Home, neighbourhood, grid

Jul 26, 2023

Size matters. And in the case of batteries, so does function.

Grid-scale and home batteries play a critical role in the clean energy transition. Although they provide different services, they can be similar to neighbourhood batteries.

And, while reaching a higher quantum of storage across the National Electricity Market (NEM) is one goal, it is not the only goal for storage. How storage functions and what services batteries can provide are also critical for the future of the energy system.

After installing the first inner-urban community battery in Victoria last year, we have had many conversations with community members, governments, and industry representatives. We are often asked: why would neighbourhood batteries be needed if we can just install more grid and home batteries?

Here, we explore this question and highlight that neighbourhood batteries have a role to play.

The quantum of storage capacity (i.e. kilowatt-hours per dollar invested) is only one goal for batteries in the energy transition, which often gets emphasised. However, in addition, we must also talk about the different functions and across what scales different types of batteries can operate.

Let’s start with the big picture.

Significantly more storage is needed to reach the Australian Energy Market Operator’s (AEMO) step change scenario forecast of 63GW of dispatchable capacity. Storage in all forms will be needed to reach this. But there is uncertainty about the various scales of storage solutions needed, how they differ, intersect, and contribute to this target.

Articulating these nuances is important for shaping the best policy and investment environment to enable the storage capacity quantum and function needed for an energy system, that is mostly supplied by variable renewable energy generation.

As an overview, we have created a comparison table to start this discussion. We encourage you to use the chart as a conversation starter within your own network.

We originally included “micro-storage”, which would encompass phones, laptops, and maybe e-scooters and bikes, but realised it would not add much value to this conversation. But we acknowledge that scale of storage does exist.

We also chose to use the term “grid-scale” batteries, which are also commonly referred to as “utility-scale” or simply “big batteries”.

We’d like to draw your attention to three characteristics of this chart:

Next, let’s discuss whether neighbourhood batteries can firm the grid. We understand firming as maintaining the output from an intermittent power source (including variable renewable energy generation) across time to achieve stable supply to meet demand. This might be within a single day or even across seasons.

Here, we consider two general forms of firming:

The first type of firming refers to ‘moving’ energy around to smooth out the peaks and troughs in generation experienced with renewables (i.e. cloudy or still days).

While neighbourhood batteries can provide this function to some extent, they are not necessarily charging at the times when the most renewable generators are dispatched by AEMO.

The second type of firming is less about energy and more about maintaining consistent power output from a renewable generator.

It is far easier for power system operators (AEMO and network service providers) to manage a predominantly renewable grid when there is some predictability to generators’ outputs, and they are not subject to the real-time variability of fickle weather, such as passing clouds and fluctuating wind speeds.

Therefore, grid-scale batteries and other firming providers (including hydro) will be a critical part of an energy system which is heavily dependent on variable renewable energy generation.

However, in addition to meeting the quantum of storage targets outlined by AEMO, we will also need function targets for the low-voltage network. That is, batteries that can address other symptoms of an electricity system supplied with lots of renewable energy at the distribution level (e.g., from rooftop solar).

Here, neighbourhood batteries may have a key role.

Outlined in our Year 1 Performance Report, we show that cycling a neighbourhood battery once per day — charging during the day and discharging during the evening peak — can not only help to flatten the duck curve issue and support the network, but we also made $8,417 (ex GST) over 10-months (without Frequency Control Ancillary Services [FCAS] yet enabled). The next financial year promises to be more lucrative.

Within the low-voltage distribution networks there are two common pinch points: overvoltage and load limitations. Here, we highlight that the quantum of storage is not the only need. In fact, there are functional needs of our network which can only be met by battery storage solutions, like neighbourhood batteries.

During the day, while the sun is shining, the export of excess solar generation causes the voltage in the distribution network to increase. This can cause inverters to reduce power, or trip and switch off, which cuts the solar output entirely.

This is why some customers are subject to export limits on their solar systems, reducing the amount of energy they can sell back to the grid. Typically, in areas of high solar penetration, the further you go down the feeder away from the transformer, the more the voltage increases, so inverters furthest from the transformer will be at risk of tripping first.

As a response to this risk of solar generation, the Victorian government is introducing an “emergency backstop mechanism for solar”.

“With an emergency backstop, network service providers can remotely turn down or switch off rooftop solar systems during an energy supply emergency to avoid blackouts. The emergency backstop will be introduced for new and replacement rooftop solar systems by January 2024 for large systems and July 2024 for small and medium systems. Households and businesses with existing rooftop solar will not be impacted.”

The expected cost of the backstop mechanism to solar households is between $4 to $7 in lost feed-in-tariff per year. Moreover, while some curtailment of renewables will be necessary at times of high generation and minimum demand, the backstop mechanism would lead to significant ‘foregone generation’ from distributed solar.

Neighbourhood batteries, unlike grid-scale batteries, can help to alleviate this pressure and lower the risk of overvoltage at the low-voltage level. They do this by ‘solar soaking’ during the day and discharging during peak demand periods. They can also increase the capacity of a low-voltage network to accommodate more solar exports from households.

Because distribution transformers typically have lifespans of multiple decades, many have been sized on historical requirements that have now been surpassed.

Some transformers routinely experience utilisation of greater than 100%, meaning they are transferring more power than they are rated for during peak demand. Replacing transformers is costly, and the costs are passed through to consumers in the form of network tariffs.

However, dispatchable storage (like a neighbourhood battery) downstream of the transformer can take the pressure off transformers. Neighbourhood batteries can increase the load capacity of the network by providing power directly to households without going through the transformer.

On top of this, widespread electrification of homes and businesses will lead to higher demand for electricity. We’d like to signpost the great work of Rewiring Australia and the movement of household electrification this has sparked.

This trend, while positive overall, will exacerbate load limits and may cause voltages to dip during peak demand periods (referred to as “voltage drop”). This is something we all – especially Distribution Network Service Providers (DNSPs) – should want to avoid.

Given the technical limits of our existing distribution networks, an increase in both embedded generation and electrification will require more flexible and dynamic regulation of voltage, and most likely low-voltage connected storage.

Shifting gear now, a quick note on how electric vehicles (EVs) might compare to services provided by neighbourhood batteries. We like to think of EVs more as batteries on wheels.

Frequency control and firming by time shifting are both technically possible for EVs, but not currently available. This would depend on vehicle-to-grid technology and enabling EVs to participate in the market. However, we are not aware of a clear pathway for this today.

EV batteries are not static and may not always be available to support the network. Even if EV batteries can technically perform the same services as neighbourhood batteries, EV services will be competing with, presumably, what they’ve been designed to do: driving.

In this context, neighbourhood batteries remain a promising solution to bridge the gap in our energy storage function requirements.

These communal energy storage systems can cater to both the low-voltage distribution network and the specific needs of local communities. This makes them a ‘Swiss army knife’ storage solution with the versatility to meet the evolving needs of modern power systems.

To be absolutely clear, in addition to neighbourhood batteries, we support the rollout of household batteries, other so-called ‘behind-the-meter’ batteries, grid batteries, and EVs – let a thousand batteries bloom! We need all the storage we can get.

Above and beyond what the comparison table shows, neighbourhood batteries also have the potential to transform the energy market and build social momentum around renewable energy.

They are already being funded by both state and federal governments and can operate under new trial tariff structures that support their services.

From our experience at the Yarra Energy Foundation, a shared storage asset within the community has enabled us to start countless conversations and raise awareness about our energy system and personal electricity usage – another benefit which is entirely missed through the lens of “quantum of storage.”

Lloyd Heathfield and Tim Shue are from the Yarra Energy Foundation