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Battery Storage Projects Face Delays and Cost Increases

Wind and solar don’t work at night or when the wind isn’t blowing. Australia is told the solution is batteries! Real world experience shows that batteries are too expensive, too slow to build and don’t last long enough to support a grid.

During this session with the Australian Renewable Energy Agency (ARENA), I revisited the status of the eight large-scale battery storage projects funded in 2022, noting that $176 million had been allocated but none had completed construction by February. I was told that while all projects are progressing, some face challenges like grid connection issues. I highlighted the significant cost increase from $2.7 billion to $3.1 billion and questioned the efficiency and cost-effectiveness of these batteries compared to coal-fired power stations.

I also raised concerns about the stability and reliability of renewable energy sources like solar and wind, and the additional costs associated with making them grid-compatible. Additionally, I asked ARENA about their responsibilities and the financial transparency of their operations. I emphasised the high cost of electricity in Australia compared to countries like China and criticised the impact of net-zero policies on manufacturing.

We need to ditch net-zero. Use the cheap resources we have in Australia’s ground for Australians first!

Transcript

Senator ROBERTS: I return to the eight batteries in the large-scale battery storage funding round from 2022. In February you told me that you had put $176 million into it. None had completed construction as at that time and only two of the eight were under construction. Have any completed construction? What is the status of the others in the round of eight?

Mr Miller: They have progressed. I don’t have the precise figures to hand—unless my colleague finds a brief on that in the notes—in which case I can provide that information on notice. But they’re all progressing. Some have challenges around grid connection and various studies that have to be completed. They’re not all there yet, but I think the vast majority have reached their targets for the ARENA funding and would be either close to construction or close to financial decision.

Senator ROBERTS: I would have thought with the Australian Renewable Energy Agency this would have been one of the biggest projects and most important aspects of what you do; is that correct?

Mr Miller: It’s important and is amongst many other important things that we work on.

Senator ROBERTS: In December 2022, the portfolio cost of the eight batteries was $2.7 billion. That increased to $3.1 billion, which is roughly a 16 per cent increase. What is the latest cost of the portfolio? What is the updated figure?

Mr Miller: What are you talking about?

Senator ROBERTS: The portfolio cost of the eight batteries was $2.7 billion. What’s the latest cost?

Mr Miller: That information that you had that was publicised would be the most up-to-date information that we have.

Senator ROBERTS: Is that the $3.1 billion?

Mr Miller: Some of the batteries increased in capacity. Since we announced the program, the proponents who were developing those batteries actually increased the size of the batteries, given that the economics were improving and that they could get the job done and actually build more. That capital cost increase would be in relation to an increase in the capacity of the batteries that are being developed.

Senator ROBERTS: We’ve gone above two gigawatts and 4.4 gigawatt hours?

Mr Miller: As I said, if you want precise information I will get you that on notice.

Senator ROBERTS: Thank you. That would be good. That seems like a hell of a lot of money for a bunch of batteries that only last two hours and lose 20 per cent to 30 per cent of the power to charge them?

Mr Miller: That’s not accurate.

Senator ROBERTS: Could you tell me the accurate figures?

Mr Miller: The minimum size in that portfolio is a two-hour battery. Some of them are three and I think one of them has gone to four hours. Again, I’ll check that just to make sure. The batteries are playing a very important role. The project as described by ARENA and the innovation that’s in this portfolio is around what’s called grid-forming capabilities. It’s the ability for these batteries to essentially replace the very important system services that coal- and gas-fired power stations provide.

Senator ROBERTS: Stability of the grid?

Mr Miller: Stability of the grid, voltage frequency.

Senator ROBERTS: What we call ‘firming’?

Mr Miller: I think firming would traditionally be thought of as providing the energy that’s required to fill gaps. These batteries are providing power quality services. Firming would be about the quantum of energy and power services, or these system security services, are about performing the very important electronic functions that the grid needs to remain stable and at the right frequency.

Senator ROBERTS: My understanding is that solar and wind are asynchronous, inherently unstable and therefore you need to provide an additional service so that the grid maintains stability?

Mr Miller: Again, that’s not also strictly true. There is technology around solar and wind, inverters, that converts the DC electricity into AC and that can provide grid-forming capabilities as well. The latest wind turbines coming out of Goldwind, for example, in China have system security services built into those inverter technologies. It’s not only the batteries that are advancing; it’s actually the solar inverters and the wind technology inverters as well that’s advancing to provide the services.

