Renewable energy generation is rapidly increasing around the world, driven by competitive costs, eager capital and supportive governments.
Many countries have ambitious targets, including Australia, which is aiming for 82 percent renewable generation by 2030 – up from around 29 percent in 2021.
To ensure the grid remains reliable while these targets are met, many electricity markets are shifting how they operate and exploring dedicated technologies.
Battery energy storage systems have rapidly become a major tool to support the grid, by regulating frequency and shifting energy to different times of the day, such as evening peaks.
According to BloombergNEF, 27 gigawatts / 56 gigawatt hours of battery energy storage assets world-wide were online at the end of 2021. This could reach a cumulative 441 gigawatts by 2030.
However, energy storage is a highly versatile asset and new use cases are frequently being unlocked.
More recently, grid operators have been looking towards energy storage to support the transmission and distribution networks that will be needed to accommodate an enormous build of new renewable generators.
Lara Panjkov, Senior Growth & Market Development Manager at Fluence believes this use case is promising, but says urgent work is needed to progress uptake and unleash its full value.
“Australia’s National Electricity Market (NEM) is undergoing a once-in-a-lifetime transformation toward a cleaner electricity system, and it’s happening at turbo speed,” said Lara ahead of the Australian Energy & Battery Storage Conference.
“With our spaghetti-like grid, and challenges around coal plant retirements, grid connection and rooftop PV uptake, we will face major obstacles in our clean energy transition – unless we can build a significant amount of new network infrastructure quickly.
“However, building new poles & wires infrastructure is a long and onerous process and social license issues are a major challenge, so we need to consider every item in the toolkit.
“We need to think innovatively and deeply consider how we can use energy storage. Not just for frequency regulation and energy arbitrage. Not just for grid forming services like inertia and enhancing system strength. But fundamentally to make sure we build poles & wires smarter. So that we only build what we need and we reduce the impact on communities.”
Options for deploying Storage as a Transmission Asset
One way storage can help, is by deploying it as a Virtual Transmission Line. This is where the asset is placed at strategic locations to help back up or optimise the use of transmission lines. This could essentially help defer investment in a new line.
“A major benefit of this is you alleviate some of the overbuild and underbuild risk when building new network. Storage can be built quickly, it’s modular and scalable so this allows you to only build what you need at any given time, or even relocate storage assets if no longer needed. It’s also a digital asset that essentially could be repurposed to do multiple things throughout its useful life. For example, in different seasons or even different times of the day. This optionality in how it’s built and used can also be very valuable to decrease the total cost of the system,” Lara said.
The first known Storage as Transmission Asset was in Arizona in 2017, provided by Fluence. Instead of building a 32km transmission line upgrade to a remote town, the network operator found a greater net benefit if the line upgrade was deferred and instead they built a new battery energy storage asset.
The technology is now scaling up to a bigger examples with more capabilities – particularly in Germany.
“Germany has lots of great wind resources in the North and load – especially industrial load – in the South. There are several north-south transmission lines, but they are often congested, leaving grid users with €2.3bn in congestion management costs in 2021, a number that is expected to increase further in 2022,” Lara said.
“Germany is building more wind and needs more network to accommodate this. Major High Voltage Direct Current (HVDC) corridors are currently being built to accommodate the new wind resources, but planning processes are long, Nimbyism persists and cost- and time overruns are stacking up. To relieve the grid quicker than using traditional poles and wires, network operators did something different, as part of their GridBooster program.
“Networks deeply assessed the value Storage as a Transmission Asset could bring. They realised that highly advanced energy storage would bring a great net benefit. They could significantly reduce renewable curtailment and congestion costs. The asset could also provide specially designed grid forming services. It also avoids social license issues that can arise building new transmission lines.”
After a detailed scoping process, the network operator TransnetBW is starting with a 250 MW asset in the South near the load centre. This initially functions like a one sided Virtual Transmission Line. Another grid operator in Germany, TenneT, is currently procuring two 100 MW assets and other grid operators are considering adding more assets to other parts of the network.
“The great thing about this is the network operator deeply evaluated what they needed, while this took some time, and the asset will be able to be built quickly, so this whole process will be much faster than building a new line,” Lara said.
In Australia, the use of storage as a transmission asset (SATA) could help manage the enormous network infrastructure build we need to accommodate and influx of renewable generators and coal plant retirements. However, the current transmission investment frameworks are too rigid, slow, and no longer fit-for purpose.
To capture Australia’s wind and solar resources more efficiently – which happen to be far from load centres – network planning is moving toward a Renewable Energy Zone (REZ) approach.
REZs are clusters of large-scale renewables, energy storage and transmission, in which areas of plentiful renewable energy resources benefit from economies of scale. Using this approach, the Australia Energy Market Operator (AEMO) publishes the Integrated System Plan (ISP) every two years.
This is a comprehensive whole-of-system roadmap that models the most optimal and low-cost development paths to a cleaner electricity grid. There are also several other reforms underway, such as the Australian Energy Market Commission’s (AEMC) Transmission Planning Investment Review.
However, speed is still limited, causing State Governments like Victoria and New South Wales to use their powers to bypass current structures.
Despite this, there are various barriers to using SATA domestically, Lara highlights.
“Germany’s application of SATA has a lot of potential for Australia. But the hardest part is fitting it into the NEM’s spaghetti network investment frameworks. We are already doing a form of Storage as Transmission in projects like Victoria Big Battery and Waratah. But they had to be initiated through State Government’s derogating to bypass the current processes.”
Indeed, many network companies are restricted by planning and regulatory frameworks that either disincentivise or outright prevent storage from being utilised as a transmission solution.
These frameworks mean SATA is not given the same treatment as other transmission assets, forcing some network companies to pursue other, less cost-effective, options.
While various government schemes have sought to address this, some obstacles remain.
“The state of current regulatory processes are not really suitable for storage. Storage can participate but it’s hard for the net benefit test to consider all the value storage can offer. And the other route of government derogations may get something done quickly by bypassing the process, but it’s quite ad hoc. And because it’s so reactive, it may be hard to repeat, might come as a surprise to the market, may not be transparent and also may not consider all the value storage has to offer,” Lara said.
So what do we do?
“It’s still unclear what approach works best, but we really need something in between. Going forward for every new Renewable Energy Zones (REZ) or line upgrade, we should be evaluating this innovatively, but also carefully. It may take some time to figure out what we really need, but options like storage can be built much quicker than poles and wires, so we may not lose that much time anyway,” Lara concluded.
Lara Panjkov is Senior Growth & Market Development Manager at Fluence.
Hear more from her at the Australian Energy & Battery Storage Conference hosted by Informa Connect.
This year’s event will be held 7-8 March at the Hilton Sydney.
Learn more and register your place.