It’s a message that creates both excitement and trepidation.
Australia is in the midst of an unprecedented energy transformation.
It’s already happening fast and is set to accelerate and intensify in coming years.
But it won’t happen smoothly if we don’t make sure we are prepared.
That was the key message from a study commissioned by Chief Scientist Alan Finkel and carried out by the Australian Council of Learned Academies (ACOLA).
The report, released on Monday, is both bullish about the rise of renewable energy and optimistic about the role storage can play in making sure the transformation is orderly and controlled
It finds that even if renewables jumped to make up 50 per cent of our electricity mix by 2030, reliability of supply (making sure daily electricity needs are met) could be achieved without significant investment in energy storage.
But the pressing need to ensure security of the energy system (protection against system-wide failure such as blackouts) should drive an increase in storage, the report finds.
And with increased investment will come increased rewards, such as new export industries for the nation and lower prices for energy consumers.
“The challenge is to manage the transition from here to there. We are going to be moving to a new future, it’s happening around the world, it’s inevitable,” Dr Finkel said.
“What this report shows is that if storage is used effectively, we can manage that transition smoothly at the lowest possible price.”
The report goes into detail about a range of storage solutions that will likely be part of the future mix, ensuring that the baseload power that has dominated Australia’s past is slowly replaced by renewable sources of generation, supplemented by storage systems that can dispatch power at times of need.
“Over the past decade, Australia’s electricity market has experienced change on an unprecedented scale,” the report argues.
“Energy storage has the potential to upend the industry structures, both physical and economic, that have defined power markets for the last century.”
The actual mix of storage or other technologies used will depend on market dynamics, policy settings and consumer preferences, the report notes. It models three different versions of a possible 2030 energy market: a high renewable energy model (in which renewables make up 75 per cent of the electricity mix) as well as mid (50 per cent) and low (35 per cent) models.
HOW MUCH WILL IT COST?
Even assuming for the high renewables option, the costs, which appear large at first glance, are actually quite reasonable.
Meeting the storage needs for the high RE model would cost $43 billion if pumped hydro alone was used (which the report says is unlikely) or $22 billion for a batteries only solution.
But the report notes that the current cost of maintaining the NEM, extrapolated forward to 2030, would total $70 billion.
Many of the observations the report’s authors make align closely with ARENA’s priorities and the projects it has been funding. Here are a few areas where we are already helping to advance the nation’s storage capabilities.
The report finds that a combination of available lithium resources and current research capabilities means that “Australia has the potential to become a world leader” when it comes to battery storage.
This is unlikely to happen for existing forms of the technology, it finds, but could be the case for the next generation of batteries.
ARENA says: We are investing in several projects that aim to push the technology of battery storage forward. This includes working with CSIRO on potential applications for their ‘Ultra battery’.
ARENA is also funding researchers at the University of Technology, Sydney who are working on a prototype lithium-sulfur battery for renewable energy storage and scientists at University of Wollongong, who are developing a ‘salt battery’ that uses sodium in place of lithium and could result in a cheaper form of battery, suited to home storage.
“There are opportunities to use our solar energy resources to produce and export renewable hydrogen and ammonia,” the report says, “enabling growth of a new industry that may be suited to northern Australia.”
And when you ask Dr Finkel about what excites him about the report he is quick to bring up hydrogen.
“It’s looking at the opportunity to export sunshine, take sunshine, wind, renewable electricity, and use that through electrolysis to make hydrogen and from hydrogen you make ammonia,” he said.
“And ammonia is easy to ship and you can send it to countries that have indicated that they will have a not only growing, but a huge demand for hydrogen.”
ARENA says: We couldn’t agree more. Exporting renewable energy was adopted as one of ARENA’s four new priorities earlier this year and we have recently called for information from global players regarding the potential for creating an Australian export industry that produces hydrogen via electrolysis powered by renewable energy and exports it to recipients such as Japan and South Korea.
The ACOLA report also sees potential for using renewable energy to create hydrogen and then pump it into the existing gas grid, where it mixes with LNG and can be safely used as fuel for household appliances such as heaters and stoves.
