Market reform key to turbocharge energy storage

Targeted electricity market reform, rather than long-term public funding, is the key to unlocking the full benefits from energy storage technology as Australia shifts to renewable energy, according Clean Energy Council’s latest policy paper.

“There remains substantial work to do in modernising Australia’s energy rules and allowing energy storage to fully participate in the market, bringing the benefits of the technology to both the grid and consumers more broadly,” said CEC Chief Executive Kane Thornton.

“Australia currently lacks a strategic package of energy market reforms that will help to turbocharge energy storage and tear down the barriers that stand in the way to its wider use around the country.

“While there is a role for government funding at the moment to help with the cost reduction and establishment of the energy storage industry, strategic reform and regulation is the most efficient way to encourage more widespread use of the technology over the long term.”

The newly released policy paper Charging Forward: Policy and regulatory reforms to unlock the potential of energy storage in Australia outlines a package of targeted reforms to support the increased rollout of energy storage projects at residential, commercial and grid scales.

“Energy storage is the last major puzzle piece of an evolved energy system. It can complement more variable sources of generation, like wind and solar power, while also providing services that bolster the resilience of the system. It also lightens the load during peak demand, reducing the need for expensive network investment and augmentation,” Thornton said.

“Rising electricity costs, changing tariff structures and rapidly reducing technology costs have combined to create the ideal conditions for greater adoption of ‘behind the meter’ storage and solar technologies. These new products can make a contribution to the electricity market and reduce costs for all consumers.

“Energy storage costs — especially battery storage — are falling. There is huge potential for these technologies to change the way customers and retailers interact with the grid. However, a combination of market reform, incentives and regulatory change is needed to drive this transition, while ensuring a secure and affordable power system,” he said.

The policy paper recommends 13 reforms across four categories to achieve this, ranging from removing regulatory barriers and rewarding the value of storage behind the meter to protecting consumers and changes that would allow storage to support grid security through its fast frequency response capability.