Angela Macdonald-Smith in today's AFR:Battery ventures including...

Angela Macdonald-Smith in today's AFR:

Battery ventures including the Tesla battery in South Australia are being paid to charge up their plants, as the transition to clean energy sends wholesale power prices into negative territory on a near-daily basis.The combination of ample generation from rooftop solar and utility-scale solar farms, combined with constraints on a transmission line, drove prices down to the lowest price of minus $1000 in Queensland and South Australia on Thursday.

The volatility in prices is causing some solar plants to switch off to avoid losses, but for the developers of storage projects – whether pumped hydro or lithium-ion – it underscores the opportunity to charge plants at cheap or negative prices to be able to release power at peak periods.

‘‘It certainly focuses the mind in terms of reaffirming the business case,’’ said James Harding, chief executive of Genex Power, which is targeting financial close within two months on a 250-megawatt pumped hydro storage project in far north Queensland.

‘‘Having batteries, whether pumped hydro or lithium-ion, operating in terms of arbitrage is clearly a very good business case today,’’ he said, while acknowledging the market will be very different when Genex’s Kidston plant is due to come online in 3 1/2 years. ‘‘It just makes it clear there is a transition under way.’

’Prices in Queensland were in negative territory or zero from 7.45am on Thursday until 2:20pm, according to data from the Australian Energy Market Operator. That followed at least 6 1/2 hours of negative prices on Wednesday. That compares with prices as high as $264/MWh in the evening peak on Wednesday when the solar farms had stopped generating after sundown.

In South Australia, where negative pricing has long been a regular feature of the wholesale market, the Tesla/ Neoen Hornsdale battery is paid for charging when the market price signal is negative.The 100MW/129MWh battery, sparked by a Twitter bet between software billionaire Mike Cannon-Brookes and Tesla’s Elon Musk, slashed $40 million in grid stabilisation costs, operating in the frequency control and ancillary services (FCAS) market, in its first year of operation.

‘‘Our HPR [Hornsdale Power Reserve] charged exclusively from negative pricing today while providing FCAS in all markets, being paid in preparation for the inevitable higher price discharge this afternoon,’’ Tesla Energy senior engineering manager Josef Tadich said in a LinkedIn post last week.

‘‘Expensive day to be a high marginal cost baseload generator. Zero is definitely the new black!’’

In South Australia, low power prices have gone in a few years from being uncommon to occurring multiple times a week, especially in spring when strong solar and wind generation combines with electricity demand lower than summer peaks to result in higher market supply than demand.

Still, building storage plants with a view to time-shifting electricity load – storing surplus power in order to make it available on demand later – is very expensive and inefficient, said Roger Price, chief executive of Windlab, which has included a battery of just 2MW/ 4MWh at the Kennedy solar-wind storage hybrid plant being commissioned in central north Queensland. ‘‘There is a need for storage in the network but it’s really about managing volatility,’’ he said.

______

Ash here.

The final remarks from Windlab's Roger Price are telling. Yes, from a system perspective, batteries are expensive and inefficient. From IFN's operator perspective, it is exchanging nil or negative value own-generation into peak price supply so is money for jam.

BESS will be operational anytime now.

Ash