The Hornsdale Power Reserve has brought big savings for consumers
Operators of the Hornsdale Power Reserve say it has helped save consumers A$150m ($115m) in energy costs in its first two years © David Gray/Reuters

In 2017, following several power cuts in the state of South Australia, Tesla chief executive Elon Musk made an audacious bet on Twitter: if he could not build a battery to solve the crisis in 100 days, he would provide one for free.

Musk won his bet, and operators of the resulting 129 megawatt-hours Hornsdale Power Reserve battery say it has helped save consumers A$150m ($115m) in energy costs in its first two years of operation.

The success of the lithium-ion battery has kickstarted other such projects aimed at helping Australia to integrate solar and wind energy into its electricity grid, by storing power for when it is needed.

In February, French renewable energy company Neoen, which operates the Hornsdale project, said it had secured financing for an even bigger battery in Geelong, south-west of Melbourne, for 450 MWh of storage. 

The Hornsdale Power Reserve features the world’s largest lithium ion battery © David Gray/Reuters

Melbourne-based renewable developer CEP Energy also says it will build four batteries in Australia, including a A$1.5bn unit at Kurri Kurri in the state of New South Wales.

These developments offer a way of replacing supply from once-dominant coal power stations. “There is an opportunity to provide grid stability as a lot of coal-fired power was being turned off quickly, probably faster than anyone planned,” says Peter Wright, CEP chief executive. “This would lead to a significant shortfall.”

Batteries will also be critical to meeting climate targets by mid-century, as they can ease the integration of renewable energy by smoothing out fluctuations in supply — when the sun does not shine or the wind does not blow.

Their deployment is already forecast to grow rapidly: storage is set to increase to 62 gigawatt-hours by 2030, from 3.7 GWh last year, according to Rho Motion, a consultancy. That equates to about 4 per cent of the battery market for electric vehicles by then, Rho Motion says.

Lithium-ion batteries, the same as those used in electric cars, can provide short bursts of power in fractions of a second, allowing them to make up for sudden electricity shortfalls or to store excess energy.

That can help in places well suited to solar power generation — as output is typically strongest around midday, when demand is weak, but falls as demand increases around sunset, as people return home from work.

“As the penetration and volume of solar and wind increases, batteries are required to buffer a lot of that variability,” explains Mark Stedwell, an adviser to CEP Energy.

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Batteries and renewable energy can, in effect, replace the security of supply offered by coal, according to a study by The Australia Institute, a think-tank. “The business model underpinning coal and gas is collapsing before our eyes and the good news is that batteries and renewable energy are now able to step in and keep the grid secure,” says Bruce Mountain, lead author of the study.

However, the lead in energy storage installations is about to be taken by the US, according to consultancy IHS.

California, which has pledged its electricity supply will be emissions-free by 2045, has targeted energy storage to help with its growing amount of solar power and to prevent blackouts.

In December, California’s Pacific Gas and Electric Company (PG&E) requested approval for six battery energy storage projects, all using lithium-ion batteries. “The next few years will be pivotal for the deployment and integration of utility-scale battery energy storage on to the grid,” says Fong Wan, PG&E senior vice-president for energy policy and procurement.

In March, US technology company Apple said it would build a battery capable of storing 240 MWh of energy — enough to power 7,000 homes for one day — in California.

But, even though costs for lithium-ion batteries have fallen 88 per cent since 2010 to $137 per kWh, industry analysts say they must become cheaper for them to be more widely deployed.

Some start-ups are developing much lower-cost batteries that would make it profitable to retain energy for longer, allowing energy to be stored for days when there is no wind or sun. Form Energy, a Boston-based start-up, aims to reduce prices to a 10th of that for lithium-ion battery packs. Its batteries are designed to store energy for 150 hours.

Costs for long-duration storage need to fall to as low as $1 per kWh to “fully displace” all baseload power generation technologies, according to a study published in the journal Nature Energy. It will be systems that can store energy for longer than 100 hours that have the most impact, it found — compared with four hours for lithium-ion batteries.

Utilities might even struggle to obtain enough high-quality lithium-ion batteries, given the competition from the automotive industry, says Simon Moores, managing director of Benchmark Mineral Intelligence. “[Electric vehicles] are sucking up the supply of high-quality batteries,” he says. “The reality [for battery producers] is that EVs are the priority — you get a bigger contract and bigger prices.”

Another option is vanadium-flow batteries, which use large tanks of separately charged vanadium electrolytes to store energy. These make it easier to expand capacity than when using conventional batteries. Invinity Energy Systems, a producer of vanadium batteries, has a contract to build a battery in Yadlamalka, South Australia, that will store energy from a solar project and provide it to the local grid. Its 8 MWh battery will be paired with a solar array.

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