Following this morning's release of the 15th paper in the Occasional Paper Series, Taking charge: The energy storage opportunity for Australia, by the Office of the Chief Scientist and a supporting media release by Australia's Energy Minister Josh Frydenberg, Ravi Manghani, research director, Wood Mackenzie Power and Renewables commented on Australia's energy storage outlook:
"Looking at behind-the-meter, Australia was the biggest residential storage market in the world in 2017, with a tripling of residential storage deployments over the previous year. High retail electricity rates and diminishing or expiring feed-in tariffs have encouraged residential solar customers to choose storage for self-consumption benefits. As a result, over the past few years, Australia has been the preferred testbed for new residential energy storage products, as several technology vendors have first introduced their residential product portfolios in the country.
"2018 continues to see a higher proportion of new residential solar projects, including storage, in line with energy supplier offerings. Increased proportions of residential and commercial properties are adding storage to current PV systems. Australia will enjoy its spot on the top as the largest residential storage market, buoyed by increasingly favourable economics for self-consumption, as well as mushrooming virtual power plant deployments. Australia and Japan (the second largest residential market) will together account for over 0.5 GWh of residential storage deployments, representing 43% of the global grid-tied residential market."
Mr Manghani added: "Australia is also turning out to be an important front-of-the-meter market. In 2017, the South Australian government awarded a 100 MW/129 MWh battery storage project to French renewable energy developer, Neoen, along with Tesla. The system came online in Q1 2018, and as of now, is the largest deployed lithium-ion battery system in the world. The asset has been contracted to provide contingency reserves and blackstart operations, and also receives merchant revenue for frequency regulation and energy market participation. Before getting ousted in the recent elections, South Australia's Labour Party announced Australia's first storage target with a 25% of system peak by its goal in 2025.
"At the heels of South Australia's procurement, the state of Victoria announced a $25 million energy storage initiative in March 2018. As part of the programme, the state has awarded two projects totalling 55 MW/80 MWh that will be used for providing transmission deferral services and renewable integration applications, respectively. Even as some electric utilities are looking to procure energy storage for renewable integration and deferral applications, majority of the market opportunities in the near term exist in the form of off-take agreements or merchant participation. We see a sizable pipeline of projects announced and under construction, of over a gigawatt-hour. Again these are huge projects, one 400MWh and another 200MWh, announced at this stage. The next few years will be fascinating for Australia's utility-scale storage as market rules make it easier for storage to participate and get market revenues. We project that Australia front-of-the-meter storage market will have 2.5 GWh of cumulative deployments over the five year period from 2018 to 2022."