1 Solving the BESS issues in the NEM HARD software 9th Solar & Storage Integration Workshop 2 HORNSDALE POWER RESERVE 3 SOUTH AUSTRALIAN BLACKOUT 28 SEP 2016 4 ISSUES IN SOUTH AUSTRALIAN REGION SA black out on 28 SEP 2016 due to extreme storm Near SA black out on 3 MAR 2017 due to explosion in gas plant switchyard High penetration of wind and later solar generation High reliance on the VIC- SA interconnector (900 MW) Retirement of 520 MW brown coal generator FCAS duopoly leading to extreme high price local events 5 HORNSDALE POWER RESERVE Largest lithium- ion utility scale battery in the world 100MW/129MWh proposed to be delivered in 100 days Revenue of $AUS 90 million with the SA government committing to $AUS 4 million EBITA for 10 years 70 MW – System protection system 30 MW – Actively traded as merchant HARD software to provide hosting and design & develop operator & market systems in same timeframe 6 HPR TRADING & OPERATIONS SYSTEM 7 HORNSDALE BESS PERFORMANCE 8 hours of locally sourced SA AGC services cost $AUS 3.5m less on 14 Jan 2018 compared to 14 Sep 2017 25 AUG 2018 QLD & SA regions islanded after lightening strikes – no load shedding in SA and the lights stayed on HPR revenues of $AUS 29m for 2018 and $AUS 22m profit In 6 months, HPR had revenues of $AUS 6m from SA FCAS & reduced FCAS costs by $AUS 1.6m for Neoen wind farms Q1 2019 BESS had 17% of NEM RREG FCAS, up from 10% in Q4 2018 but recent BESS competition is reducing share 8 THE CHANGING RENEWABLE NEM MARKET 9 QLD RENEWABLE GENERATION PROJECTS EXISTING PROPOSED 10 RECENT QLD MARKET CONDITIONS 11 RECENT QLD MARKET CONDITIONS 12 RECENT QLD MARKET CONDITIONS 13 CHANGED RENEWABLE OPERATIONS Renewable generators now have to manage the competing requirements of avoiding negative prices & binding constraints Simple “once a year” bidding and then just responding to plant generation caps via SCADA is no longer possible PPA partners are requiring generators to respond to negative prices and ensure price risk is managed for them Increased requirements to understand & monitor market out- comes such as constraints & deploy effective trading strategies Automated bidding solutions that manage the rebidding when market conditions change and assist small/medium renewables Large portfolio renewable generators can use full trading optimization solutions if capital & trading operations justified 14 THE ENERGY BATTERY SOLUTION 15 BESS ADVANTAGES FOR RENEWABLES BESS can capture “lost” generated energy when curtailed New revenue streams from energy arbitrage & FCAS market BESS can assist with local voltage & transient stability issues BESS are not just an extra additional project cost like capacitor banks & synchronous condensers Co- location with plant sharing operation & maintenance staff, switchyard & available land is possible Provide NEM with new sources of dispatchable energy 16 ANNOUNCED NEM BESS PROJECTS LOCATION COMPANY SIZE FUNDING GENERATION Hornsdale Power Reserve Jamestown SA Neoen / Tesla 100 MW / 129 MWh SA Gov / private 1 Dec 2017 Dalrymple ESCRI battery Yorke Peninsula SA ElectraNet / AGL 30 MW / 8 MWh ARENA / private Apr 2019 Gannawarra Solar Farm Kerang VIC Edify & Wirsol 25 MW / 50 MW ARENA / private Oct 2018 Bungama Project Port Pirie SA EPS Energy 140 MW / 560 MWh private 2021 Robertson Solar Project Roberston SA EPS Energy 250 MW / 1000 MWh private End 2019 Solar River Project SA Alinta Energy 100 MW / 300 MWh ARENA / private 1st Qtr 2021 Lincoln Gap wind farm BESS Lincoln Gap SA Nexif / Fluence 10 MW / 10 MWh private May 2020 Energy Australia Ballarat VIC Spotless / Downer 30 MW / 30 MWh ARENA / private May 2020 Playford Utility Battery (PUB) Port Pirie SA Simec Energy 100 MW / 100 MWh ARENA / private May 2020 Bulgana Green Energy Hub Stawell, VIC Neoen 20 MW / 34 MWh private Dec 2019 Lake Bonney Wind Farm Lake Bonney SA Infigen Energy 25 MW / 52 MWh ARENA / private Sep 2019 Mt Stuart Power Station North QLD Origin Energy 4 MW / 4 MWh private May 2019 Snowtown mid-north SA Tilt 21 MW / 26 MWh ARENA / private 2021 Kennedy Energy Park North QLD Windlab 2 MW / 4 MWh ARENA / private Sep 2019 17 BESS MARKET ISSUES Market settlement is based on 30 minute dispatch intervals derived from 5 min averages and leads to market distortions (fixed 2021) No storage class of generator (under review) or hybrid class unless plant is fully dispatched requiring large storage & high risk Locating BESS system with renewable plant will incur the same location transmission issues and loss factors Annual marginal loss factors can not predict new plant, are highly variable and are a serious financial risk for generators The FCAS market is shallow and there are lessening opportunities for energy arbitrage Adding new or enhancing transmission capacity in the NEM is a long, consultative & contentious process 18 RECOMMENDATIONS FOR BESS PROJECTS NEM market redesign is urgently needed to address marginal loss factors, many constraints & optimize the use of transmission system The location of BESS system decisions need to consider the suitability of network connections & transmission losses Co- locating with renewable plant may not be the best option Small/medium size renewable generators should consider auto- mated business rule systems to manage BESS & dispatch risk Large portfolio BESS/renewable generators should use trading optimizers that suit their trading & operations Competitive energy market design must evolve to meet the rapid pace of change in technology and generation portfolio 19 Dr. Harley Mackenzie HARD software [email protected].