A recent report by the Clean Energy Council (CEC), Battery Storage: The New, Clean Peaker, proposes that gas is no longer fit-for-purpose in a 21st-century electricity system, suggesting large-scale battery storage is best for the future.
The CEC’s study compared a new 250MW gas peaker with a new 250MW four-hour grid-scale battery, both built in NSW and operating over a 20-year period.
The report found that large-scale battery storage is a better choice than gas for electricity peaking services, based on cost, flexibility, services to the network and emissions.
The CEC’s report findings directly contradict the Federal Government’s preference for a “gas-fired recovery” from the COVID-19 pandemic.
The study also found that a four-hour battery provides cost savings of more than 30 per cent on a levelised cost of energy basis, providing energy for $156/MWh compared to $234/MWh for a gas peaker.
Batteries also fared better than gas in capital costs, an area where batteries have traditionally struggled to compete – offering a 25 per cent saving compared to a gas peaker.
These financial differences will only grow in future as battery prices continue to decline, with the US’s National Renewable Energy Laboratory, forecasting that the cost of batteries could fall as much as 63 per cent between now and 2030 – due to technological advances and increased economies of scale.
In addition to their cost advantages, batteries also provide a superior peaking service compared to gas, offering a faster ramp rate, higher accuracy and better-quality frequency response. Also providing a more comprehensive range of network services, including digital inertia, voltage support, system strength and fast frequency response.
Since the Hornsdale Power Reserve, located in South Australia,was commissioned in 2018, it has saved consumers millions of dollars by providing frequency control ancillary services, whilst helping to keep the lights on during major network events and unscheduled coal outages.
Batteries can also be used for other vital services, such as the 300MW/450MWh Victorian Big Battery, currently under construction – unlocking an additional 250MW of peak capacity on the Victoria-NSW interconnector and saving millions of dollars in transmission upgrades.
The CEC states that, whilst the future applications of batteries have almost unlimited potential, gas projects come with several inherent risks, such as the price of gas, which has a significant impact on the economic feasibility of gas-fired peaking services.
The Australian Energy Market Operator (AEMO) also forecasts that gas prices will increase by almost $4/GJ between now and 2032, further undermining the case for gas peaking services.
According to the CEC, as the world increases its climate change ambitions, carbon risk also becomes a significant consideration for gas-fired power stations. This could make finance more difficult to procure, increase insurance premiums and raise the prospect of early closure, all of which would further diminish the business case for a new gas-fired peaker.
The CEC says gas-fired generation also comes with operational risks from planned and unplanned maintenance outages, which will increase in frequency as the growth of variable renewable generation forces gas plants to ramp more often, causing more wear-and-tear that will shorten their technical lives.
In contrast, batteries have higher availability due to the requirement for less maintenance and can offer guaranteed fixed power and energy for over 20 years.
The CEC says one area where gas does outperform batteries is in duration of storage, with a gas-fired plant able to keep generating power as long as it has a steady supply of gas – however demand spikes that peaking services are designed to meet, typically only range from a few minutes to a couple of hours. This is supported by the market’s clear preference for two to four hours of storage duration, with several recent storage announcements seeking this capacity.
For longer-duration storage, gas plants will be eventually competing against hydro power, which has demonstrated its effectiveness and increasing cost competitiveness for long-duration storage.
As the CEC’s analysis shows, the case for the widespread use of batteries to provide firming support to Australia’s electricity system is impossible to ignore, with the report stating that “it is now undeniable that Australia’s energy future is renewable”.
Leading market bodies have already begun mapping out what a transition to a clean energy-based electricity system will look like, such as the AEMO, who, according to the CEC, is leading the way on this frontier.
The AEMO, with the latest iteration of its Integrated System Plan, has anticipated that an additional 26 to 50GW of new large-scale renewable energy generation will be needed in the National Electricity Market by 2040, to replace Australia’s retiring coal-fired generators.
To support this massive influx of new renewable generation, the majority of which will be large-scale wind and solar, AEMO has signalled that 6 to 19GW of new dispatchable resources will be needed.
The battery industry has been recognised by governments and project developers around Australia, who have announced 15 large-scale battery storage projects in 2021, representing 6.6GW of capacity and $4.3 billion in investment.
The CEC is now calling on the Federal Government to “acknowledge the potential of batteries by abandoning its gas-fired fantasy” for the electricity sector and embrace the compelling potential of batteries in Australia’s clean energy transition.