50MWh Tesla big battery South Australia

Finding ways to firm up renewables will be key to the energy transition

While fully-commercial hybrid power plants are still a way off, pumped storage, batteries and green hydrogen can all play a part in Australia’s energy transition, write Tony Morton and Mark Andrews.

This article first appeared in ReCharge.

Australia has been viewed by many as the pioneers of hybrid plants – where wind, solar, or other forms of generation are combined with storage to ‘firm up’ variable generation and provide other services such as arbitrage and fast frequency response.

This stems from the well-publicised Hornsdale battery project (‘Tesla big battery’), which was a South Australia government-led project arising from the region’s highly politicised blackout in 2016.  The ensuing politics of this event – and the high penetration of renewables in South Australia – has led to the growth of a strong narrative about firming renewable generation, which on the surface drives enthusiasm for hybrid plants. 

In practice, however, the economics of such systems are still marginal given the current cost of batteries – so the majority of developments we are seeing today are backed by public-sector support.

The exception is in isolated inland communities – far from the major transmission lines on the coast – where we can see a growth in hybrid plant as a cost-effective alternative to diesel. It’s the same story in remote mining operations where solar plus wind plus batteries can offset diesel bills.

On the commercial side we have seen some green shoots where one pioneer scheme – the 58MW combined solar wind and battery Kennedy Energy Park, 290km southwest of Townsville – has completed. And although it does have some grid challenges to overcome it may set a future direction for the rest of the industry as hybrid projects become more economical.

In the next 20 years we will see a massive one-off transition from baseload to variable generation as the Australian Energy Market Operator’s (AEMO’s) Integrated System Plan plots a pathway to 100 per cent renewables – and finding ways to firm up renewable generation will be key.

In their plan the AEMO is relying primarily on pumped-storage, with batteries an important secondary technology providing fast-response capability.

In a first move, New South Wales plans a 3GW Renewable Energy Zone which will combine renewable generation with peaking gas plant, upgraded interconnectors, demand side controls and a 2GW, 175 hours pumped storage hydro scheme known as Snowy 2.0.

As in the UK, pumped storage makes sense at scale (provided the correct market signals are in place), or in very specific grid-stranded locations. So in Australia we may see also pumped storage in mine sites with good vertical differentials.

Hot rocks, molten salt

Various other forms of storage such as compressed air, hot rocks, flow batteries, liquid air and molten salt are in development, as are other forms of gravity storage which, in contrast to pumped storage, lift multiple heavy weights to store power.

In many ways these technologies draw on existing expertise in hydraulics, resource extraction and thermal generation, and are at varying stages of commercialisation. 

Active research continues in all these areas, and their proponents claim they should ultimately be able to demonstrate levelized costs lower than batteries per MWh of storage capacity.

Some of these technologies may also have inherent advantages in specific niches, either geographical or market led, such as fast frequency response, where they may be able to compete toe to toe with batteries.

These claims are not without merit.  On the other hand, defenders of battery technology point out that batteries are already on a falling cost trajectory as mass production ramps up (driven in part by the growing electric vehicle industry) and so these other technologies are already chasing a moving target.

Green hydrogen

Australia is also moving ahead with some ambitious green hydrogen plans.

Unlike storage technologies, hydrogen is more of a player in the portable fuels market, competing with oil and LNG. In this it is enabled by the cost reductions in wind and solar technology, which potentially allow hydrogen to be produced at similar or lower unit costs than oil or LNG with equivalent energy value.

It is also increasingly seen as the ‘missing link’ in the energy transition thanks to its ability to penetrate hard-to-decarbonise areas such as heating and heavy industrial processes.

However, the main technology gap at present remains the commercial demonstration of large-scale green electrolysis allied to the challenge of producing and transporting very high volumes of what is a relatively low-density fuel.

Scaling up may be the key. In the UK, offshore wind is rapidly emerging as a key potential power source for bulk – and therefore more cost-effective – production of green hydrogen.

In Australia a growing coalition of wind and solar OEMs, energy developers and technical experts suggest that the continent’s comparative advantage in wind and solar resources, though remote from direct electricity connections, could drive a large industry in green hydrogen production to  supply to both domestic and offshore customers, competitive with existing oil and gas supply. 

In response to this Tasmania has set a 200% renewables target with the goal of delivering GWhs of green hydrogen driven by 2GW of new renewables up and running by 2024, whilst in the country’s opposite corner – in the Pilbara region in Australia’s far north-west – the Asian Renewable Energy Hub proposes developing 15GW of combined wind and solar to power the local economy and deliver green hydrogen at scale for export at sea. 

A way to go

So, despite the early promise of the Tesla big battery project, raw economics mean that hybrid projects need to stand on their own feet economically before we see them in quantity.

At present this means projects in remote communities where grids are weak (or non-existent) and alternatives are expensive; or mega-schemes, with utility-scale support, where storage (either pumped or battery) play their part.

Green hydrogen is a different proposition and is viewed here as substitute to other fuels. The technology still has a way to go but could become commercial at sufficient scale.

Australia has set its stall with very ambitious renewable energy goals. It has excellent renewable energy resources and will be at the forefront of commercial hybrid projects

As battery costs come down – as they will – commercial schemes will take root.