28/11/18 SMH - Virtual power plants are the 'Uberisation' of batteries, says Sonnen chief
Labor’s plan to ramp up solar and battery installation will help battery companies 'Uberise' the market and provide enough power to rival the big generators, says the head of battery maker Sonnen.
Chief Scientist Alan Finkel says power bills will go up and energy supply will be less reliable unless Australia develops better storage systems. Earlier this month, opposition leader Bill Shorten announced a target of one million households with batteries by 2025, supported by a $2000 subsidy on new batteries for 100,000 households that have less than $180,000 in household income. State governments and battery makers plan to combine these new batteries together to act as more than just back up, but as potential power stations themselves. One million batteries could provide the equivalent of around 5000 megawatts of energy, or around one and a half times the largest coal-fired power station in Australia, Origin's Eraring power station in NSW.
Christoph Ostermann, the head of German-Australian battery maker Sonnen - which opened a battery manufacturing plant in South Australia on Tuesday - said batteries will play a growing role in providing grid power.
"This is the 'Uberisation' of the battery business model, it's using assets that are already there in a smarter way," Mr Ostermann told Fairfax Media.
This combining of batteries to act as a single unit is known as a virtual power plant, or VPP. These virtual power plants would have the battery makers operating as the ‘generator’, working with the energy market operator to provide power to the network within milliseconds. "VPPs are the cherry on top of the battery cake," Mr Ostermann said. Energy storage company Evergen's chief executive Emlyn Keane said these household batteries could soon challenge the generation supremacy of the 'big three' power generator AGL, Origin and Energy Australia. Opposition Leader Bill Shorten has proposed a massive boost for household batteries. “That’s our aim, with thousands of household batteries connecting together throughout the country to be a single [generation] resource,” Mr Keane told Fairfax Media. “There’s a huge appetite for this distributed energy vision.” Mr Keane said the increasing support from state governments and Labor’s proposed subsidies for battery technology is making this generator challenge a reality. He added that the price of batteries could be further reduced if owners gave more control to the battery maker or vendor. “Homeowners could be a ‘host’, getting power bill reductions on the usage, and when the market needs power the vendor can use the batteries like a stabilising power station,” he said. “This is what we foresee and what we are hoping to occur.” Mr Keane said batteries and the Internet of Things have combined to allow these distributed batteries, spread across thousands of households, to be aggregated together to operate as a single source of power. The Australian Energy Market Operator, Australian Energy Market Commission, Australian Energy Regulator and industry members last week launched a consultation paper on establishing frameworks for these virtual power plants.
If Australian households' batteries combine they could challenge the generation supremacy of the Big 3 energy companies, AGL, Origin and EnergyAustralia. “Virtual power plants powered by residential batteries or other technologies, and the market aggregators that will control them, will continue to have an increasing impact on the energy market,” AER chief executive Paula Conboy said. In South Australia, the state government is working with Tesla to combine 50,000 home solar and battery installations to create a 250 megawatt VPP. Analysis by Frontier Economics forecasts that this 250 megawatt virtual power plant could cut participating households' power bills by almost a third. Citi analysts said Labor's proposed battery subsidies will help build these virtual power plants.
“The purpose of the first round of battery subsidies appear to be to buy economies of scale,” Citi analysts said.
Sonnen’s Asia Pacific head Nathan Dunn said the rise of these decentralised generators will happen over time.
“It’s definitely a proposition. Everyone is talking about how older-style generators will wind up in a position where they’re no longer viable,” Mr Dunn told Fairfax Media. “Batteries don’t accelerate this shutdown of power plants but it will provide stability as they close.” Mr Ostermann said Sonnen's Australian-made batteries will begin rolling off the production line within the next two months, with aims to build up to 10,000 batteries annually with a capacity of up to 30,000.
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