Batteries Better Than Gas at Meeting Australia’s Future Peaking Needs

In September last year, the Scott Morrison-led Australian government had announced that it was setting a target for the electricity sector to reach final investment decisions by the end of April 2021, towards delivering 1000 MW of new dispatchable energy by summer 2023-24, so that the coal-fired Liddell power station could be closed down in 2023 as per schedule.

The announcement came following the Liddell Taskforce’s report which found that in the event of unavailable alternative power generation source, post the closure, electricity prices would rise by almost 30% over 2 years and might stand at $20/MWh to $80/MWh in 2024, and at around $105/MWh by 2030. The government said that it would support a new gas power plant at Kurri Kurri, should the private sector fail to rise to the challenge. But although the deadline is just around the corner, gas generators are now losing appeal, especially after a new study argued that big batteries are much cheaper and more effective providers of peaking services.

The research paper, Battery Storage: The New, Clean Peaker, published by Clean Energy Council (CEC), compares the levelised cost of energy delivered by a new 250 MW gas peaked plant with 250 MW four-hour and two-hour grid-scale batteries, and concludes, after taking into account the cost of capital, and fixed and variable operations, that two-hour batteries are 17% cheaper and four-hour batteries cost 30% less.

Since renewable resources’ share in Australia’s total power generation has been increasing in recent years (27.7% currently), the Australian Energy Market Operator estimates that in order to replace present fossil fuel generation, the required capacity of large-scale solar and wind farms would be around 26-50 GW by 2040, with 6-19 GW of new dispatch-able resources needed to factor in the variability of clean energy sources. These peak energy needs, it now appears, would be better served by the newly improved battery storage technologies which provide benefits such as a fast response rate, a wide range of network support services, and zero emissions. On all these counts, batteries perform better than the gas-fired peaking plants currently in use, which are increasingly becoming obsolete in the clean energy future of the country’s electrical system.

The bright future of batteries with two to four hours of storage, is indicated by the recent announcements made by major companies like AGL, EnergyAustralia, Neoen, etc, which are investing in them. Even the Victorian Government’s renewable energy zone plans to benefit from the potential capacity of batteries. Additionally, 15 massive battery projects, which will store 6.6 GW energy and cost $4.3 billion in funding, were also announced in 2021. Expansion and strengthening of the transmission grid plus optimum utilisation of hydropower, will help store energy for a longer period of time.

CEC Chief Executive Kane Thornton has said, “Large-scale batteries are now undoubtedly the best option to meet periods of high electricity demand.” It is left to see whether the Australian government will take a cue from this report and abandon its plans to construct a new gas peaker, a decision which is looking increasingly unsustainable and counterintuitive to both experts and investors in the country’s energy market.