Investor group calls for policy support to deliver ‘critical’ battery storage

The Clean Energy Investor Group (CEIG) says there must be certainty in the Australian market if investor participation is to be assured, stressing Australia’s renewable energy future hinges on the sector’s ability to ramp up energy storage capacity.

The CEIG, which represents more than 20 institutional investors with a combined generation portfolio of 16 GW and combined portfolio value of $38 billion (USD 25 billion), said government support has been required on 50% of current utility-scale battery projects, indicating the financing challenges that confront the sector, particularly for longer-duration batteries.

Australian Energy Market Operator (AEMO) projections estimate a demand of 19 GW of storage by 2030 and capacity growth in the next five years from the current 1.4 GW of batteries and 1.6 GW of pumped hydro is an estimated 57 GW by 2050.

The Energy storage financeability in Australia report, commissioned by CEIG in collaboration with Nexa Advisory and Baringa Partners, provides insights into Australia’s energy storage market and the imperative for action to deliver the required energy storage capacity.

CEIG Chief Executive Simon Corbell, former deputy chief minister of the Australian Capital Territory (ACT), said efforts to meet energy storage needs for 2030 and beyond require collaboration between government, industry, and investors and the challenges need to address the sector’s ability to drive investment, innovation, and policy reform.

“The report unveils a significant financeability gap, particularly for energy storage solutions beyond two hours which are pivotal for ensuring grid reliability as we decarbonise the grid,” Corbell said, noting that the report highlights the need for targeted financial sector reform.

Other barriers to deployment outlined in the report include operational hurdles, such as complex planning processes and difficulties in securing agreements with transmission network service providers and the Australian Energy Market Operator (AEMO).

New markets for battery storage with support from the Australian Energy Market Commission (AEMC) and AEMO and investment in long-duration energy storage (LDES) technologies, supported by Federal and state funding are key strategic recommendations outlined in the CEIG report.

Nexa Advisory Chief Executive Stephanie Bashir said the report is an urgent call to action for federal and state governments, specifically energy ministers who should ensure fit-for-purpose approvals for storage.

“Governments need to facilitate private investment by giving certainty and removing regulatory roadblocks,” she said. “That will accelerate new markets and contracting of services for energy storage and ensure we can scale investment.”

Bashir said the data shows meeting Australia’s goals is possible, “but the time for discussion, debate and soundbites about intent is over.”

“We need to do this right now,” she said.

Ensuring transparency in Capacity Investment Scheme (CIS) mechanism development through stakeholder involvement and guaranteeing revenue certainty for batteries through coal-fired power station closure certainty, are also among the recommendations outlined in the report.