Storage under scrutiny

The opening paragraph sets the big picture: “Australia is undergoing an energy transformation that promises to intensify over the coming decades. In the electricity generation sector this transformation involves: a greater reliance on renewable energy in response to climate mitigation policies; relocation of where energy is generated and distributed as a result of changing economics of energy costs and technological developments; and how and when energy is consumed with the advent of prosumers.”

Thus begins the report on The role of energy storage in Australia’s future energy supply mix, published today by the Australian Council of Learned Academies working in tandem with Chief Scientist Alan Finkel, a commentary bringing energy back in to the media headlines.

The sum of the report’s message is quite neatly conveyed in the opening sentences of the media statement heralding its publication: “The report shows that Australia has a wealth of natural advantages (in developing large and home-scale energy storage systems) that could aid the development of new industries, exports and create jobs in mining and manufacturing. It also warns that, without proper planning and investment in energy storage, electricity costs in Australia will continue to rise and electricity supply will become less reliable.”

And this, in part, is how the 158-page report concludes: “There is a near-term requirement to strengthen Australia’s energy security in NEM jurisdictions and maintaining acceptable energy security levels for customers will dominate over energy reliability requirements until well in excess of 50 per cent renewable energy penetration.”

It also observes elsewhere: “Australians are deeply concerned by the sharp rise in electricity prices and affordability and hold governments and energy providers responsible for the perceived lack of affordability. Energy storage is not a well-known concept in the community and concerns exist at the lack of suitable standards at the household level. Australians favour a higher renewables mix by 2030 – particularly PV and wind, with significant energy storage deployed to manage grid security.”

The never-ending political problem is Australians want to feel good about the environment but don’t want to pay the butcher’s bill for going green.

The ACOLA panel says that further work is needed to establish “the optimum balance of generation, storage and interconnection, taking into account both cost optimisation and the long-term strategic opportunities for Australia.” It recommends “a deeper analysis of opportunities for growth of a substantial energy storage industry in Australia.”

Among the threats to a brave new world of storage seen by the panel are policy and regulatory risk (caused by “unsupportive energy policy or inadequate safety or environmental standards”) and market development risk (“distortions promoting an inefficient storage mix”) as well as “land use issues and resource availability limiting certain technologies.”

The panel says public opinion research it has had undertaken demonstrates that “there is low (community) trust in the Australian energy system’s capacity to deliver consistent and efficient electricity provision at reasonable prices” and “deregulation of the electricity market, changes in feed-in-tariff schemes and other time of use tariffs have led to an underlying general mistrust of the government and energy providers.”

It adds: “The majority of those surveyed suggested they would look to government to play a role in the future energy mix, but lacked confidence that their preference for higher renewables would be achieved without consistent energy policies.”

The panel reinforces public scepticism by warning that “without effective planning, appropriate investment and also incentives to develop and deploy energy storage technologies, the costs of electricity in Australia will continue to increase and there will be less reliable (adequate and secure) electricity supply,” threatening “large negative implications on the Australian economy.”

One of the panel’s more telling observations, it seems to me, is: “The availability of private sector risk capital and profitable revenue streams for Australian energy storage start-ups and projects is a challenge for new ventures, as is policy uncertainty. Profitable revenue streams from energy markets together with consistent, stable and integrated energy and climate policies will be essential to drive investment in energy storage and other technology solutions that support decarbonization of the electricity system while ensuring system security and consumer equity. Technology-neutral market-based reforms will be required to address these challenges at least cost.”

Note the last sentence – what could be further from the minds of the green boosters and a great many politicians ever on the hunt for (vote) winners to pick?

Tucked away in the report is the observation that the different types of energy storage “have varying costs and other characteristics,” so determining the “best” form (the panel’s inverted commas) depends on where it is needed, for what purpose, the nature of the electricity grid and current and future types of generation.

There is also this not-minor thought: “Unless planned for and managed appropriately, batteries present a future waste management challenge.” Someone will have to pay for that, too.

The paper is not exactly a slam dunk for energy batteries, then, a point that might be missed by casual readers of the media.

None of the forays in to storage – and there is near universal agreement among the more educated scanners of the power market scene that this technology in a number of forms must have a role in the transition taking place – will come cheaply.

Modeling for the ACOLA panel suggests that storage investment for the current approach to renewable energy would be $3.6 billion (in what the modelers assume will be 2030 money values), $11 billion for the RET Labor is pushing and $22 billion under the target green activists want pursued.

The report is upbeat about opportunities for Australian innovation as well as energy storage intellectual property and for value-adding for beneficiation of our mineral resources such as lithium – it would be very surprising if such a panel did not take this view but this aging sceptic thinks Us Outdoors should be mindful of all the promises of a decade ago about local manufacturing of wind and solar gear and the fact that local energy investors most frequently pick up technology from the best overseas sources while our politicians keep veering off in to the interventionist bushes for their venal reasons as well as hacking at subsidies when the consumer cost heat gets too much to bear.

In the best of all worlds, Australian opportunities are exceptional but we will have to lift our collective game a long way to pursue optimal outcomes.

Finkel, talking to the media at the report’s unveiling in Canberra today, said “We have a long way to go and the best thing to do is to start now.” There’s a lot more to that statement than the glib “Bill Shorten is right” (about a 50 per cent RET) being picked up in media headlines as I write this.

Rather in context, I feel, the Energy Security Board chair, Kerry Schott, was telling a Melbourne conference at roughly the same time that most Australians – “apart from a hard core few” – want to see continuous greenhouse gas reductions but “at the moment all we are doing is throwing grenades at each other which is not very helpful.” Quite.







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