Community batteries and their role in transforming the DER landscape
Photo credit: Mika Baumeister
Australia has the world's highest rate of rooftop-solar generation, and as noted by AEMO, our rapid rate of adoption means that distributed solar PV is already the largest generation source in the market and is on track to be 25x larger than the grid’s biggest remaining coal generators within five short years.
AEMO’s Draft ISP forecasted that:
63 per cent of Australia’s coal-fired generation is set to retire by 2040
More than 30 gigawatts (GW) of large-scale renewable energy is needed to replace coal-fired generation by 2040
21 GW of new dispatchable resources are needed to back up renewables, in the form of utility-scale pumped hydro or battery storage, demand response and distributed batteries participating as virtual power plants.
The problem with such high levels of existing solar PV is that they cannot be managed as part of the energy system, and the primary solutions available to network operators to date involve imposing system capacity size limits or static solar export limits - possibly even zero export. While this is changing - and SwitchDin is helping to develop flexible & dynamic export solutions that address this problem - this presents major challenges for a) allowing system owners to get more from their solar, and b) ensuring the maximum possible amount of solar and other forms of variable renewable technologies can be installed on the grid.
While this approach keeps the grid safe, it also reduces the value proposition for consumers. Batteries will play a key role in helping to stabilise the grid as they can be controlled to help compensate for fluctuations in solar PV generation, which in turn can potentially reduce the need for constraints on consumer choice. That being said, residential batteries are still relatively expensive and - like most infrastructure - the bigger the battery the better its overall cost-effectiveness tends to be.
However, batteries that are too big will be difficult to install at a location where they can deliver value by addressing issues in the low or medium voltage parts of the network. For these reasons a mid-sized battery option located near consumers is proving to be a good approach. These ‘community-level’ batteries simultaneously benefit the electricity network by providing energy reserves to help manage peak demand whilst also giving retailers access to energy markets to provide downward pressure on wholesale prices, all while they improve our ability to soak up excess solar to help address local network voltage and capacity issues.
Early modelling developed by Australian National University (ANU) researchers suggests household batteries can lessen potentially damaging energy flows during peak periods by about 25 per cent, while a community battery can be up to twice as effective. Maximising the value derived from community batteries relies on tapping opportunities such as:
Storing solar energy that has been exported to the grid for evening use
Network support (for example, managing power quality at the ‘fringe of the grid’ or minimising peak demand on distribution transformers)
Ancillary services such as frequency control
Energy price arbitrage - charging when wholesale prices are low and discharging into the market when prices are at their peak
Community batteries around Australia
Community batteries are starting to emerge around the country, with projects in Queensland and South Australia and more planned for New South Wales, Victoria and the Northern Territory. They arguably have the most traction in Western Australia, where high PV penetration is causing problems in the system which require urgent attention.
In late July, the WA government announced a plan to spend $66.3 million on solar and batteries for schools, isolated communities and social housing as part of a $5.5 billion Covid-19 economic recovery plan for the state. The plan takes a huge focus on regional areas including remote Aboriginal communities and on generating jobs. About $56.3 million will be spent on installing solar power, and a total of $44.5 million in the north-west of the state, mostly on 50 standalone power systems combining solar and battery storage and nine community energy storage systems (BESS).
The government says each of the nine ESSs is expected to replace generation costing up to $322,000 a year per site and create around 20 jobs over the course of the projects’ design, construction, and installation.
Community Batteries Two Ways
Shared ‘behind the meter’ battery: This is the classic community battery model typically seen in a retirement village or housing estate. Included within this category would be embedded networks and new subdivisions such as industrial estates, where a network exemption has been granted for the precinct owner to operate a private network.
One example of this arrangement is Narara Ecovillage, an intergenerational residential community of 150 homes situated one hour north of Sydney which operates as a cooperative. Now commencing stage two of construction, the village runs its own private smart grid which is connected to the external grid via an approved embedded network licensed to NEV Power, a subsidiary owned by the village. Partly funded through a $1.15m grant from ARENA, the smart grid is expected to include 1,052 kW of solar PV and 825 kWh of batteries, and SwitchDin is consulting with NEV Power regarding demand side management and control systems to help manage power quality and bi-directional energy flows.
Shared ‘front of meter’ battery (virtual community battery): An example of this case is where the distribution network owns the battery which is installed at the local substation, but since the contestability rules don't allow them to sell any of those services, they lease it to an electricity retailer. The retailer can then use that asset either to sell energy into the energy market, to sell network services back to the network, or to make a deal for homes downstream to use a slice of the “virtual” battery to store their excess solar. Instead of storing their excess energy in their own battery as they would they had their own, they’re storing ‘it up the road’ at the community battery. Ideally, it would work in the same way as if they had their own battery, but would be much cheaper and still be local.
In this arrangement, the network benefits by containing excess solar generation within that substation’s network, helping to manage demand but also lessening the need for future network upgrades; the retailer gains additional revenue streams, and homes are compensated for their excess solar generation and get a more cost effective energy storage option.
For now, a key barrier for maximising battery benefits in front of the meter is network service charges, which are charged for all electricity passed through network infrastructure. While there has been a push to enable local network pricing which could see a reduction in service charges for consumers, there are key regulatory reforms required to make this model work.
Critical capabilities for batteries to realise their full potential
In order for batteries to deliver real value, they must be:
Visible to the network operator and energy market
Able to interact intelligently with the grid, for example to allow for dynamic network agreements
Support market participation to enable new value
Able to support the fair and equitable distribution of their services.
SwitchDin technology provides visibility and transparency across all elements of the system and enables the equitable support of different ownership models. SwitchDin is also backwards compatible with almost every battery on the market today, meaning it can be retrofitted to old, ‘dumb’ batteries so they can be as smart as the latest storage technologies.
Storage is a critical enabler of a well-functioning electricity grid that is powered mostly (or wholly) by renewables. In a perfect world, SwitchDin envisions high levels of renewable generation distributed throughout the network, owned by the community and utilities, and providing services into the market. The role we see SwitchDin playing in this new energy mix is to ensure that this cooperation between different assets delivers shared value, and to enable new ways for consumers to participate.
Shared value is all about maximising the value of clean, low-cost energy by improving efficiency and reliability, but the critical piece is the technology that makes the grid responsive.
SwitchDin is working hard to make our future grid a reality, sooner.