A View of the Rapidly Growing Australian BESS Market
Feb 14, 2023 Conrad Nichols
Australia is at the forefront of great battery energy storage system (BESS) development, with front-of-the-meter (FTM) installations expected to continue growing rapidly in the coming decade while supplemented by steady behind-the-meter (BTM) installations. IDTechEx estimates a CAGR for an annual installed capacity of 42% for 2023 - 2033 in Australia. The Victorian Big Battery, installed in 2021, is one of the largest battery systems to be installed globally, with only installations in the US having a larger capacity. Its 450 MWh capacity stores enough energy to power over one million homes for 30 minutes.
On the supply chain front, Energy Renaissance will soon begin commercial operation of its Li-ion gigafactory in Tomago, New South Wales. This will promote domestic business opportunities for the supply of battery components, assist in the growing demand of Australian large-scale batteries, and complement residential battery demand. This will contribute to a more robust supply chain with reduced dependence on oversea markets, expediting battery manufacturing processes and, thus, battery installations. With established domestic supply chains for Li-ion battery manufacturing and production, the greatest increase in growth in battery installations in Australia is expected to occur in the latter half of the decade and beyond.
The country still has barriers to overcome on the regulatory front. Policies and targets are currently only state-wide and mostly comprised of renewable energy targets and not energy storage or battery storage targets.
Australia's storage policy, funding, and renewables targets. Source: IDTechEx
Battery storage targets, seen across regions globally, act as key drivers for FTM battery installations. Regions such as the US and China, which have either state- or government-level battery storage targets, have historically seen the greatest volume of BESS deployments in recent years. IDTechEx expects these countries with battery storage targets to continue deploying large BESS at a growing rate. Australia still relies greatly on fossil fuels for electricity generation, and network charge arrangements are yet to be fully optimized. With greater coal phase-out and improved market conditions, Australia's FTM market would flourish more so than in the current circumstances.
With the Victoria region aiming for net-zero emissions by 2050, the Victorian Government has created what is known as the "Neighbourhood Battery Initiative" (NBI). The Victorian Government has provided AU$10.92M in funding and AU$3.6M in grants to 16 projects in Victoria. These are mostly clustered in and around Melbourne, as shown in the below figure. One of the latest of these batteries in the Initiative was unveiled in Yarra, in June 2022. It has a system size of 110 kW / 284 kWh. The modules are manufactured by the Swedish company Polarium, and Pixii supply the monitoring and control applications.
Locations in Victoria of the 16 neighborhood BESS projects. Source: IDTechEx
If the Neighbourhood Battery Initiative proves financially feasible and beneficial for all stakeholders, this would help give rise to an emerging C&I market. Currently, only New South Wales has any form of budget (of AU$20 million)specifically for C&I battery installations. These neighborhood BTM batteries are larger in capacity than residential batteries and would be installed to support communities' and businesses' energy needs. However, improvements to network tariff arrangements on this front would spur their further uptake.
For example, in the National Electricity Market (NEM), current network tariff arrangements are such that energy flows between the customer and battery are charged twice. This occurs once on energy imported to the battery and twice when customers use this energy as electricity. The NBI is trialing tariff and subscription schemes to discount local network tariffs.
These developments in battery production supply chain, policies, and initiatives will bolster Australia to being one of the fastest growing regions for BESS deployments globally, though Australia will be very unlikely to compete with annual BESS deployment volumes forecast in regions such as the US and China.
Further insights and battery storage forecasts for Australia can be found in IDTechEx's latest report on the topic "Batteries for Stationary Energy Storage 2023-2033", among further insights and battery storage forecasts for the regions of the US, China, UK, Germany, Italy, and India. The report also includes regulatory landscapes, residential market analysis, business models and revenue streams, technologies in energy storage, and more.
To find out more, including downloadable sample pages, please visit www.IDTechEx.com/Stationary.