Tesla Recommends AEMO Recognize Battery Storage Now Outcompetes Gas Peaking Plant

Tesla Recommends AEMO Recognize Battery Storage Now Outcompetes Gas Peaking Plant

On December 10, 2021, the Australian Energy Market Operator published the Draft 2022 Integrated System Plan (ISP). It is a ‘whole of system plan’ that offers a roadmap for development in eastern Australia’s electricity system and AEMO has invited energy market players to work together to finalize the 2022 ISP. Tesla gave its recommendations to the operator in a 6-page response.

An American manufacturer that is active in the Australian energy market recommended AEMO's final 2022 ISP following:

  1. to be more clear on the role of grid-forming inverters (aligning with the Engineering Framework objectives);
  2. to incorporate the full value of storage assets beyond simply energy time-shifting (aligning with actual investment and policy decisions and ensuring a credible storage capacity mix forecast); and
  3. recognize battery storage now outcompetes gas peaking plant as the preeminent firming technology.

Embedding the role of grid-forming inverters
Tesla's recommendation is for AEMO to take a more consistent view of the role of grid-forming (advanced) inverters across its 2022 ISP and parallel engineering and system security publications. The company understands the ISP focuses on optimized modeling for resource adequacy (assuming essential system service requirements are solved as necessary), but this does not preclude AEMO highlighting the role that grid-forming battery storage will need to play beyond simply time-shifting of energy, and alongside other storage technologies, the full suite of services that will be provided to support the transition to an efficient, secure and low-emission future NEM, the manufacturer wrote.

Recognizing the full value of storage assets
Tesla recommends enhancing the ISP modeling approach to consider the full value potential of storage beyond simply energy time-shifting applications. In particular, AEMO's modeling can incorporate the additional capabilities and flexibilities beyond energy generation provided by both standalone battery storage (eg ancillary services, inertia contributions and system security benefits) as well as hybrid battery assets when paired with renewables (eg reduced curtailment, improved marginal loss factors, reduced causer pays liabilities). This will more accurately reflect the role and value of battery storage and better map to actual and expected market behavior relative to other generation and storage plant, without relying on sensitive forecast capital cost comparisons based on energy-related costs ($/kW or $/kWh ) - which should be used with caution for informing optimal investment decisions.

Tesla also seeks to dismiss the idea that battery storage is limited to two or four-hour duration, a common argument deployed by proponents of pumped hydro and peaking gas generators. Batteries are modular and complementary, such that two independent 2-hour systems may be deployed and concatenated to provide up to 4 hours of duration, or two 4-hour battery systems are able to provide up to 8 hours of depth for intraday energy shifting, etc – in much the same way that behind the meter batteries can be aggregated and considered as a fleet when part of a VPP, Tesla writes.

Battery storage – the new clean peaker
Tesla is dismayed by AEMO’s forecasts of another 9GW of gas peaking plants. "We disagree with this result," the company said in response, pointing to plunging costs that means battery storage is both faster and significantly cheaper than fossil fuel alternatives. Its position is in direct contrast to the federal government and its so-called "gas led recovery", and the government-owned Snowy Hydro, which is highly dismissive of battery storage and is building its own heavily subsidized and highly controversial gas peaking plant at Kurri Kurri.

"Battery solutions can serve the same role traditionally performed by gas peakers by discharging when demand (and correspondingly prices) approach peak levels and sustaining output to cover the typical daily peak duration.

"Given it is no longer economically rational (or necessary) for proponents, investors or governments to build gas peaking plants in Australia, aside from a small selection of subsidized plants currently proposed (~700MW), there is unlikely to be further commercial opportunities to deploy gas peakers anywhere in the NEM.

"To include 9GW in the ISP would unnecessarily embed a clear disconnect between AEMO’s ISP modeling results and a credible deployment outcome."

© 2022, Eva Fox | Tesmanian. All rights reserved.


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Article edited by @SmokeyShorts, you can follow him on Twitter

About the Author

Eva Fox

Eva Fox

Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.

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