Australia has lots of renewable power, but limited high-voltage power lines to move it around the country. Now it's tapping a massive battery to help.

The Australian Energy Market Operator (AEMO) last week awarded a competitive contract to developer Neoen to build the project dubbed the "Victorian Big Battery" along the transmission line connecting the states of Victoria and New South Wales. At 300 megawatts/450 megawatt-hours, this project will eclipse the size of all other grid batteries online today, at least for now

Besides the eye-catching scale and the fact that Tesla will supply the project with its Megapack battery product, the Victorian Big Battery is notable for what it will do: act like transmission infrastructure. 

The battery is set to come online by November 2021, fulfilling a System Integrity Protection Scheme contract with AEMO through 2032. That grid jargon means that the battery will guarantee instantaneous power in case the transmission network suffers an unexpected outage. That assurance should let the grid operator move an extra 250 MW of peak capacity between the states, helping to balance the influx of renewable energy. 

"This is a massive signpost that storage will be one of the key transmission assets of the next two decades," said Daniel Finn-Foley, energy storage director at research firm Wood Mackenzie.

The rest of the time, the battery can bid into Australia's power markets and make money just like the earlier Neoen and Tesla collaboration, the Hornsdale Power Reserve.

Batteries acting like wires

Battery advocates often praise the technology for addressing the under-utilization of power generation resources. Instead of building peaker plants that only run for a few hours each year, the grid can simply store power during hours of surplus production, and discharge that power during hours of peak demand. Batteries could make similar headway in the utilization of transmission infrastructure, which is also built for rare peaks and therefore sits idle much of the time.

Utility Arizona Public Service put this concept to work for the remote desert town of Punkin Center back in 2017. The community's peak load was growing past what the existing wires could deliver. Rather than build another wire, only to meet the rare occasions when demand exceeded transmission capacity, APS procured a battery from storage integrator Fluence. It stores power in the community and delivers it when needed. This approach costs less than half of what the wires upgrade would have been.

"Storage helps existing transmission assets to be used more efficiently at any point in time," Kiran Kumaraswamy, Fluence's VP of market applications, wrote in a 2019 blog post on the topic. "Like an extra [highway] lane that appears whenever and wherever it is needed, it can provide the added capacity — at the right size and with a smaller footprint — to ensure reliability and redundancy."

Since Punkin Center, a handful of coastal New England utilities have opted for batteries rather than running new lines to supply additional power for seasonal beachgoing activity. 

Using batteries for this role avoids contentious permitting battles for new transmission lines. Moreover, batteries can actually do useful things when the grid isn't dealing with a power shortage, which adds value relative to wires that only transmit power. 

Still, nobody has awarded a contract for a battery-as-transmission project as big as the Victorian battery, said Jason Burwen, vice president for policy at the U.S. Energy Storage Association, an industry group.

Australia's battery leadership continues

The award bolsters Australia's claim as a pioneer in applying battery technology to grid problems at scale. That track record kicked off with the Hornsdale battery, which Tesla famously delivered within 100 days in 2017 to shore up the South Australian grid. That remained the largest lithium-ion battery in the world for several years.

"Tesla made a big bet; they put their money where their mouth was, and they're reaping the rewards of that," Finn-Foley said.

Australia has seen booming wind and solar production as old coal plants head for retirement. That creates grid volatility as renewable production waxes and wanes. It also poses challenges for a transmission network that largely hugs the coastal population belt; a state may have an influx of surplus wind at one moment but lack the transmission capacity to ship it to neighbors that could use it.

The state of Victoria has a goal to reach 50 percent renewable electricity by 2030 and net-zero emissions by 2050. It launched the System Integrity Protection Scheme to secure 250 MW of power for at least 30 minutes, in order to allow more electricity transfer through the line between Victoria and New South Wales.

"There is a crucial need in Victoria to secure additional reliable electricity supplies," Lily D'Ambrosio, Victoria's minister for energy, environment and climate change, wrote in the order initiating the procurement earlier this year.

Tapping batteries as a tool to deal with transmission constraints opens the door to the development of exceedingly large batteries. But projects at the scale of Victoria's remain rare. Germany is gearing up for large-scale battery installations under its GridBooster initiative. But in the U.S., a leader in many forms of battery development, storage-as-transmission regulations remain "underdeveloped," Burwen said in an email Monday.

Congress and the Federal Energy Regulatory Commission have classified storage as a possible transmission tool, Burwen noted, but it wasn't until this year that a regional grid operator — MISO, in this case — finalized regulatory frameworks for storage as a transmission asset. 

"Although the door is theoretically open to storage-as-transmission, a considerable amount of regulatory uncertainty needs to be resolved to create a stable foundation for significant investments in this critical new part of bulk power system infrastructure," Burwen said.

A groundbreaking project in Australia doesn't necessarily serve as a precedent for regulatory proceedings in other countries. But real operational data from a large-scale instantiation of the concept could bolster proposals to try this elsewhere.

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Learn more about the expanding markets and grid applications for batteries and the emerging role for long-duration energy storage technologies at Wood Mackenzie's Energy Storage Summit 2020 this week. The three-day event, now in its sixth year, will bring together utilities, system integrators, financiers, regulators, battery and software innovators, and other key storage players for two days of data-intensive presentations, analyst-led panel sessions with industry leaders and extensive, high-level networking.