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Australian Regulator Reports Tesla Battery Working ‘Faster, Smarter, Cheaper’ Than Gas

In its first four months of operation, Tesla’s mega-battery system in South Australia was faster, smarter, and cheaper than conventional gas turbines, according to a new report by the Australian Energy Market Operator (AEMO).

The performance milestone has observers and analysts excited about a breakthrough in grid security and resilience that could be a death knell for natural gas peaker plants.

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“The 100MW/129MWh Tesla big battery, officially known as the Hornsdale Power Reserve (HPR), was officially switched on December 1,” RenewEconomy recalls, “with 70 MW providing network security for the grid operator, and another 30 MW operating energy arbitrage in wholesale markets.”

A particular highlight was the battery’s “virtually immediate” response to “a major outage of a fossil fuel generator in [New South Wales] on December 18,” prompting AEMO to conclude that “commissioning tests and simulations confirm that the HPR is capable of responding more rapidly to a contingency event than conventional synchronous generation.”

RenewEconomy describes the battery’s performance as “a constant bull’s eye”, in contrast to conventional turbines’ response to system demands that more resembles the way a “drunk may walk across the street, or throw darts at a dartboard”.

Yet as both Tesla and AEMO acknowledge, “there is actually no market in Australia for such speed and accuracy,” since “even the conventional turbine staggering across its target range is operating within industry standards.”

That may soon change, however, with AEMO recognizing “that there could be a strong case for such markets to be developed, particularly as the grid changes to more inverter-based technologies (wind and solar), and away from synchronous generation.”

RenewEconomy notes, meanwhile, that even with the positive reviews to date, most of the HPR’s capacity has gone unused. “The bulk of the battery’s discharge capacity—70 MW—has not even been used yet. It is there sitting in reserve in an emergency—like the state government-owned diesel gen-sets—but has not yet been called upon.”

With that experience as a starting point, AEMO “is now looking to the Tesla big battery—and others like it—as its first line of defence against the kind of potentially catastrophic events that triggered the blackout in South Australia more than 18 months ago,” RenewEconomy Editor Giles Parkinson notes in a more recent post.

“These schemes,” he explains, “could be based almost entirely on the ability of these batteries to swing into action at a moment’s notice in response to a major fault (such as the tripping of a big coal or gas generator), and literally hold the grid together while slower-moving conventional machines get into gear.”

The ultimate goal “is to stop the big interconnectors from tripping off—and leaving states such as South Australia islanded and at risk of massive load shedding, or worse.”

The battery “enables us to inject energy into the system in a matter of milliseconds,” a “fantastic” level of control that means “the operator does not need to trip off so much load,” said AEMO Head of Operations Damien Sanford. The net result, RenewEconomy notes, is that the grid operator “doesn’t have to cut supplies to major users such as BHP’s Olympic Dam or other manufacturers.”

The actual experience hasn’t stopped naysayers, particularly from Australia’s coal industry, from talking down the battery’s success, largely because the new technology is so quick it has left rule-makers in its wake,” Parkinson notes. But times are changing. “AEMO is keen to look at modifying rules that will actually ascribe value—very fast frequency response, ancillary services, and other specifications,” building on experience in overseas markets, particularly the United States.

“We are pretty excited about the range of batteries coming into the [National Electricity Market],” and “about the types of services that batteries can provide,” Sanford said. “We will actively pursue those changes to enable greater participation by these batteries, and similar fast responding technologies.”

Also compelling for AEMO, RenewEconomy notes, is “the speed with which the battery responds to the contingency market, and the fact that storage can be commissioned so quickly, can be built without the need for new connection points, and because it is modular—meaning they can be big or small, or anything in between.” Sanford sees storage playing “a key role in dealing with system peaks” that are being pushed later into the evening by rooftop solar, and in addressing high “ramp rates” caused by fluctuations in weather-dependent output.

“Once we work out how to integrate large volumes of battery storage, we are going to start to see some great outcomes,” he said.

One of those outcomes, Parkinson notes, is the extent to which “wind and solar technologies paired with battery storage are already beating new coal- and gas-fired generators on cost.” Average combined costs for onshore wind and solar photovoltaic plants paired with small batteries are already coming in between US$32 and $110 (A$41 to $143) per megawatt-hour, according to a recent Bloomberg New Energy Finance report. And “this cost will fall dramatically in coming years, as wind and solar costs continue to fall–-solar by another 62% and wind by another 48% by 2040–-making them the cheapest form of bulk generation almost everywhere in the world by 2023.”

Citing BNEF, Parkinson notes that “adding a battery to a solar or wind plant can make some of its output ‘dispatchable’, and give it access to high-value hours when it might otherwise be offline”. Which means that in today’s electricity markets, “in countries like Australia, the U.S., and India, new solar- and wind-plus-battery systems with a low degree of dispatchability—say, 25% generating capacity to storage ratio, and one-hour batteries—can already compete with new coal and gas plants.”

By 2025, the BNEF report stated, “four-hour energy storage begins to compete with peaker gas plants, even in countries with cheap gas generation like the U.S.”