October 2017
October 2017

Australia is moving from centralised, synchronous fossil fuel generation to flexible, responsive distributed generation that supports the intermittent nature of renewable energy supply. 

With this shift, the need for reliability of supply and control of electrical power systems is critical. Tenders for large-scale battery systems from the Queensland, Victorian and South Australian governments all include requirements for reliability and grid support. However, if you look across media reports the importance of these factors, and in the ‘value stack’ that batteries provide, is not well understood.

The key metric constantly referred to is the cost per kilowatt-hour or, more recently, where batteries have been compared with synchronous generators, cost per kilowatt.  Simple enough, right? In the housing market, this would be the equivalent of comparing properties on the basis of cost per number of bedrooms. So we ignore location, land area, age of property, etc. – those aspects that are just common sense to consider when looking for a property. The problem is, when it comes to assessing the value of a grid-scale battery the metrics that are common sense to consider, aren’t common knowledge. 

Most of the ‘common sense’ features of grid-scale batteries relate to their ability to support  transmission and distribution systems, and help keep the network functioning through disturbance events. Below is a high-level summary of the five key features to look for in any valuation.

  1. Improved reliability – Can the batteries proposed provide reserve capacity when demand approaches supply in order to avoid load shedding or blackouts?
  2. Frequency control and voltage support – Can the batteries provide spinning reserve capacity with the ability to absorb or manage deviations in frequency and voltage caused by sudden loss of generation capacity or interconnector failure?
  3. Load shifting – The ability to use renewable energy during low demand periods to charge the batteries which can then be drawn down during high demand periods.
  4. Transmission and distribution upgrade deferral – Allowing the network to cope with demand growth without increasing the capacity of existing transmission and distribution systems. Also delaying scheduled upgrades by extending the life time of infrastructure.
  5. Renewable integration smoothing and mitigation of renewable curtailment – Can the batteries provide support for short term variations in renewable generation, absorbing generation spikes and compensating for dips in generation?

All the above metrics are crucial in the operation of functional and reliable modern electrical power systems. So the next time you see the news that grid-scale batteries are getting the green light, remember that there is more to the value of a battery than just the cost per kilowatt-hour.

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