Report shows using buildings as batteries offers 12 GW of new peak capacity

The authors of the Buildings as Batteries paper claim that such a load shift would also save $1.7 billion annually, add additional peak capacity equivalent to 52% of Australia’s existing coal-generation fleet, and reduce the country’s greenhouse gas emissions from electricity by more than 2.7 million tonnes per year.

The report, prepared by think-tank The Australia Institute (TAI) and built environment data science company Buildings Alive, found that by changing the time of day that electricity is used and harnessing the power of buildings as thermal batteries would have a major impact on the country’s energy security with minimal intervention and investment.

TAI Executive Director Richard Denniss said Australia’s electricity market has a “supply and demand problem” with a lot of cheap, clean renewable energy supply in the middle of the day and much demand toward the end of the day when the market relies increasingly on coal and gas generated electricity.

“Luckily for everyone except the owners of the coal-fired power stations, it is relatively easy to shift a lot of electricity demand from late afternoon to the middle of the day,” he said.

“Our research shows big commercial buildings are particularly good at shifting their daily electricity demand around, to take better advantage of the cheap, clean power that is so abundant in the middle of the day.”

The paper cites an example of a large office tower in Sydney where the building managers were advised the electricity demand was likely to be extremely high on a hot summer day in 2019. In response, the internal temperature setpoint of the building was lowered 1 degree from 8.30am to 2pm. The data shows the building used more electricity earlier in the day and reduced demand by 200 kW relative to forecasts from 2pm to 6pm.

“The building effectively operated as a battery with capacity of at least 800 kWh,” the report says.

“We estimate this led to savings of $111 and 221kg CO2e in emissions in just one day in just that one building. A battery of that size would cost around $500,000.”

“Extrapolating across Australia, if 33% of the energy buildings use in the late afternoon in summer were shifted to the middle of the day, that would deliver new peak capacity in the energy market of almost 12 GW.”

The report says if a government program to develop the demand side in the National Electricity Market was launched this year it could organise load shifting in 30% of Australia’s institutional grade office buildings in 2025, with that rising to 90% in 2027.

The authors say such a program, which could deliver about 2.6 GW of flexible capacity by the end of 2026, could be secured through relatively minor changes to building management practices, such as cooling large office buildings earlier in the day and then allowing their temperature to rise back to normal levels across the afternoon.

They do warn that changes to policy and regulation will be required, saying current efficiency ratings systems are holding back the adoption of new technologies by failing to recognise the financial, emissions and grid stabilising potential of smart, grid-interactive buildings.

Buildings Alive Chief Executive Officer Craig Roussac said the solutions to this problem exist already, and the country just needs to get on and start using them

“If we don’t harness the potential of smart, grid-interactive buildings, Australians will pay the price through higher network costs, more expensive electricity and increased carbon pollution,” he said.

“Australia has had world-leading building efficiency ratings systems in the past, but they have not evolved. Most buildings can double their energy demand at times of the day when it’s abundant and halve it when networks are constrained. This is a massive service they can offer.”

The report recommends a range of policies to support load shifting and demand response, including having NABERS develop and implement an updated building efficiency rating system that recognises the potential of these measures.

The researchers also recommend that governments commit to implement demand flexibility in their own buildings and work with energy innovators and the property sector to accelerate development of load shifting and broader demand response.

They also suggest federal government agencies like ARENA and the CEFC could also help by soliciting for related project proposals and through concessional finance.

The report also says it would be necessary for the electricity market operator, regulators and rule makers to ensure that load shifting can compete in the wholesale demand response market.