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Flexible capacity & large-scale energy storage


What are we doing?

ARENA and the CEFC have announced that they will prioritise financial support for flexible capacity and large-scale energy storage. Through providing targeted support the costs of these innovative technologies will be brought down, the risks reduced and local expertise grown. The result will be that valuable innovative technologies become commercially deployable without any further government support.

The announcement outlines a two-phase approach:

  • In the first phase, ARENA and the CEFC will accelerate a number of flexible capacity demonstration projects already in their pipeline. ARENA will also seek further expressions of interest under its current Advancing Renewables Program setting aside at least $20 million for successful new projects, which could include projects incorporating grid scale battery storage, concentrated solar thermal, pumped hydro and biomass. This will add to the bank of knowledge and Australian expertise already growing through some early storage projects that ARENA and the CEFC are supporting (see section 3 below).
  • In the second phase, experience gained from the demonstration projects will help design a framework for competitive funding round for flexible capacity, likely to include large-scale energy storage projects. It is proposed that this would work in a similar way to the 2016 large-scale solar funding round, which was a competitive tender process for ARENA grants with a parallel large-scale solar financing program run by CEFC.

Large-scale energy storage projects can be an enabler of this transition. It can help balance electricity supply with electricity demand, for example by allowing intermittent renewable energy to be stored and dispatched as needed. It can make the electricity grid more efficient and reduce rising cost pressures.

It can also provide some critical elements of grid stability such as inertia and frequency and voltage control. For this reason, ARENA and the CEFC will also look to support related innovative technologies that boost the stability of the electricity grid – like advanced control systems, smart grids, and demand response measures

What are ARENA and the CEFC already doing to support energy security and reliability?

Through ARENA and the CEFC, the Australian Government has already provided significant support for large-scale energy storage projects and research.

  • For example, ARENA is supporting a study by ANU to develop a map of potential sites for off-river pumped hydro projects, and (together with the CEFC) is assisting Genex Power to investigate the feasibility of a pumped storage hydro power plant at the disused Kidston Gold Mine in North Queensland. That project has the potential to generate up to 250 MW of rapid-response flexible power for the NEM.
  • In South Australia, ARENA has conditionally committed up to $5 million funding for AGL to install 1,000 centrally controlled batteries in homes and businesses. Together, these will form the largest battery storage ‘virtual power plant’ in the world, with a combined 7 MWh storage capacity.
  • This work is supported by funding for energy storage research, including for the development of advanced lithium-sulphur batteries with the University of Technology, Sydney; the establishment of a mobile energy storage test facility at the University of Adelaide; and a range of research around the use of CSIRO’s patented UltraBattery.

Australia also has a relatively large off-grid market for electricity, with energy storage a key enabling technology for projects in remote or fringe-of-grid areas.

  • For example, on King Island in the Bass Straight, ARENA has provided $6 million to a Hydro Tasmania project that includes the installation of the largest battery-based energy storage system in the country. The project has reduced diesel use by 1.9 million litres per year. ARENA has also provided support for similar projects on Flinders Island and Lord Howe Island.
  • ARENA and the CEFC have supported a number of projects combining lithium battery storage with renewable generation, including the Lakeland Solar Farm and Kennedy Energy Park in North Queensland and the DeGrussa Copper Mine in Western Australia. These projects are lowering energy costs and reducing the dependency of remote communities on diesel fuel.