Senator ROBERTS: Is that at an additional cost?

Mr Miller: It may or may not be. It may be integrated into the technology that’s put forward.

Senator ROBERTS: Let’s move on to the next one. On a very conservative cost of $4.5 million per megawatt installed and a capacity factor of 90 per cent, a $3.1 billion coal-fired power station would produce 15 gigawatt hours of data capacity versus just 4.4 gigawatt hours for the batteries. Unlike the batteries, the coal station actually generates power. It doesn’t lose power on charging. Doesn’t that seem like a much cheaper investment for Australians, just coal-fired power stations?

Mr Miller: You’re fundamentally misunderstanding the different role of those coal-fired power stations that you mentioned in the old world and the role of these kinds of batteries in supplementing wind-solar transmission system demand flexibility. The new world we are well underway, progressing into and entering requires a variety of technology. These batteries provide a very specific set of technologies and services that in combination with wind, solar, transmission and all the other things I mentioned, provides you with a system that is stable and can do the job.

Senator ROBERTS: At inherently higher component costs. There’s a lot of confusion amongst constituents and amongst MPs and senators. Among the various agencies charged with some responsibility or accountability over energy transition, could you as simply and as specifically as possible tell us what ARENA does? What are your basic accountabilities and, specifically, what is the uniqueness of that? There’s accountability that no other agency has.

Mr Miller: That’s a good question. We are an agency that is specifically around to improve the competitiveness of renewable energy technologies, to increase the supply of renewable energy in Australia and to facilitate the achievement of Australia’s greenhouse gas emissions reduction targets. Our functions include the provision of financial support in the form of grant support and the sharing of knowledge, which is very important to ensure the money we spent is leveraged and available to more than just the proponent we fund so that Australia’s energy transition can happen in an accelerated and stable fashion.

Senator ROBERTS: Specifically with regard to the people at the table, apart from Senator Ayres—and he’d be happy that I’m leaving him out—what is the total salary package of each of the people at the desk here? I’ll exempt anyone who’s not at Senior Executive Service level, but if you are at executive level I’ll ask for the band you’re in and the total remuneration package, including on-costs?

Mr Faris: I’m a band 1 officer, seconded across from the department. I think I’m at band 1.6. I don’t have my salary figures off the top of my head, but they’re actually in our annual report. I’m listed as one of the key management personnel in our annual report, which was tabled last week. You can find that information specifically.

Senator ROBERTS: Could we have them on notice, please?

Senator Ayres: I think what the officer has said to you is that they’re in the annual report. If there’s anything in addition to the annual report, we are happy to provide that on notice.

Senator ROBERTS: What is the total wage bill for all employees, including casuals and contractors, at ARENA? Could you give me a breakdown of the numbers, please?

Mr Miller: Again, I might follow Senator Ayres’s lead and refer you to the annual report, which has this information for the last financial year.

Senator ROBERTS: Numbers, breakdown into permanent employees, casual employees, contractors?

CHAIR: Senator Roberts, maybe I could help you out. If you were to grab a copy of that and have a look through, you could potentially put any further questions on notice. There is a breakdown in their annual report.

Senator ROBERTS: We’ll do that. Future Made in Australia—Senator Ayres raised that. The No. 1 cost category in manufacturing today around the world is no longer labour, it’s electricity—with very few exceptions. China uses coal-fired power, sometimes including alcohol, but produces almost 10 times in terms of alcohol production. They have a production rate of $4.5 billion, heading for $5 billion, a year. They produce electricity and sell it, I am told, for 8c a kilowatt hour. Australia is at 25c a kilowatt hour, thanks largely to the transitioned components. Why is Labor so hostile towards manufacturing? Clearly, net zero destroys manufacturing. You also said that there’s no risk. That’s just a slogan. There’s huge risk when you’ve gone from being the cheapest electricity provider in the world to amongst the most expensive. I don’t know why you keep letting down Australian workers.

Senator Ayres: There’s a series of propositions in that we could—

Senator ROBERTS: They’re facts.

Senator Ayres: You assert that they’re facts.

Senator ROBERTS: Eight cents a kilowatt hour versus 25c a kilowatt hour.

