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Investors backing big batteries

The level of investment in large-scale batteries in Australia has doubled in the last six months, according to an analysis by the Clean Energy Council. From the end of Q3 2019 to the end of Q1 2020, the cumulative capacity of utility-scale battery projects has risen from 400 MW to 800 MW.

"Battery technology is now proven and scalable, and the costs have plummeted rapidly. This has resulted in new investor commitments to new batteries, growing interest in battery development, and a clear recognition of the role of batteries to complement and support wind and solar and provide essential grid services," says Clean Energy Council Chief Executive, Kane Thornton.

It is expected that these projects will create 3,800 jobs in their construction. Energy storage currently accounts for around 6 per cent of Australia's renewable energy workforce (excluding Western Australia and Northern Territory), as revealed in the Clean Energy At Work report.

This increased investment includes an expansion to Neoen’s Hornsdale Power Reserve, also known as the Tesla Big Battery, - the largest lithium-ion battery in the world – which is currently testing its recently increased 50MW storage capacity and will provide new grid services, such as inertia.

Utility-scale batteries help to smooth the output of wind and solar and are can also provide critical system services, including swift response to frequency changes on the energy system.

"There is no other technology that can respond as quickly as batteries to changing frequency on the energy system," said Thornton.

However, the incentives for battery projects to provide these system services remains immature and poorly defined. Further investment in utility-scale batteries requires more significant reforms. Reforms such as the shift to five-minute settlement and recent changes to legislation in NSW that will support big batteries installed as stand-alone projects, rather than next to existing wind and solar farms, are welcome steps forward. However, changes are also required to market arrangements to value the grid services provided by batteries and improve how batteries are integrated into the National Electricity Market.

"Batteries, along with extended duration storage solutions such as hydro and pumped hydro, will play a critical role in supporting the generation of wind and solar as the lowest cost forms of generation in Australia," Thornton continued. "Investors are clear that these are the energy technologies of the future."