Wartsila says right signals needed to drive Australian battery investment

The Australian BESS market is experiencing strong growth, driven by increased demand for large-scale energy storage solutions to manage the integration of intermittent renewable energy generation but Finnish technology group Wärtsilä says challenges remain.

Kashish Shah, head of energy storage market development for Wärtsilä in Australia, said concerns about delays and changes to rules for grid connections remain a major issue for developers.

“One of the biggest challenges for a BESS developer is getting the desired grid connections in a timely fashion,” he said. “This can have a great impact on the investment decisions. Another big challenge is fast-changing regulations and, a lot of times, it can have negative or unclear impacts on BESS assets.”

Shah said, to unlock the full potential of battery storage, regulatory systems must provide clarity on market access, recognize the full value of the services that the technology offers, and establish price signals that accurately reflect its various contributions.

“As Australia transitions to a more renewables-backed grid, long-duration energy storage is a critical component to mitigate the risk of renewable droughts,” he said. “BESS is the most cost-effective technology that provides firming of intermittent sources of renewable energy generation. But the market and regulations need to continue to provide the right price signals to safeguard BESS investments.”

Wärtsilä has established itself as a key figure in Australia’s renewable energy sector. It already has 1 GW/2.7 GWh of battery energy storage under contract or in deployment across the country.

Its projects include the multi-stage Bungama BESS being developed by Amp Energy in South Australia and it is partnering with Origin Energy on the Eraring battery facility in New South Wales, which will be one of the world’s largest energy storage projects, at 700 MW/2,103 MWh, once completed.

Despite concerns about the challenges related to the grid connection process and technical requirements, Shah said revenue opportunities continue to grow and diversify for battery owners and operators with software solutions to increasingly play a crucial role in enabling asset owners to have strong technical and market performance.

“On top of the market mechanism, there is policy support to encourage investment into battery assets,” he said, highlighting the federal government-backed Capacity Investment Scheme (CIS) that aims to secure long-term revenue for 9 GW of standalone dispatchable assets and another 23 GW of renewable energy generation assets with which BESS could be paired to provide firmed power to the grid.

This scheme, along with grants and green financing, is expected to help stabilize the revenue for big battery projects in Australia.

“The capacity investment scheme will offer competitive revenue underwriting structure with cap and collar [maximum and minimum price] contracts on annual revenue,” Shah said.

Data from the Clean Energy Council show that investment in energy storage projects is powering ahead, with eight new battery systems totalling 1,235 MW/3,862 MWh of energy capacity reaching financial commitment in the July-to-September quarter, up 95% compared to the same period of 2023.

The Australian Energy Market Operator has projected that Australia will need about 49 GW of dispatchable battery energy storage projects and approximately 640 GWh of total energy storage capacity, to achieve its 2050 clean energy goals.

Australia’s current storage capacity is about 3 GW, inclusive of batteries, virtual power plants, and pumped hydro projects.

From pv magazine Australia.