Long read: Inside WA’s bet on PowerBanks

From the August edition of pv magazine

Power pundits observing Western Australia’s South West Interconnected System (SWIS) might have been intrigued in recent months to see a spate of reports about Tesla 0.5 MW batteries. Such systems have been appearing in small parks and in population centers ranging from metropolitan Ellenbrook to regional Busselton. It’s as if they’ve been beamed in – pristine energy-storage pods from another universe. In fact, they are the vanguard of an innovative trial, prompted by Western Australia’s astronomical solar uptake, mandated by the Australian Energy Market Operator (AEMO), supported by the Western Australian government, and eagerly observed by global grids in transition.

A joint initiative of state-owned electricity network provider Western Power, and state-owned generator and retailer Synergy, the 13 white knights are intended in part to provide community-battery services. Three of them are being used by an enthusiastic cohort of residential solar users, while stakeholders workshop ways to incorporate learnings from these deployments into an ongoing model. Each battery will attract the subscription and connection of 60 or so residents with rooftop solar. They will serve to absorb unused daytime PV generation when the sun is high, later providing that generation back to the same homes when their electricity use spikes.

At this stage, the proponents have trialed one main payment model for the battery service, which lets consumers avoid or delay the A$10,000 ($7,065) to A$15,000 cost of buying a behind-the-meter battery storage system. Residents can subscribe for 6 kWh or 8 kWh of storage per day in a community battery, paying A$1.60 or A$1.90 a day, respectively.

The arrangement enables Synergy’s retail customers to more efficiently self-consume their rooftop generation each day (the batteries are cycled daily), makes battery storage accessible to people who might not otherwise be able to afford it, and delivers them savings on Australia’s relatively high energy bills.

The trial, says Jason Waters, CEO of Synergy, “is about identifying how we can optimize the supply of solar from rooftops with some of the localized distribution network management issues that have started to emerge in areas of the grid that have very high solar penetration.”

Disgruntled grid

One in three Western Australian homes has solar on the roof, with some suburbs and regions basking in higher concentrations of PV than others. These distributed energy resources (DER) already comprise the biggest single generator on the SWIS, which is an islanded grid with no connection to other Australian states, so it has no way of balancing its energy flows within a wider system.

Studies by AEMO to determine the operational limits of the SWIS, which has a 4,000 MW peak demand, were summarized in Integrating Utility-scale Renewables and Distributed Energy Resources in the SWIS. The 2019 report concluded that new technologies would have to be implemented to prevent the system from imploding with uncontrolled voltage when peak rooftop production during the day reduced operational demand below 700 MW. The report found that, with state solar uptake continuing at around 2,000 households a month, the minimal operational demand would be breached somewhere between 2022 and 2024. AEMO mooted strategic placement of energy storage as one measure for shifting solar output that would aggregate solar PV resources, provide visibility over solar-energy assets within communities, and avoid the need to curtail further PV uptake.

This application of batteries is “definitely a unique business model,” says Oliver Forsyth a global energy storage analyst with IHS Markit. “There are other programs where network operators try to control [behind-the-meter] assets directly through the inverter, curtailing the amount of generation at particular times and managing that congestion on the local networks. It has had some success in certain locations, but energy storage can be a more efficient solution.”

Soaking up solar

Brenton Laws, business development principal at Western Power, says all the installed “PowerBanks,” as the Tesla 464 kWh systems are known, are already delivering efficiencies to the overall system. For example, they’ve been placed downstream of local networks that are under stress from the reverse flow of large volumes of rooftop solar into the grid, negating the need to replace transformers in those areas. “The beauty of these batteries being at a community level is we sponge up that distributed solar in the areas where we need to. If we’d put in a massive centralized battery, it wouldn’t have helped the equipment where the reverse flows are happening.”

Cameron Parrotte, AEMO’s executive general manager of Western Australia, knows the state grid well. He had been involved in the management, design, and innovation of the Western Power system for 20 years before joining AEMO in 2016. He now sees potential for the community battery strategy to reduce network expansion costs by limiting peak demand. Still, he’s also keen to explore the potential for aggregated solar PV resources to support the grid with alternatives to spinning reserve, for example.

“They can provide voltage control, but can they provide other things just as important to keeping the lights on. Can they do it at a cheaper rate than existing traditional generators?” he asks. Parrotte says aggregated DER supported by battery storage can contribute to a stable and reliable electricity supply. “But it’s a matter of the market constructs allowing that to be built in a competitive way so that other players can step into this area, generate competition and reduce the overall cost outcome for consumers,” Parrotte says.

