What we’ve learned about neighbourhood batteries
For the past five years, our team at Wave Consulting has been working on various neighbourhood battery projects (sometimes referred to as community battery projects). Read on to find out the benefits of neighbourhood batteries as well as six things we’ve learned along the way that lead to effective feasibility projects.
What are the benefits of neighbourhood batteries?
Energy battery storage is critical to a zero emissions grid, and a zero emissions community and economy.
It’s why Victoria’s Labour government has just announced that they’ll be building a 125MW big battery in north-western Victoria in order to meet some big energy storage targets. The aim is for it to power 24,000 homes.
Storing renewable energy can happen at the household scale up to the grid scale.
A key part of the transition to a zero emissions grid, is the role that ‘in front of the meter’ battery storage systems will play in the transformation of the grid and the move to a 100% renewable energy system in Australia. This is particularly important at the local or neighbourhood scale.
So why are neighbourhood batteries good for our communities?
1. Act as a solar sponge
Neighbourhood batteries act as a ‘solar sponge’ to absorb solar during the day and discharge it at night. In so doing, they:
enable more people to connect their solar systems to the grid for exporting
reduce peak demand at night
reduce the voltage fluctuations that result from these power flows.
2. Defer or avoid network upgrades
They can defer or avoid network upgrades. This means that if the battery can absorb solar power in the day, discharge it later that night, and is in a specific local voltage network that is constrained (i.e., the demand at night is higher than the local transformer) then the transformer does not need to be upgraded. And this means that the Distributed Network Service Provider (DNSP) saves money!
3. Play a role in the Frequency Control Ancillary Services market
When they are set up to be aggregated with other battery storage systems, neighbourhood batteries can play a role in the Frequency Control Ancillary Services (FCAS) market.
What this means is that in addition to just supply power, a battery can help regulate the frequency of the power grid. This is too complicated to get into in one article, but the if the frequency of the power being supplied isn’t in the right range, then it shuts down! See the article What is Frequency Control Ancillary Services? that ARENA has published for more detail.
4. Neighbourhood batteries are supporting, and owned by, community members
What is most interesting is the way that community batteries can support everyone in a neighbourhood. They don't just support those that own their home or those that have solar already. Energy equity is a significant issue that is partly addressed through neighbourhood batteries.
Neighbourhood batteries are unique too in that they can be owned by local community members. They can become shared local energy assets that represent, in a very visual way, the changing landscape and distribution of energy in Australia.
Community battery projects are being tried and tested across Australia
110kW/285kWh neighbourhood battery in North Fitzroy. (Photo: Wave Consulting Australia)
There are several neighbourhood battery trials around the country, so this isn’t some far-fetched concept. They are in operation right now. We have examples in Sydney, Perth, Melbourne, Phillip Island... and the North Fitzroy community battery is probably the most well-known for its iconic artwork!
These trials continue to provide feedback to the community, generators, network managers, and government. This includes feedback on the cost and benefits of storage being located within communities and neighbourhoods. There should be updates later this year and in early 2023 on their effectiveness.
At Wave, we have delivered two significant neighbourhood battery feasibility projects recently:
To create these community assets, we’ve also collaborated with organisations including the Department of Environment, Land, Water and Planning (DEWLP), Yarra Energy Foundation, ANU’s Battery Storage and Grid Integration Program, and other consultants such as Eagles Engineering and Benjy Lee Consulting.
6 things we’ve learned about neighbourhood batteries
As a result of working on these intensive neighbourhood battery feasibility projects, we’ve learned a thing or two. Here are some of the main insights we have gathered along the way.
1. Neighbourhood batteries have a big impact on households
A neighbourhood battery could support between 10 and 100 households
2. Neighbourhood batteries are not cheap
Neighbourhood batteries are not cheap, and mostly don’t deliver a positive financial return.
These projects usually require between $250,000 and $2 million in capital funds. That is a big investment in an asset that is forecast to ‘maybe’ break even over a 10 or 15 year period.
If batteries were to come down by 50% in cost, then most neighbourhood battery projects would be NPV positive, and proceed. Very quickly a thousand neighbourhood batteries would bloom!
3. Community engagement for neighbourhood batteries is critical for success
The community interest and demand for neighbourhood batteries is very large. The Clean Energy Nillumbik study in northeast Melbourne found that 92% of the community was very supportive of a neighbourhood battery.
There is a community expectation that a neighbourhood battery will supply power during blackouts. However, the batteries are currently not designed to do that, so meeting community expectations is tricky. It’s very important to be very clear, early in the engagement process, about what the battery storage projects will and will not do.
Community engagement is time-consuming but critical to obtaining a social license to proceed with these projects.
Pole-top neighbourhood batteries are not favoured by the community. Creative artworks on ground-mounted battery systems have received very positive local feedback to date.
4. Finding the perfect location for a community battery can be tricky
Locating a site for neighbourhood batteries can be very difficult.
In built-up areas, it can be harder to find a suitable site that doesn’t create noise or amenity issues for local residents. In inner city suburbs like Fitzroy in Melbourne and Bondi Junction in Sydney, the available space is limited.
In some peri-urban areas there are multiple areas suitable for a battery.
5. Electricity modelling requires quality data
Modelling of the electricity flows requires good quality and fine temporal scale metered data at the local upstream transformer.
Data from a number of years is required in order to be accurate, which is often difficult to obtain from a Distribution Network Services Provider.
6. Neighbourhood batteries require a robust financial and ownership model
Forecasting the future of electricity prices is difficult but critical to developing a robust financial model.
A neighbourhood battery will generate, at most, 50% of the revenue from energy arbitrage (the buying and selling of power). The other 50% comes from FCAS and network charges.
A community battery tariff is critical to the financial feasibility. It creates an incentive to charge in the day, and discharge at night. This is opposite to traditional tariff structures that would cost the battery for each kWh as the battery is charged.
There is still much work to be done on developing a good financial and ownership model for these projects. Successful models need to be scalable as new neighbourhood batteries are delivered in new communities.
What is the future of neighbourhood batteries?
We see neighbourhood batteries continuing to be developed more and more for our communities.
Alongside the rise, and use, of bi-directionally charged electric vehicles, they will play a key part of our successful transformation towards net zero.
Feasibility projects of your energy and battery storage options
As an innovative consultancy, with a key focus on renewable energy, we are specialists in community energy and neighbourhood batteries. Get in touch today.
Email us on info@waveconsulting.com.au or call 0425 298 997.
COMMUNITY ENERGY AND NEIGHBOURHOOD BATTERY CASE STUDIES
Keep exploring
