AUSTRALIAN ENERGY STORAGE ROADMAP CLEAN ENERGY COUNCIL APRIL 2015

AUSTRALIAN ENERGY STORAGE ROADMAP CLEAN ENERGY COUNCIL APRIL 2015 1 EXECUTIVE SUMMARY Energy storage technologies are a game changer for the Aust...
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AUSTRALIAN ENERGY STORAGE ROADMAP

CLEAN ENERGY COUNCIL APRIL 2015

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EXECUTIVE SUMMARY

Energy storage technologies are a game changer for the Australian energy market, offering the prospects of greatly increased flexibility, reliability and efficiency in the delivery of power to consumers. Energy storage will complement the accelerated deployment of renewable energy in its various forms. As storage technology evolves and costs decline, the potential for storage technology in Australia is massive. Unlocking the full potential of this technology requires strategic planning by the Australian renewable energy and storage sector. This includes a focus on the following objectives: • • • • •

Analyse and monitor the growth of the storage sector Ensure the development of standards and the integrity of the storage sector Ensure effective regulation and policy to support the uptake and implementation of storage technology Coordinate the emerging sector, raising awareness about best practice implementation, and engagement in policy and regulatory issues Promote storage technology and its potential to consumers, policy makers and regulators

Focusing on these key objectives will ensure that the sector develops as quickly as possible, driving down costs, with strong standards that protect the integrity of the sector, and continues to build customer demand and confidence in the technology. As the peak body for the clean energy sector, including all renewable energy technologies, scales and the Australian storage sector, the Clean Energy Council has developed this roadmap to ensure the full potential of storage technology is realised in Australia. This roadmap builds on the Clean Energy Council’s 2012 report ‘Energy Storage in Australia – Commercial Opportunities, Barriers and Policy Options’1, which suggested the potential market for energy storage devices could be 3000 MW by 2030, and identified a range of barriers that might restrict the growth of storage. The Australian Energy Storage Roadmap outlines a program of initiatives to better define and address the safety, environmental, technical, commercial and informational barriers to the deployment of energy storage technologies – large- and small-scale.

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Marchment Hill Consulting, ‘Energy Storage in Australia – Commercial Opportunities, Barriers and Policy Options’, November 2012. Available online at: http://www.cleanenergycouncil.org.au/dam/Clean Energy Council/policy-and-advocacy/reports/2013/Energy-Storage-Study/Energy%20Storage%20Study.pdf

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This roadmap provides an overview of the current status and future direction of the Australian energy storage market and outlines the initiatives the industry must undertake to build and lead this industry. Many of the initiatives within this roadmap are already underway, while others will be undertaken in partnership with key stakeholders.

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____________________________________________________________ SECTION 1: HOW THE STORAGE INDUSTRY CAN GET INVOLVED This roadmap offers different opportunities for involvement from the leading companies involved and interested in the storage industry, as well as key regulatory, policy and industry stakeholders. Engagement and participation of leading companies in the storage sector is crucial to ensure the industry develops in an effective and coordinated manner. Companies and individuals can get involved by: •



Joining the Storage Advisory Group to have a direct say in the development and priorities of this exciting industry. The Storage Advisory Group is open to Sponsoring, Corporate and Associate Members of the Clean Energy Council. Sign up to the Energy Storage Network to be kept up-to-date on the progress of the roadmap, hear the latest industry news and receive latest reports and event invitations. The Energy Storage Network is open to all companies and individuals currently active or looking to learn more about the Australian storage industry.

To get involved contact [email protected].

____________________________________________________________ SECTION 2: POTENTIAL OF ENERGY STORAGE The global market for grid-connected residential photovoltaic (PV) solar installations coupled with energy storage is predicted to grow tenfold to reach more than 900 megawatts (MW) in 2018, up from just 90 MW in 2014.2 Australia can, and should, be a key player in the global storage market. Cost-effective, scalable, controllable and safe energy storage will have a profound impact on the Australian electricity industry. Energy storage includes a diverse range of technologies (see figure 1) that dispatch power within fractions of a second to provide critical power quality support, through to various battery chemistries that can store and release greater volumes of electricity over minutes or hours, and finally the bulk power storage technologies that can replicate the role of peaking power plants. With such a diverse range of technologies it can be difficult to generalise about the current status of the industry. Some technologies, such as Pumped Hydro Energy Storage (PHES), are proven technologies but face strict controls or very high capital costs on development, while others like solar hot water are mature technologies that could play a bigger role than they currently do. The battery storage sector is currently seeing an ever-growing range of different chemistries and applications entering the market.

