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Funding energy storage: is a 100% renewable energy grid within reach?

Image credit: Alex Lang (Flickr: Creative Commons)

In the wake of Elon Musk’s announcement that Tesla will partner with French utility company Neoen to deliver the world’s largest lithium ion battery in South Australia, Australia is well placed to become a trailblazer in the uptake of large scale renewable energy storage. Will political uncertainty and a lack of policy coordination halt further development in this space? Or, after decades of relative inaction, will recent catalysts allow the funding floodgates to open, leading to the emergence of Australia as a frontrunner in the global energy storage landscape?

It was the severe heatwave that pushed across Australia during the summer of 2016-2017 that most recently brought the nation’s energy policies into sharp focus, prompting civil society, industry groups and investors to challenge political leaders to stop partisan antics and reform Australia’s energy market.

Leading into the Finkel review, an impervious environment clouded the nation’s energy policy landscape. More than a decade of finger pointing has hindered transformational change of the nation’s electricity system, and surging electricity prices led to impacts on regional communities and trade-exposed industries. Yet, positively, large scale energy grid storage via battery technology emerged from the Finkel review as one of several flexible, technology neutral approaches to decarbonising the electricity sector and improving its reliability.

The review touted the promise of battery storage, and championed their relatively fast discharge time, particularly when compared with large pumped hydro and thermal storage. However, whilst the uptake of storage technologies will depend on investment levels and sustained demonstration at scale, the energy storage policy from the Finkel review needs to be implemented promptly to ensure that consumers receive a reliable supply of electricity across the FY2018 summer.

Meanwhile, the Federal government’s intent to expand the snowy mountains hydro scheme also places another piece into the longer term puzzle of Australia’s energy storage capability. Pumped hydro-electric storage represents 97% of energy storage worldwide, and has the capacity to store vastly greater amounts of energy than battery storage. However, no single storage medium has the features to meet all the requirements for energy that the grid requires and a mix of storage solutions will likely be mandatory to address the challenges of the electricity market into the future.

Both Victoria and Queensland have followed suit in establishing intent to deliver large-scale battery storage. The Victorian government’s $25 million storage initiative, which seeks to provide funding to deploy up to two projects of commercially ready battery storage, will provide at least a total of 100 MWh by January 2018.

At an individual level, the retail market for household storage batteries is also growing. Tesla’s Powerwall is now being installed for residential customers across the nation, and Australia is in an enviable position worldwide as home to approximately 1.5 million households already with rooftop solar installations. Thus, the same technology that can help stabilise the state grid can also be used by homeowners to collect energy during the day.

From the government’s perspective, the primary challenge is how best to coordinate millions of solar panels, storage systems, load management devices and other technologies in a way that utilises the multiple services they can deliver to enhance reliability and reduce costs. In terms of energy storage, it’s individual Australians rather than politicians who are currently providing leadership in this space to advance the long-term interests of our economy and environment.

Despite strong progress on a household level, however, the Australian government must also make haste and act swiftly. According to Costa Rica’s former minister of environment and energy (2017 Brown to Green Report), experts rate Australia’s climate policy performance as very low, and criticise the government’s overall lack of ambition in climate policies. Without serious action on decarbonisation and energy reliability via storage technology, Australia risks rising domestic electricity prices and a global reputation of negligence.

Will Tesla’s move provide a model for future deployments around the world, that will help accelerate the adoption of sustainable energy and its storage? While it’s too early to call, it’s clear that battery storage is the future of Australia’s national energy market, and the eyes of the world will be closely following our leadership in this space.

Tom Perfrement is the Climate Change and Energy Security Fellow at Young Australians in International Affairs.

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