Senator Ayres: As I said, you assert that they are facts. It may come as news to you, but the economy in the People’s Republic of China is structured a little bit differently to the Australian economy.

Senator ROBERTS: Eight cents a kilowatt hour—

Senator Ayres: There are some differences between our political and economic systems and the way that the government interacts with the electricity generation system and indeed the way the industry works is different. Our job here in Australia, if we’re acting in the national interest, is to secure Australia’s position. It is very clear that we have a series of forces acting upon our electricity system and our energy system more broadly. Firstly, most of our ageing coal-fired generators announced their closure under the previous government. There are many of them.

Senator ROBERTS: It’s cheaper to replace them new coal-fired power stations.

Senator Ayres: Many of them are coming to the end of their operational life. Some of them have been extended by state governments. The cheapest form of future energy for Australia is renewables and storage.

Senator ROBERTS: Only if you omit coal, hydrogen—

Senator Ayres: I did not interrupt you. I interrupted Senator Cadell earlier when he was being obnoxious, but I didn’t interrupt you.

Senator ROBERTS: Does that mean you want me to get obnoxious?

Senator Ayres: I don’t want to interrupt you. I don’t like interrupting people.

CHAIR: I’m going to interrupt you both and say that we are coming very close to the lunchbreak. I’ll ask you to wrap up. To be clear, Senator Roberts, you’ve had 11.5 minutes.

Senator ROBERTS: Thank you very much. That was my last question.

CHAIR: Do you feel like you’ve had a sufficient answer?

Senator ROBERTS: Very.

CHAIR: Excellent. I’m glad to hear it.

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Taxpayer Funded Storage Batteries

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The Australia Renewable Energy Agency (ARENA) will be using your money to partially fund batteries costing $2.7 billion.

These batteries are 2 gigawatt, which sounds impressive, until the officials confirm they will last only 2 hours out of the whole day. Compare that to a 2 gigawatt coal-fired power station that can be run at 95% capacity factor or 23 hours a day.

We’ll get much cheaper power per gigawatt-hour if we just use coal, abandon the net zero lunacy and all of it’s expensive requirements like grid-forming batteries.

Transcript

CHAIR: Senator Roberts. 

Senator ROBERTS: Thank you for being here again. My questions go to the cost, capacity and suitability of large-scale battery storage. I’m going to reference the Large Scale Battery Storage Funding Round from 2022. ARENA put $176 million of taxpayers’ funds into eight batteries, with a total of two gigawatts of dispatchable power. That was in the media release from Chris Bowen on 17 December 2022. For how long could those batteries dispatch that full two gigawatts of power? 

Mr Miller : On average, across that portfolio of eight batteries it’s approximately just over two hours at full power. 

Senator ROBERTS: Two hours at— 

Mr Miller : Full power. 

Senator ROBERTS: What’s the total of gigawatt hours that those batteries represent? 

Mr Miller : I think that 4.4 gigawatt hours is the total. 

Senator ROBERTS: Okay. Have all eight of the batteries been constructed? 

Mr Miller : Not yet. They’re under construction—at least half of them are under construction. Some of them might have been completed—a couple of the earlier ones. We announced quite recently that the AGL battery has actually doubled in capacity since we announced the funding. They’ve chosen to increase the capacity by two times. And there are another three or four that are still to be announced as reaching financial close and construction. 

Senator ROBERTS: How many have been built? 

Mr Miller : Do you have that? 

Mr Kay : Yes. Two are currently in advanced construction— 

Senator ROBERTS: So none have been built? 

Mr Kay : None are operational at this stage, but there are two that are in advanced construction and others that are at various stages of planning and preconstruction. 

Senator ROBERTS: So there are two at advanced stages of construction and no others under construction? 

Mr Kay : Yes, that’s right. 

Senator ROBERTS: What was the total cost of those projects—well, they’re still underway. What is the total cost now envisaged to be? 

Mr Miller : As you suggested, correctly, ARENA’s commitment was $176 million. Mr Kay might have the precise number for the capital costs of those batteries, but I recall that our grant sizing was about seven per cent of the cost of the batteries—a substantial cost, in the billions of dollars, for those eight batteries. 

