The Australian battery energy storage system (BESS) market is experiencing strong growth, driven by increased demand for large-scale energy storage solutions to manage the integration of intermittent renewable generation, but Finnish technology group Wärtsilä says challenges remain.
Kashish Shah, head of energy storage market development for Wärtsilä in Australia, said concerns about delays and changes to rules for grid connections remain a major issue for developers.
“One of the biggest challenges for a BESS developer is getting the desired grid connections in a timely fashion,” he said. “This can have a great impact on the investment decisions.”
“Another big challenge is fast-changing regulations and a lot of times it can have negative or unclear impacts on BESS assets.”
Shah said to unlock the full potential of battery storage, regulatory systems must provide clarity on market access, recognise the full value of the services that the technology offers, and establish price signals that accurately reflect its various contributions.
“As Australia transitions to a more renewable-backed grid, long-duration energy storage is a critical component to mitigate the risk of renewable droughts,” he said. “BESS is the most cost-effective technology that provides firming of intermittent sources of renewable energy generation.”
“But the market and regulations need to continue to provide the right price signals to safeguard BESS investments.”
Image: Wärtsilä
Wärtsilä has established itself as a key figure in Australia’s renewable energy sector. It already has 1 GW / 2.7 GWh of battery energy storage under contract or in deployment across the country.
Its projects include the multi-stage Bungama battery energy storage system being developed by Amp Energy in South Australia and it is partnering with Origin Energy on the Eraring battery facility in New South Wales, which will be one of the world’s largest energy storage projects at 700 MW / 2,103 MWh once completed.
Despite concerns about the challenges related to the grid connection process and technical requirements, Shah said revenue opportunities continue to grow and diversify for battery owners and operators, with software solutions to increasingly play a crucial role in enabling asset owners to have strong technical and market performance.
“On top of the market mechanism, there is policy support to encourage investment into battery assets,” he said, highlighting the federal government-backed Capacity Investment Scheme (CIS) that aims to secure long-term revenue for 9 GW of standalone dispatchable assets and another 23 GW of renewable generation assets in which BESS could be paired to provide firmed power to the grid.
This scheme, along with grants and green financing, is expected to help stabilise the revenue for big battery projects in Australia.
“The capacity investment scheme will offer competitive revenue underwriting structure with cap-collar contracts on annual revenue,” Shah said.
Data from the Clean Energy Council shows that investment in energy storage projects is powering ahead with eight new battery systems totalling 1,235 MW / 3,862 MWh of energy capacity reaching financial commitment in the September quarter, up 95% compared to the same period last year.
The Australian Energy Market Operator has projected that Australia will need about 49 GW of dispatchable battery energy storage capacity, totalling approximately 640 GWh, to achieve its 2050 clean energy goals.
Australia’s current storage capacity is about 3 GW, this is inclusive of batteries, virtual power plants and pumped hydro projects.
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