For the past few months, batteries have been filling the electricity supply gap left by decreasing solar outputs as winter approaches. Lower supply has also been quickened by the decrease in available capacity from coal plants due to numerous outages of coal power stations and the closure of Unit 3 of Liddell. Batteries have been providing 4-5% capacity factor, compared to the normal level of around 2-3%.
As energy dispatched from batteries increases, so do their charging requirements. This increases demand for electricity, in turn raising market prices. The data is concerning for the future electricity market in Australia, with the move over to renewables meaning battery usage will only rise, potentially sending winter prices higher than the already substantial rises seen in 2022.
Source: Cornwall Insight Australia analytics using AEMO data
Dominic Pacaba, Energy Modelling & Analytics Consultant at Cornwall Insight Australia:
“The current situation provides perspective on the future market state when the retirement of coal power plants is accelerated and replaced by renewable energy sources such as solar and wind. Over the next few years, there will be a significant increase in the number of batteries installed to help balance the system’s energy supply. Depending on the quantity of batteries installed and the marginal clearing price in the future, prices could be pushed to even higher levels. This is due to limited solar generation during the winter months and the additional demand from charging the batteries, alongside high demand from air conditioning units during peak summer days.
“It will still be important to provide other options to supply the market and have a balanced energy mix in a low emission future scenario. This is to prevent price spikes resulting from increased demand from charging or pumping energy storage.”