Senator ROBERTS: So we’ll just have to work out the total cost by dividing by seven or eight and multiplying by 100. Something on that media release intrigued me in preparing for today—that media release from 17 December 2022. It talks repeatedly—at least three times—of ‘grid forming inverter’ technology. What is ‘grid forming’? Or is that just a mistake from ‘grid firming’? 

Mr Miller : No. It’s correct language. Grid forming means that those batteries have the capability to provide very high frequency support to the energy system. So you would know that the energy system operates at 50 hertz, so 50 cycles a second. That ability to keep the grid operating at 50 cycles a second is traditionally provided by spinning generators from coal and gas plants. 

Senator ROBERTS: Hydro, nuclear— 

Mr Miller : Not nuclear; we don’t have that in Australia. 

Senator ROBERTS: No. But nuclear can provide it. 

Mr Miller : In theory, yes. If we had that, it would provide it. But, in Australia, that’s provided by coal, gas and hydro. And, in the absence of coal and gas, what we need is resources to do the job of keeping the grid at that 50 hertz frequency, keeping the system stable, providing the right voltage waveform, and also being able to what’s called ‘black start’—have the grid commence operation from nothing—and that is not a service that traditional batteries without grid forming inverters can provide. What the grid forming inverters provide is the ability to form the wave signal of the grid and stand up the grid without any other support. 

Senator ROBERTS: So, correct me if I’m wrong, I’ll just put it into simple language, coal, nuclear, hydro and gas are all synchronous power generation sources, and they’re stable. Whereas, solar and wind are asynchronous and need something added to make sure they’re stable and produce 50 hertz. 

Mr Miller : That’s a fair lay representation of the scenario. Correct. 

Senator ROBERTS: Thank you. I also was intrigued to notice that Minister Bowen’s press release on 17 September 2022 said: 

Over the past decade, we saw policy chaos cause a reduction of 3GW of dispatchable power in the grid, enough to power over two million homes. 

What was the cause of that loss of 3 gigawatts? He’s saying that it’s policy. But was that specifically coal fired or gas fired exiting? 

Mr Miller : I haven’t delved into those numbers. I’m sure they are correct; but I wouldn’t be best placed to comment on generators entering and exiting the market. I’d refer that question to Minister Bowen if he [inaudible] it. 

Senator ROBERTS: Okay. Who do I refer it to now to take on notice? 

Senator McAllister: Senator, over the period in question it is the case that 4 gigawatts of dispatchable generation capacity left the system and only one was constructed to replace it, or commissioned to replace it. I do not have the source document for that fact, but I have examined it before and I can assure you that it’s possible to obtain it, so I’ll take that on notice and get back to you. 

Senator ROBERTS: Thank you. Last question, Chair. Mr Miller, in your opening statement you say in financial year 2022-2023 ARENA approved $544.1 million—that’s over half a billion dollars—60 projects valued at over $3.5 billion, representing the agency’s largest value of funds approved in a single year. How many of those funds were deployed on investments that were needed because of solar and wind? In other words, are they additional costs to solar and wind? 

Mr Miller : As a general statement, ARENA hasn’t supported to any material degree wind projects. Wind has been commercial since the agency [inaudible] 

Senator ROBERTS: Sorry, I wasn’t clear in my question. I didn’t mean that you’re investing in solar and wind; I meant that you’re investing in technology or equipment that is needed because solar and wind, for example, is unstable. Or are they to supplement solar and wind? 

Mr Miller : If you take those battery projects, for example, which would have fed into that number of $544 million, absolutely, clearly one of the things we were trying to do in that program is provide supporting technology to allow further penetration of solar and wind. So that kind of work, plus the work we do on grid integration—one of our key priorities—would be to support increasing shares of solar and wind energy. Ultimately, all of the technologies we support are in the furtherance of increasing the renewable energy penetration and competitiveness in Australia. So even the hydrogen work that we do—while I couldn’t characterise it as being needed to support solar and wind; it is a technology set that relies on increased penetrations of cheap solar and wind to provide the energy source to make the hydrogen. So it’s ultimately all related to renewable energy supply and competitiveness. All of that funding would be [inaudible] 

Senator ROBERTS: Thank you for a very clear answer. So these are additional costs that are needed for solar and wind. I wonder if gen costs from CSIRO incorporates them—that’s not for you; that’s just a wonder. 

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