“Unpredictable energy demands and fluctuating prices make energy storage a crucial solution in the world’s most volatile market, ensuring stability and resilience for businesses and consumers alike.”
The National Electricity Market (NEM) in Australia is experiencing increased volatility due to various factors such as outages at coal power plants, natural disasters affecting transmission infrastructure, and the growing presence of variable renewable energy sources like solar PV. Rystad Energy conducted an analysis that revealed the need for significant energy storage capacity to balance the NEM by 2050. They estimated that 46GW/640GWh of energy storage, provided by utility-scale battery energy storage systems (BESS) and pumped hydro energy storage (PHES), would be necessary. These figures align with similar assessments made by the Australian Energy Market Operator (AEMO) and the national science agency CSIRO, which both highlighted the need for substantial storage capacity to meet future energy demands and achieve net-zero emissions targets. Currently, there are only about 2.5GW of utility-scale batteries and pumped hydro participating in the NEM. The AEMO has also emphasized the urgent need for long-duration energy storage (LDES) to balance the grid. Additionally, Western Australia alone requires 12GW-17GW/74GW/96GWh of storage capacity by 2050. The volatility in the market can be unsettling for retailers and consumers, underscoring the importance of enhancing transmission infrastructure and investing in storage solutions to create a stable and affordable electricity market. Australia has the opportunity to transition to renewable energy sources, given its favorable geography and climate, but the unreliability of aging coal power plants and the intermittent nature of solar PV contribute to price fluctuations. As coal plants retire, renewables are expected to play a more significant role in the energy mix, but firming technologies for renewables must be considered to ensure a secure and reliable power supply. The energy storage sector in Australia is growing, with increasing battery storage capacity being built each year. However, it is still far from meeting the recommended storage capacity levels. The Capacity Investment Mechanism, a scheme of tenders and auctions for dispatchable renewable energy capacity with mandatory inclusion of energy storage, is set to be implemented and could provide the certainty needed to attract investment in the battery storage sector. This scheme has been welcomed by industry experts as a step towards a national energy storage strategy.