Electricity prices are reaching record high levels throughout Australia. However, the case of South Australia is unique: while power network operation represents the largest fraction of power bills elsewhere, generation and network costs are evenly matched in SA. Coal has been phased out in the state, and natural gas is now the main fossil fuel used to meet demand when the solar and wind generation are low. However, natural gas has become more expensive at an unfortunate time for South Australia.
Nevertheless, expensive gas generation also creates an opportunity to deploy large-scale battery storage. Perhaps you have seen the news about the world’s largest battery, which is being deployed by Tesla in South Australia, scheduled to start operating in December 2017. The business case for batteries is promising at all project scales: they reduce dependence on gas-fired peaking plants at the utility scale, and help homes and businesses avoid peak-hour tariffs in smaller applications.
Electricity costs are unlikely to decrease in the near future, so the Australian Renewable Energy Agency are pushing forward a second utility-scale battery system in South Australia. The planned location is in the Yorke Peninsula, near the 90-MW Wattle Point wind farm, and the project will be rated for 30 MW of power and 8 MWh of storage.
Creating a Microgrid in the Yorke Peninsula
The 30-MW battery in the Yorke Peninsula is intended to complement the Wattle Point wind farm, as well as the large number of distributed solar power systems in the region. The battery will absorb surplus renewable generation while mitigating peak demand, which will decongest local transmission lines, improving the regional power supply.
Another advantage of the 30-MW battery is that the Yorke Peninsula will gain a microgrid, normally connected to the National Electricity Market (NEM), but also capable of isolated operation in response to power network issues. The project cost will be $30 million, and the ARENA will provide $12 million in funding.
The Yorke Peninsula battery will not only provide energy storage services, but also power grid stabilisation. Batteries have a very fast response time, allowing them to compensate for network disturbances that affect the supply voltage and frequency.
Although the Tesla battery system in Adelaide has a much larger capacity, with 100 MW of power and 129 MWh of storage, the impact of the Yorke Peninsula battery will be more noticeable because it serves a smaller area of the power network. There are around 4,500 homes and 500 businesses in the Yorke Peninsula, all of which have suffered from blackouts. Their total demand is typically between 2 and 3 MW, allowing the 8-MWh battery to meet local demand for two hours or more, buying time to resolve any power grid issues.
Battery systems are often regarded as backup power supplies, but their true potential is overlooked. They can also contribute to power grid decongestion and stabilisation, which is extremely valuable in Australia: more than 70% of the kWh price paid by Australian homeowners is used to cover network and retail costs, not generation. If batteries can help optimise network capacity and delay infrastructure investments, they can reduce network costs in the long run.