02 June 2016

by Angela Macdonald-Smith

Batteries to help grid become 'the internet of energy'

Rather than facing a "death spiral", the electricity grid is set to become the backbone of the "internet of energy," with the help of batteries – as long as policymakers get on board.

The concept that the electricity network is set to become an expensive white elephant with everyone self-sufficient in producing and storing their own power has disappeared.

In its place is the conviction that the rise of batteries will help place the transmission and distribution system as front and centre of tomorrow's electricity supply system, connecting consumers in a smart network of generation and storage devices and allowing them to trade with one another, and control household appliances remotely.

"By 2030, the grid has become necessarily a much smarter place, it's become more like the internet," said Simon Hackett, chairman of battery developer Redflow Energy, at an energy storage conference in Sydney on Wednesday.

"It's gone from dumb to smart, it's internet smart – internally resilient. What you get in an economic sense is a marketplace."

Storage systems could be seen as a threat to the grid and a contributor to the "death spiral" but instead they will have the opposite effect, according to Sunverge Energy's Australian and New Zealand general manager Philip Keogan.

"At Sunverge we are big believers in the grid, and we see huge relevance in the emerging transactive energy market," Mr Keogan said. "We consider the grid to be the internet of energy."

He pointed to forecasts from Bloomberg New Energy Finance that 50 per cent of energy generation will be "behind the meter" by 2040, so in rooftop solar and battery systems in houses rather than centralised power stations. Locally, some 2.5 million batteries are expected to be deployed in Australia by 2025.

Networks will take on a role as "a facilitator" of energy trading transactions, carried out by companies that aggregate power generated by household rooftop panels and trade it, according to James Myatt, chief executive of emerging retailer Mojo Power

He said networks would provide "significant value" in creating a marketplace, but said a major transition would be required to get there, both in terms of technology capability and in pricing. Mr Myatt said demand tariffs for energy taken from the grid would probably be phased out, to be replaced by a "fee-for-access" model.

"You'd pay for that as you'd pay for a toll road," he said, adding that existing business models for networks were not sustainable.

Mr Hackett said regulatory reforms were still required to promote the uptake of batteries and smooth the way for the grid to move towards a new future. Otherwise, the debate would get captured by those with entrenched interests working to keep the status quo.

"What needs to shift is the attitude as to what the grid is about," he said. "It's about we as a country having a high-level policy that says the grid is going to evolve into distributed entity. We need policy in general to start to include storage in the mix."

He warned that without such an overarching policy direction, the industry would run into a plethora of regulations in the next five to 10 years that will disadvantage the use of batteries by accident.

Regulations prevent anyone other than a power company from trading power on the grid, making it impossible for individual households to participate. Meanwhile, households looking to sell energy from a battery would lose their feed-in tariffs from their solar panels.

"Right now, with the begrudging exception of solar panels, consumers aren't allowed to be energy stations," Mr Hackett said.