The Australian Renewable Energy Agency (ARENA) has announced that the Federal Government will deliver $495,000 in funding to Monash University for a study exploring the integration of storage into energy markets.
Researchers from Monash’s Grid Innovation Hub will conduct the desktop study to explore alternative market designs that could better support energy storage technologies and to design efficient incentives for storage operators to create clearer investment signals for storage.
They will also assess how day-ahead markets combined with balancing markets, similar to parts of the US and European markets, could be suitable for a market transitioning towards more bulk storage.
The $1.18 million study aligns with the findings from the Energy Security Board’s Post-2025 Electricity Market Design, which recommended further investigation of the longer term need for ahead-markets and development of an inertia spot market.
The project intends to inform policy makers and market participants, rather than to formulate prescriptive policy recommendations.
Energy storage technologies are critical to supporting uptake of variable renewable energy, with more storage required to continue Australia’s transition to renewables. Market rules for storage technologies currently fail to promote efficient allocation of energy storage resources.
The researchers will investigate market structures for new system services such as inertia, and study the risk of market manipulation by owners of storage assets.
The grid storage market study could highlight potential market design solutions and rule changes that improve valuation of energy storage services, increase investment in storage across the National Electricity Market, reduce barriers to high shares of renewable energy, and improve grid reliability.
ARENA CEO Darren Miller said studying different energy market designs for storage would help to develop the changes required to achieve an efficient transformation of Australia’s electricity system towards our net zero goals.
“Further investment in storage solutions such as pumped hydro, large and small-scale batteries is vital to continue Australia’s uptake of variable renewable energy into the grid,” Mr Miller said.
“As traditional generation retires, we need storage to play a bigger role in firming up and balancing our electricity system.
“The team at Monash University Energy Institute’s Grid Innovation Hub has already achieved important insights in previous studies, and we see the Grid Storage Market study as just as important in highlighting the potential market changes required to incentivise industry to further invest in renewable energy storage.”
Professor Tony Marxsen, Chairman of the Monash Grid Innovation Hub, said the study will guide more efficient investments in renewable energy in the future.
“For a successful transition to a low carbon energy future, energy markets must reflect the full value of all the services modern technology offers. Services from battery storage are not valued clearly at present, and this exciting research will reveal ways in which markets can better reflect their value to guide investment.”