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‘Energy Storage in PV Report – 2014’, IHS Technology, October 17 2014, available online at: https://technology.ihs.com/461779

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Figure 1. Energy storage technologies, applications and scale (courtesy General Compression)

The Clean Energy Council released the ‘Energy Storage in Australia’ report in 2012, which included detailed modelling and assessment of the potential market size for energy storage technologies.3 That report remains the most comprehensive publicly available analysis of the storage market in Australia. The modelling indicates that there is potentially a 3000 MW market for energy storage devices by 2030 (even without any specific government policies to support storage) but also identified a range of barriers that might restrict the growth of storage. The Clean Energy Council warned policy makers then that the energy storage revolution was coming, it couldn’t be stopped and would have profound implications, and told governments to be ready. The boom in solar PV caught many off-guard. The rise of storage should come as no surprise to anyone. Today we see growing recognition of the issues likely to emerge with the widespread uptake of storage technology, but only a limited understanding of the potential, the impacts and the barriers to entry facing energy storage technologies.

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Marchment Hill Consulting, ‘Energy Storage in Australia – Commercial Opportunities, Barriers and Policy Options’, November 2012. Available online at: http://www.cleanenergycouncil.org.au/dam/Clean Energy Council/policy-and-advocacy/reports/2013/Energy-Storage-Study/Energy%20Storage%20Study.pdf

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____________________________________________________________ SECTION 3: THE ROADMAP OBJECTIVE 1: ANALYSE AND MONITOR THE GROWTH OF THE STORAGE SECTOR Battery storage has attracted significant new investment and interest to date, particularly at the residential or commercial-scale, to complement the enormous uptake of small-scale solar PV in Australia over the last 5 to 10 years. Data on the number of installed battery storage systems is hard to find. Some public estimates of currently installed grid-connected systems are as low as 500 systems for 2014 and approximately 4 to 5 MW of off-grid systems, but these figures are disputed by some in the industry. Getting accurate data on the actual deployment of stand-alone batteries and those ‘behind the meter’ is essential for effective energy system planning as well as to assist current and prospective energy storage manufactures and retailers to assess the market. ACTION: The Clean Energy Council will undertake an annual Australian storage industry survey to gauge actual levels of deployment in 2014 and expectations for 2015. We will also work with key regulators and utilities to seek new ways to gather key data on storage deployment and monitor the sector’s development. OBJECTIVE 2: ENSURE THE DEVELOPMENT OF STANDARDS AND INTEGRITY OF THE STORAGE SECTOR It is critical that the storage sector develops the standards and protocols necessary to ensure the mass deployment of storage technology is done credibly, consistently and in a way that secures strong public and political support. The Clean Energy Council has established the Storage Integrity Working Group to lead the work in ensuring Australia has the appropriate standards, accreditation programs and product stewardship in place to ensure that batteries are installed to the required safety and quality standards. The Clean Energy Council (with support from ARENA) has also commissioned the CSIRO to undertake a comprehensive storage safety performance study which will advise on international best practice for battery installations, maintenance and disposal. ACTION: Complete a comprehensive storage safety performance study which will advise on international best practice for battery installations, maintenance and disposal. Ensuring batteries are installed correctly and appropriately is vital to maintaining consumer support for the industry. While there are rigorous guidelines for the installation of solar PV in Australia, at present there are no consistent guidelines on storage for installers to follow or for consumers to use to give them confidence. The Clean Energy Council has commenced the development of these guidelines and an accreditation regime that will ensure installation practices are robust and that installers have the competency to continue to undertake these installations. ACTION: Develop guidelines for the installation of residential- and commercial-scale storage technology, and establish a robust accreditation regime to ensure these guidelines are followed by Australian installers.

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Appropriate arrangements for the safe disposal or recycling of end-of-life systems (product stewardship) are a vital part of maintaining community support and industry integrity. Local councils and private waste management processes must be amended to accommodate batteries. ACTION: Work with Australian Battery Recycling Initiative (ABRI) to establish an agreed approach to the safe disposal of battery technology. There is currently no clear guidance for the standard of technology able to be installed in Australian homes and businesses. To ensure the integrity of the sector, including suitable safety and quality management, standards must be established and consumers and installers made aware of the minimum requirements for products. The Clean Energy Council is working with Standards Australia to develop formal standards for battery installation. ACTION: Work with Standards Australia to establish standards for storage technology and develop a listing of products approved for installation in Australia. OBJECTIVE 3: ENSURE EFFECTIVE REGULATION AND POLICY TO SUPPORT THE UPTAKE AND IMPLEMENTATION OF STORAGE TECHNOLOGY There are a variety of ways to support the roll-out of energy storage technologies, and these measures broadly fit into the following categories: 1. 2. 3. 4.

