Battery storage is key to the transition to net zero. And as community batteries take off, the question ‘who owns a community battery?’ is one that needs to be considered.
Home batteries, car batteries, grid scale batteries, and pumped hydro, among many other solutions, are being installed at an accelerating rate.
And now we have community batteries. A battery that is installed in the local street, park or alongside a building, to serve anywhere from two to 200 households.
The scale and rise of community batteries
A community battery is typically about 20 to 50 times bigger than your home battery.
They are perhaps between 100 kW (200kWh) and 500 kW (1000 kWh) in size.
They cost between $250,000 and $5,000,000.
In the next two or three years, it’s expected that 500 more community batteries will be installed across Australia through a series of federal and state government grants.
But who will (or should) own them?
6 community battery ownership options
We’ve been considering this issue of ownership (and therefore control, costs, risks and benefit) for the past year or two through our work on neighbourhood batteries and community energy projects.
In our view, there are six distinct options. Read about the pros and cons of each option.
Note there is no easy answer to this. Nor is there a currently preferred model in the community.
1. Distribution Network Service Provider (DNSP) ownership
Electricity distribution companies are well placed to own community battery assets as they neatly connect and are located with poles and wires. There is a lot of efficiency and assurance that comes with a DNSP owning a community battery and maintaining it.
The DNSP would have to lease the operation (and then any associated income streams) of the community battery.
But, is it really a community battery if it’s owned by a DNSP? Or is it just a network augmentation?
Distribution companies claim these batteries benefit the community, which is technically true. But every new pole and LV network extension is, in theory, supporting the community, for a price! These assets then feed into their price submission and increase in the regulated asset base.
2. Local government owned
Local governments could own a community battery, particularly as the land the battery is located on is often local government land (a road reserve, park or car park).
The most significant reason for a local council to take ownership, and support the installation of a community battery, is that it supports the local community. Councils would be directly responding to the community's needs.
This approach is consistent with other sustainability initiatives that many councils support for the community such as solar bulk buys, energy efficiency, and actions consistent with declaring a climate emergency.
And importantly, they have available and suitable land. Local governments also have the administrative structures in place to manage a community battery asset, insure it, and be a customer of the battery too. Ccouncils would have to outsource the operations of the battery.
3. Corporate ownership
A community battery could be owned by a corporation. Particularly a developer or battery supplier that both makes and operates the battery.
As an aggregator and operator of several batteries, they would have an incentive to ensure that the infrastructure is safe, maintained, and operational all the time. This would maximise the participation in the market and trading of electricity.
They may partner with an electricity retailer to offer electricity to the local community.
4. Community bank ownership
Another form of corporate ownership is where a community bank steps in to own the battery. And in some instances then offer shares to the community.
Their incentive is to support a local community, and also find innovative models to reinvest in community infrastructure, outside of providing grants to sporting and recreation groups that they have traditionally followed.
5. Energy retailer ownership
Energy retailers may want to have battery storage on their asset base, just as they have come up with innovative financial models to own solar on customers’ roofs.
They would benefit by operating the battery to avoid price spikes in the evening.
And we assume retailers would also develop innovative retail energy product offerings for the local community around the battery.
6. Community ownership
Last but not least! Many community groups are actively looking at the feasibility, opportunity, and advocacy for community batteries across Australia. And then applying for grants to have community batteries installed.
A mix of issues and values drives them. From our experience and conversation with a variety of these groups, community ownership is a big thing.
The community could own shares in the battery and/or be a customer of the battery. And most models assume that not everyone with access to the battery is an owner. This is important for communities that want to see everyone benefit, not just those that can afford it.
In some situations, they may become members of an organisation. Or they may set up a whole new legal structure with unit shares to enable a pooled investment, similar to a managed fund.
There are several ways to structure how this would work, but the core of it is that funding and ownership of the battery is 100% community.
Only time will tell
Of course, there are hybrid versions of all of these community battery ownership options.
Time will tell which ownership model becomes the preferred option.
We will keep working on this issue, and will be sure to share updates as they happen.
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