The Solar Plus Storage Imperative For Australia


By Philip Sheridan, Sterling and Wilson Solar Australia chief executive officer


Energy curtailment and grid stability are shaping up as the key needs to be addressed for effective management of our nation’s energy supply, as the share of renewables rises in the overall energy mix.


Curtailment is the decision to reduce potential generation output because of transmission constraints to balance energy supply and demand. It is largely driven by mismatches between PV output (supply) and load (demand). It is also supported by a misalignment between when PV output is available and when that output can be absorbed by the grid. In 2020, we saw record levels of curtailment in the National Electricity Market, according to AEMO’s Energy Dynamics report. While this fell in the first quarter of 2021, it is unlikely to be an ongoing decline.


The five-minute settlement by AEMO, that calls for more grid stability and reliability, could be a step in the right direction. But the short settlement times could also serve to amplify curtailment issues for renewable developers if not properly planned for.


So, what are some of the opportunities to reduce curtailment? It is increasingly clear that batteries can improve returns on large-scale solar investments, allowing for maximum solar output at a time when investors have to “price in” factors such as grid congestion, curtailment and connection risks into their projects.

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Building in battery storage unlocks the untapped potential to harness solar energy that has been generated during the day, storing it for use outside of daylight hours. As such, it allows for intermittent solar energy to be stored for later use when it is needed, supporting the balancing of constantly changing levels of supply and demand through the day. There’s also a strong case to be made for creating storage facilities within solar and wind farms to be able to address peak energy production requirements. From a technical perspective it is quick to install – certainly far more so than via the development of gas-fired power.

The good news is that Australia is among the top five global markets for energy storage and is expected to have more capacity additions both in the short and long term. Phasing out of coal power plants, evolving energy markets with new business models and declining battery costs make energy storage a viable proposition for the country. According to the Energy Storage Market outlook by Wood Mackenzie, cumulative energy storage investments in Australia could hit US$ 6 billion by 2025 with a cumulative capacity of 12.9 GWh.

With large-scale solar-plus-storage becoming more economical every year and costs expected to decline by around a third by 2025, the cumulative Solar + Storage BESS capacity could reach nearly 4.2 GWh by 2025. However, we believe that the numbers are likely to exceed these projections as storage becomes increasingly central to managing grid stability.

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In Australia, we have noticed that many developers are leaving space for batteries within their development plans but are not moving forward with the commissioning of batteries at these sites. It’s clear there is further work to be done in building confidence around energy storage technologies, and they’re capacity to improve the stability of the grid while also maximising returns to investors.

To do so, we believe there needs to be greater recognition of the role solar and storage can play as an alternative to gas. As one of the leading solar engineering, procurement and construction (EPC) companies currently operating in Australia, and with a significant global footprint, we have worked with developers worldwide to design and engineer solutions that meet the growing appetite for clean, renewable alternatives to fossil fuels.

From our analyses, drawing on the technologies that are currently available, we’ve determined that large-scale solar plus storage competes effectively against gas as a source of peaking power. This is particularly true when using two-four hour DC Coupled storage for PV plants.

This finding aligns with the views shared in the latest report by Clean Energy Council, which argues both that peaking generation will be an important part of Australia’s future energy mix, and that large-scale battery storage is now the superior choice for electricity peaking services, providing significant cost, flexibility, and emissions advantages when compared to equivalent open-cycle gas turbine plants. It also fits well with the views of former AGL CEO Brett Redman, who spoke in 2020 of how the business case for batteries is changing fast, as prices fall rapidly.

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In conclusion, integration of large-scale batteries into solar farms in Australia will be critical for continuing to attract investment into the sector, for existing investors to maximise their returns, and for the nation to lower its carbon footprint and deliver cheaper, greener energy to consumers.

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