The Ongoing Viability of Big Batteries

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An article appeared in The Guardian on 30 November 2021, raising concerns from battery makers and storage providers in relation to the Australian Energy Market Commission’s (AEMC) impending rule changes. The AEMC’s draft report, released in July 2021, proposed charging storage providers for drawing power. This drew responses from Tesla and Snowy Hydro:

Tesla: (the charges would) kill the commercial viability of all grid storage projects.

Snowy Hydro: This is a major policy change, amounting to a tax on infrastructure critical to achieving a renewable future.

Both companies noted that the consumer would end up paying higher electricity costs.

On 2 December 2021, the AEMC published its final decision on its website, under the heading “Incentives for more batteries to enter the market”. It was clear that they had not adopted the rule change that was flagged in the July draft.

The incentives listed in the rule change can be summarised as follows:

Residential and Small Business Customers:

The new rule will create more opportunities for residential and small business customers who have small battery units. They can sign up with new aggregator businesses that will pay them for discharging their power at certain times.

The Integrated Resource Provider (a new participant category):

This new (single) category will make it simpler and easier for storage providers and hybrids to register and participate in the National Energy Market (NEM). At present, batteries needed to be registered twice, firstly for drawing energy from the grid and secondly for sending it out. This new single category means that there will be a single registration for entities providing storage or a combination of energy services.

Hybrids:

The changes will create more flexibility for hybrid energy facilities to manage behind the connection point energy flows. This means that excess energy can be stored and released into the network, at a later time, instead of being cut off.

A hybrid with an industrial load and a solar farm will not have the solar farm constrained when there is congestion on the network, as long as the load is scheduled. This means operators will not be exposed to the spot market price to purchase energy from the grid and the energy from the solar plant will not be wasted. It is anticipated that this could reduce energy costs by approximately 15%.

Energy storage participants will continue to negotiate transmission services and charges as they currently do. (AEMC)

The draft proposal of charging storage providers was not adopted. Tesla and Snowy Hydro (and a vast number of smaller players, will be well pleased.

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