Remove the barriers to deployment Prevent discriminatory electricity tariffs Level the playing field for storage Establish supportive policies specifically designed to encourage investment in storage

The Clean Energy Council will proactively and strongly develop and advocate for policy that unblocks the full potential for storage technology in Australia. REMOVING BARRIERS TO DEPLOYMENT Many of the barriers that face energy storage, particularly battery systems, relate to grid interface issues. Complex rules, lack of transparency and discriminatory tariff structures stifle innovation and create challenges for battery storage and other forms of distributed generation. To explore these issues further and develop solutions the Clean Energy Council has initiated a programme of work called the ‘Future-Proofing in Australia’s Electricity Distribution Industry’ (FPDI) project, funded by the Australian Renewable Energy Agency (ARENA). This project will begin to address some of the existing barriers to integrating generation to the distribution system and identify potential future roadblocks. This work will have a material impact on unlocking the opportunities and overcoming the challenges for storage technology in Australia. Key activities within this project that are now underway include: •

Analysis of opportunities for demand-side management, including storage for SME premises

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• • • •

Review of policies and incentives related to the integration of renewable energy and storage in the distribution system, including drawing on international case studies and experience Development of a methodology to analyse and apportion the value added to networks by small-scale embedded generation and storage Analysis of the need for a testing and certification arrangement for large-scale inverters for solar PV and storage systems Comprehensive survey of the experiences of generator and storage proponents connecting to the grid Analysis of the opportunities for mid-scale embedded generation and storage to add value to the network

ACTION: The Clean Energy Council will identify and advocate policy solutions that overcome the barriers to storage investment, through the ‘Future-Proofing in Australia’s Electricity Distribution Industry’ (FPDI) project. PREVENT DISCRIMINATORY ELECTRICITY TARIFFS A major barrier to the deployment of storage at the residential and commercial level could be the introduction of electricity tariffs that discriminate against the use of demand-side measures by consumers. This issue has been identified as a priority for the Solar PV sector and will be a focus of the Clean Energy Council’s policy work in 2015 and beyond. ACTION: Ensure electricity tariffs don’t discriminate against the use of storage. LEVELLING THE PLAYING FIELD Reform to current policies and programs is needed to ensure a level playing field to support the efficient update of storage solutions. These include the distribution network investment test (which requires a public tender only for investments over $5 million) and the demand management and embedded generation connection incentive scheme (DMEGCIS), which is a funding pool for more innovative approaches to relieving network constraints. Some of these issues are considered within the FPDI project, but the Clean Energy Council’s work also focuses on other indirect barriers to investment, such as the diesel fuel rebate, which discourages the use of hybrid off-grid and storage systems. In addition, the lack of a market mechanism for aggregating the services of distributed embedded generation is a barrier to realising the economic benefits of large numbers of smaller generation units such as storage. Similarly, the current surplus generation capacity (considered in detail in a recent Clean Energy Council Briefing Paper4) in the wholesale electricity market is depressing average wholesale prices and lowering price volatility, which directly impacts the business case for many storage technologies which can provide bulk power or help to shave off peak demand.

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‘Briefing paper: Australia’s power generation sector at the crossroads’, Clean Energy Council, September 2014. Available online at: http://www.cleanenergycouncil.org.au/policy-advocacy/renewable-energytarget/power-generation-sector-at-crossroads.html

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ACTION: The Clean Energy Council will continue its policy and advocacy work on indirect barriers to investment in storage systems, as well as creating an enabling market environment for small-scale embedded generation. ESTABLISH SUPPORTIVE POLICIES SPECIFICALLY DESIGNED TO ENCOURAGE INVESTMENT IN STORAGE Accelerating the deployment of storage in the short term will likely require some targeted policies. While it is easy to propose government funding for storage, the success of such proposals rests on the ability to articulate a strong public value case for that support. At present that case has not been comprehensively made and requires further work. A number of simple measures would assist storage technologies without requiring the extensive public benefit analysis of a broader policy measure. These include issues discussed in the Clean Energy Council’s 2014 pre-budget submission to the Victorian Government5 such as resource mapping for bulk storage technology, funding for assessment of supply chain opportunities and skills gap analysis for particular technologies. Other policy areas can indirectly benefit the storage industry. Incorporating projected increases in the price of natural gas into the case for government policies to support energy storage could greatly improve the case for action. Some of these opportunities have already been considered by the Clean Energy Council in the Quick Clean Energy Jobs for Victoria6 paper. Support for uptake of electric vehicles would also have a major impact on the residential and commercial market for storage through the creation of a secondary market for used batteries. Work is needed to consider these issues, as policy changes could happen quickly and without much warning as state and federal government look for ways to stimulate employment. ACTION: Complete an assessment of the direct and indirect policy measures that are available to support energy storage. OBJECTIVE 4: COORDINATE THE EMERGING SECTOR, RAISING AWARENESS ABOUT BEST PRACTICE IMPLEMENTATION, AND ENGAGEMENT IN POLICY AND REGULATORY ISSUES. This roadmap and the initiatives within it are intended to build a network of leading storage companies and stakeholders and raise awareness about commercial opportunities and latest national and global developments. It is clear that many domestic and international developers and investors are considering entering the Australian market. Some players will prefer to acquire or partner with existing Australian businesses, while others will choose to establish a presence directly.