On the topic of markets, Australian solar industry analyst and advisor Warwick Johnston says that Australia-wide market regulations favor installing batteries behind the meter. “As soon as you send some of your solar electrons out beyond your meter,” whether it’s to your neighbor or a community battery, or receive it back from the shared battery, “the distribution network clips the ticket … so you have to overcome that flat-rate network pricing,” he says.

VPP capital

Enter the other most promising model for aggregating DER: battery-supported behind-the-meter solar systems, connected and coordinated by smart software into virtual power plants (VPPs). The operators of VPPs seek to generate revenue by trading electricity on the electricity market, and by providing stability services to the grid.

South Australia is the VPP capital of Australia, with behind-the-meter battery penetration “miles ahead of the other states,” says Johnston. At least seven VPPs are now offering various packages and benefits to participants, including discounted batteries (the Tesla Energy Plan) and subsidized solar systems (AGL Virtual Power Plant).

Behind-the-meter battery uptake in South Australia has also been encouraged by the Home Battery Scheme (HBS). With subsidies provided by the state government and low-interest loans for solar systems funded by Australia’s Clean Energy Finance Corporation, the HBS goal is to help 40,000 households tap into the bill-lowering benefits of spreading their use of solar-generated energy throughout the day, which also reduces demand on the South Australian network during peak periods. By April this year, when it first stepped down the maximum subsidy from A$6,000 to A$4,000, it had clocked up 12,334 new battery-enabled homes.

At Synergy, Western Australia’s state-owned gen-tailer, CEO Jason Waters says some energy customers are highly engaged. “They want to contribute to a greener world, they want to take part in a more technologically driven world, some want to be involved in energy trading,” he says. For others, energy “is always going to be a relatively low-involvement product.” He sees Australia and the SWIS in particular as being on the verge of a dynamic period of opportunity, in which VPPs, community batteries, and ultimately electric vehicle batteries will coexist to provide energy use and storage choices to customers, and stability to the grid.

One system

Lachlan Blackhall, the head of the battery storage and integration program at Australian National University (ANU), agrees. He says the complexity and challenges of responding to different contexts, and at various levels and scales of grid operation, will necessitate a variety of solutions working in tandem. Western Australia’s community battery trial, he says, fills an important mid-range requirement for ensuring continued uptake of rooftop solar, for reducing capital expenditure on the grid and therefore lowering operating costs throughout the network.

“The real opportunity for community batteries is that as we roll them out, a lot of people will be able to participate in them,” adds Blackhall. The WA PowerBank trial is currently designed for the two-way flow of solar energy from houses with rooftop PV. But Blackhall says the ongoing potential is to develop models in which people who rent their homes or live in apartments, and are thus unable to install rooftop PV, can also share in the benefits.

Seeking insights

The PowerBank trial, says Waters, is an intelligence-seeking operation, designed to establish at least one commercial model that could provide an attractive proposition for a third party to operate the batteries. “It’s identifying how we use the battery, how our customers use the battery. Do customers respond to price signals? Do they respond to coaching? What is the technical performance of the battery?”

One of the latest learnings from the PowerBank trial is that few customers use their full allocation of shared storage, and that the use of the batteries is “very volatile,” says Laws. “This also has huge implications for consumers buying their own battery,” he adds. “If you buy a 10 kWh battery, chances are that your utilization is going to be well below that, and you won’t get the payback and returns you expect.” Western Power, together with other stakeholders, is contemplating how to “right-size” its products, so it can offer a more extensive range of packages that will also be flexible to customer needs as families grow or older children move out.

Further rollout of the pilot is “currently under assessment,” says Laws, but “from Western Power’s perspective it’s likely to expand.”

He says the trial is already “pushing the boundaries of battery regulation” in Australia. The national energy rules were formulated decades ago, before battery storage was even a consideration, he says, and there’s a grey area around how they’re allowed to operate in the grid. “Logically, they provide a number of value streams,” he says. “Practically, dealing with rules that were written 30 years ago, it’s quite complex to access those values.”

A working group has recently identified a variety of approved suppliers of the technology. “The market has improved a lot,” says Laws, noting that Tesla was identified as the best contender in 2017. “There’s a reasonable chance we’ll put an order in later this year” for the installation of more PowerBanks in 2020.

So, when does a trial become an implementation? “We might deem it a trial, depending on the various stakeholders and what they want to choose to deem it for whatever reason,” Laws says over the phone.