ARENA is currently trialling a ‘power to gas’ project in Adelaide, that aims to do just that.
“Pumped hydro was found to be a low risk, low impact technology,” the report finds. “Despite the geographic limitations for pumped hydro, and the time (years) to implement new facilities, it is a technology that offers much potential for deployment in the grid.”
ARENA says: We’ve funded several pumped hydro feasibility studies in the past 12 months. At Kidston in North Queensland we’re helping bring about a renewable energy hub that will reconfigure a disused gold mine to create a co-located solar farm and pumped hydro system.
We’re supporting the “Snowy 2.0’’ feasibility study, which is expected to report preliminary results soon and we have also contributed to the “battery of the nation’” feasibility studies that are investigating the potential for Tasmania to be a pumped hydro powerhouse.
The ACOLA report also cites the ARENA-backed Energy Australia feasibility study into a possible pumped hydro site using seawater at Cultana in South Australia.
And world-leading researcher Andrew Blakers has been preparing an “atlas” of potential pumped hydro sites around the country, with funding support from ARENA.
In short: We’re pretty excited about the potential of pumped hydro too.
The report urges the importance of examining the full cost of battery storage, taking into account the embodied energy and materials needed to construct batteries and arguing for investment in research that will improve the reusability of battery-making materials.
ARENA says: We’ve argued this year for the importance of life-cycle assessments in determining the potential cost and benefits of renewable technology and have begun a process of adopting this approach in some areas.
We’ve also supported efforts to reduce waste via projects such as the Clean Energy Innovation Fund’s Relectrify project – which allows for depleted electric vehicle batteries to be reused as household storage.
While Dr Finkel was at pains to point out that the ACOLA report does not “make recommendations” it does argue for further work to be carried out in several areas. ARENA is well situated to be a key driver in ensuring this work is undertaken.
- “The optimum balance of generation, storage and interconnection, taking into account cost optimisation and the long term strategic opportunities for Australia.”
ARENA says: Our dispatchable renewables study, currently underway, is an important first step in examining some of these crucial questions. Which forms of storage are likely to offer greatest return on investment? Which are best suited to different conditions? How will multiple technologies interact, combine and behave? Stay tuned in coming months, we’ll have plenty to say about these questions.
- “The role of ‘prosumers’ including their effects on the market, the system (equity and pricing concerns) and on their contribution to the energy transformation that is underway.”
ARENA says: We are currently funding a number of projects that aim to shed light on such questions. ARENA recently announced funding of $1.92 million for Horizon Power’s trial of how prosumers behave in a microgrid setting.
We’ve also contributed $450,000 to assist the creation of dEX, a digital energy exchange that will assist markets to allow prosumers to be rewarded for the services they can provide to the system.
A number of ARENA projects are also trialling ‘virtual power plant’ software that allows distributed energy resources such as rooftop solar to be aggregated and coordinated, enabling energy retailers and other energy market participants to get better at harnessing the power offered by prosumers.
The security of our electricity system relies upon its ability to transition from one balance of supply and demand to another, the report says. If supply and demand cannot be kept in balance, instability occurs. The challenge of maintaining that balance becomes more difficult as wind and solar are added to the system.
Batteries are a significant part of the answer here but other innovative forms of frequency control, such as the inverters of wind and solar farms also can play a part.
ARENA says: South Australia announced a 100MW Tesla battery would be built for this summer, as a key method for ensuring dispatchable power is on hand when required for system reliability. ARENA has also funded a large scale battery in the state: the $30 million, 30MW ESCRI battery, which will provide a range of valuable grid support services, including frequency control.
We’re also pushing ahead with a trial at Hornsdale in South Australia, examining how effective wind farms can be at offering the type of frequency control that, until now in Australia, has been almost entirely provided by fossil-fuel fired power stations.
OUR NEW PODCAST, THE INNOVATORS, IS OUT NOW. HERE’S A SNEAK PEEK