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‘Clean Energy Council submission to the Victorian budget’, submission by the Clean Energy Council, 23 December 2013. Available online at: https://www.cleanenergycouncil.org.au/dam/cec/policy-andadvocacy/submissions/Victorian-Government/CEC-Vic-Budget-Submission/CEC Vic Budget Submission.pdf 6 ‘Quick clean energy jobs for Victoria’, Clean Energy Council, October 2014. Available online at: https://www.cleanenergycouncil.org.au/dam/cec/policy-and-advocacy/reports/2014/Quick-clean-energyjobs-for-Victoria-October-2014.PDF

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In emerging industries the opportunity to network with potential backers and to seek out collaborations can improve the climate for investment and accelerate business innovation and technology deployment. Naturally, the chance to network with potential buyers of storage devices is of considerable value to the development of the sector. ACTION: Establish the Energy Storage Network to share information, host webinars, networking and other events to facilitate local and international knowledge sharing and investment. Much can be learned from international experience in developing storage-specific policies (for e.g. California, Canada, Germany). The Clean Energy Council’s relationships with leading international energy organisations will be leveraged to provide learning and relevant information to Clean Energy Council members. Specifically, through the Clean Energy Council's Asian Business Engagement Program (supported by Austrade) the Clean Energy Council spent significant time in China in 2014 to build linkages with key Chinese groups. This contact will continue throughout 2015 with a Clean Energy Council presence at the Clean Energy Expo in China and the Shanghai New Energy Conference, promoting the opportunity in the Australian storage sector. ACTION: Work with relevant international partners and countries and share best practice and international experience with the emerging Australian storage sector. OBJECTIVE 5: PROMOTE STORAGE TECHNOLOGY CONSUMERS, POLICY MAKERS AND REGULATORS

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Ensuring that the public and policy makers are well informed about the potential and benefits of energy storage to provide energy to households and business is essential. At present there is not a strong voice in the public conversation educating and informing the community about energy storage. The Clean Energy Council will play that role, just as it has successfully for other clean energy technologies. The range of battery storage devices is growing all the time with different chemistries, which broadly fall into categories of lead acid, lithium or flow batteries. Helping consumers to navigate the variety of complex options and the appropriateness of different solutions is crucial. The Clean Energy Council’s widely-used ‘Guide to installing solar PV for households’7 has played this role for the solar industry over many years. The Clean Energy Council is developing a consumer guide for storage to grow awareness and demand for battery storage technology and ensure consumers are better informed about the right solution for them. ACTION: Develop and promote a ‘Consumer Guide for Battery Storage installations’ to build consumer awareness and demand for energy storage.

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Clean Energy Council, ‘Guide to installing solar PV for households’, 2014. Available online at: solaraccreditation.com.au/guideforhouseholds

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ACTION: Develop and promote a ‘Guide to improving electricity use in your business – demand-side management solutions’ to build awareness among small-to-medium-sized enterprises (SMEs) about the range of options available – including storage. The Clean Energy Council will also promote storage technology, its potential and challenges to broader stakeholders and decisions makers through a range of initiatives aimed at our existing extensive networks. This will include: • • •

Presentations on storage at key industry events and conferences, both in Australia and overseas Briefings for key policy and decision makers Promotion of storage opportunities and challenges through media

ACTION: Provide a strong voice for storage and promote the technology through the Clean Energy Council’s extensive networks. This will include industry reports, media outreach, storage events, including the Clean Energy Council ‘Australian Clean Energy Summit’ in July, ‘All-Energy Australia in partnership with the Clean Energy Council’ in October and other key events.

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