Clean energy sector says big batteries, pumped hydro can solve crisis

Large renewable energy developers will pressure government leaders to dump controversial plans to shore up the power grid by paying generators for being on standby, and are instead calling for a national target to spur big batteries and pumped hydro projects.

As soaring wholesale electricity prices and blackout risks keep authorities on high alert across the eastern seaboard, Federal Energy Minister Chris Bowen has been leading talks with state and territory counterparts on the development of a so-called “capacity mechanism”. This would reward generators for being on standby to support renewable energy during times when the wind isn’t blowing and the sun isn’t shining.

Neon’s Victorian Big Battery project near Geelong.

The Energy Security Board (ESB), led by the nation’s three most senior energy officials, has declared the reform is desperately needed to attract sufficient investment to ensure Australia can “stick the landing” of the extraordinary energy market transition while keeping a lid on prices.

The board has called for a “technology neutral” approach that could include grid-scale batteries, pumped hydro, gas plants and existing coal-fired generators.

However, industry representatives for some of Australia’s largest clean-energy developers are now backing concerns voiced by the Victorian government, and the federal Greens, who fear the measures could artificially prolong the economic lives of emissions-intensive fossil fuel-powered generators. Opponents of the proposal have dubbed it “coal keeper”.

Clean Energy Council chief executive Kane Thornton called on government leaders to abandon the proposal, arguing it was unnecessary and may lead to higher household power bills.

“Government needs to be looking at ways to bring more clean, low-cost renewable energy into homes and to power industry without paying unreliable and expensive coal and gas to stay open, which ultimately results in more expensive electricity bills,” Thornton said.

“Clean energy and storage can meet our energy and capacity needs and the technology is here now.”

As Australia introduces more renewable energy into the grid, batteries – both household and grid-scale – are considered crucial. Large-scale batteries, such as Victoria’s “Big Battery” near Geelong, can store electricity when there is an oversupply, so it’s available to dispatch it during all weather conditions.

However, because most large-scale batteries only have two to four hours of storage available, energy officials and experts point out that other solutions including fast-start gas plants and longer-duration storage options, such as pumped hydro, will also be critical.

Grattan Institute energy expert Alison Reeve said a mixture of storage and dispatchable capacity would be essential as more renewables came into the grid to “smooth out the bumps”.

“The thing about storage is that you run out of it eventually,” said Reeve. “So there’s an optimisation question that needs to be asked as part of reforming the energy market – how do you decide how much to store, versus being able to generate energy through other sources,” she said. “There are no silver bullets here”.

Negotiations between state and federal energy ministers on market reforms come as the east-coast power grid remains fragile. Wholesale power and gas prices have been trading far higher than average levels amid a burst of cold weather driving up demand for heating, while a series of coal-fired power plant failures have forced gas-fired generators to fill the gap.

Many power generators said they could not remain viable under restricted caps that the Australian Energy Market Operator (AEMO) had imposed to halt surging prices, prompting them to withdraw offers to supply the grid, and forcing AEMO to seize control of the market for the first time in its history.

AEMO has lifted the restrictions following the return of more than 4000 megawatts of supply, about one-fifth of the grid’s needs.

However, as the winter peak demand period approaches, the grid still remains vulnerable.

EnergyAustralia, the nation’s third-largest power company, has informed AEMO that it would be taking one unit at Victoria’s giant Yallourn coal-fired power station out of service for maintenance by Tuesday, while Hallett power station would be offline for the rest of the week due to works being undertaken by South Australian transmission network provider ElectraNet.

“We are doing all that we can to make our generators available to provide supply into the system as and when needed,” EnergyAustralia managing director Mark Collette said.

“Our gas assets have been running seven times the volume compared with the same period last year, playing an important role of keeping the lights on for customers.”

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