On Friday Elon Musk and Lyndon Rive (a Tesla VP) claimed that
energy storage could solve SA's electricity problems. Tesla is
offering to install the 100MW of battery storage needed to prevent
blackouts in SA within 100 days, if asked to do so. The rough cost
of the batteries for such a project is around $200 million. You
could be forgiven for thinking that this is a marketing ploy (Tesla
have just launched the Powerwall 2 in Australia). But another
company, Zen Energy, are already looking at installing a 50-150MW
battery storage farm in SA to support their large scale solar
generation plans. So this isn't all puffery.
The plan is a bit of a regulatory headache though, if it is to
be commercially viable. One of the main problems is that the market
for the wholesale buying and selling of electricity is skewed in
favour of fossil fuel generators, who lobby to maintain the current
system. Specifically, the current spot market for electricity is
structured so that generators and users bid every five minutes on
the price of electricity, which is then averaged over 30 minutes.
In short there is no competitive market for the fast response
frequency control that batteries can provide to the energy
The energy sector is one of the most regulated areas of the
economy. However the rules set by the market operator need to keep
pace with changing technology. Storage technology is just one
example of where the rules fall behind.
SA Premier Jay Weatherill has suggested that to resolve its
energy nightmare the state might leave the National Energy Market
altogether, and nationalise the system. We think a better option is
to reform the National Energy Market so that it is fit for the
energy system we have today. It's down to the Council of
Australian Governments to make the changes. Let's hope, for
SA's sake, it makes changes sooner rather than later.
We do not disclaim anything about this article. We're
quite proud of it really.
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