stunt by world-class self promoter Musk, seeking to capitalise on the gullibility of SA’s leadership, as characterised by some.

That said, marketing was high on the agenda, with Musk flying all the way from Silicon Valley to Adelaide for a highly-produced press conference where journalists were asked not to ask embarrassing questions lest the mercurial entrepreneur decide to abandon the stage.

The political and marketing sideshows aside, the financial benefits quickly stacked up. The 100MW (now 150MW) battery’s owners, Neoen, claim it saved South Australian consumers more than $150m over the first two years of operations.

French energy firm Neoen’s Hornsdale Power Reserve, 200km north of Adelaide, which is made up of Tesla cells.

And since 2017 major players such as AGL, Origin and private firm Maoneng are building or committing to projects multiples the size of Hornsdale.

The Australian Energy Market Operator says there are now five grid-scale batteries in operation, with a total of 260MW capacity, while more than 80, with a total capacity of 21,263MW, are proposed or at some point in the planning process.

AEMO chief system design officer Dr Alex Wonhas said the organisation’s 2020 Integrated System Plan “forecasts up to 19 gigawatts of dispatchable generation, including battery storage, needed to support an expected 26 gigawatts of renewable energy in the next 20 years’’.

“Scenarios with higher levels of electrification or a significant ramp-up in hydrogen production would require even more investment.

“We are already seeing a ramp up in batteries connected throughout the electricity market, due to reducing costs, along with the appeal of quick installation, location flexibility and gradual increases in size.

“That said, longer duration ‘on demand’ energy, such as gas generation or pumped hydro, will also be required in the future energy mix in addition to batteries.’’

Maoneng says it has more than 900MW of projects in development, including a 240MW battery on Victoria’s Mornington Peninsula slated for completion in late 2022, and a 225MW project at Gould Creek just north of Adelaide set for completion in 2023.

A report released by Bell Potter recently lists a dozen projects at various stages of planning and construction, including a 700MW project being considered by Origin Energy for Eraring, NSW, and Neoen’s “Great Western Battery” project at Wallerawang, with a 500MW capacity.

And AGL has committed to a network of batteries nationally, with projects at Broken Hill, Liddell, where it is winding down operations at its coal-fired power station over the next 18 months, and Loy Yang.

The projects are not without their risks. The Victorian Big Battery - another powered by Tesla cells - caught fire and burned for three days starting in late July, with multiple investigations now underway.

An aerial view of the Victorian Big Battery which caught fire recently.

That project, double the size of Hornsdale and also owned by Neoen, is designed to provide “firming” services to the grid, storing cheap renewable power for later use, and will be a peaking power and grid stability asset.

The Clean Energy Council, in a report into battery storage released earlier this year, says batteries can now fill the role once played in the energy market by gas-fired peaking plants, which would traditionally swing into operation quickly to respond to short-term needs for energy.

“Battery storage, known for its fast and accurate response across numerous energy

applications, has improved its capability and cost-effectiveness to become the pre-eminent

peaking plant solution for energy grids across the world,’’ the report says.

“The key barrier for batteries has been capital cost, but rapid and continuing cost efficiencies driven by product innovations and manufacturing at scale are reducing this barrier, to the extent that it is no longer economically rational (or necessary) for proponents, investors or governments to build gas peaking plants in Australia.’’

Indeed at Torrens Island in SA, AGL has committed to building a $180m battery, just as one of the four remaining Torrens Island B gas-fired plants is taken offline, with that process starting next month.

AGL has already closed three units at its Torrens A plant, and the remaining unit was scheduled to leave the market this month, however was taken offline early due to a technical issue.

And many projects, not surprisingly are being built adjacent to existing power generators, given the convenience of grid infrastructure.

Mr Thornton said big batteries have “come of age, with investors recognising the increasing cost competitiveness as well as the role they play in providing energy security and supporting renewable energy’’.

“In the first half of this year alone, 650MW of capacity representing over $400 million in investment was committed.

Kane Thornton, chief executive of the Clean Energy Council.

“The full benefits and services provided by batteries to the grid are not yet fully recognised. “The Energy Security Board’s essential system service reforms are important, as are ongoing reforms to make sure grid and market are designed so they don’t discriminate for these new solutions.’’

What is certain now, is that, perhaps sadly, we’re unlikely to see again the installation of any piece of energy infrastructure heralded with such fanfare as Australia’s original “big battery” was.

Larger than life billionaires, competing claims about the brilliance or madness of the idea, and even an on-site launch attended by hundreds of clean energy and start up types - on top of the Elon Musk press conference palaver. It had it all.