FTM batteries (sometimes referred to as utility scale batteries) are installed directly onto a distribution or transmission network. As well as the standard benefits batteries can provide, FTM batteries can provide an alternative to investment in peaking generation and can defer investments in grid reinforcements by providing a tool to manage grid congestion. They can also provide an alternative and competitive resource in the provision of ancillary services in the wholesale electricity market. Through these different mechanisms, batteries can help to reduce the overall costs of providing electricity to customers.
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Batteries can also provide system security and stability services which have been traditionally provided by fossil fuel -based generation (e.g. coal fired generation). A useful discussion about the role of FTM batteries is included in the International Renewable Energy Agency's paper on utility-scale batteries. Due to their size and cost, FTM battery systems are generally developed in conjunction with the private sector and different levels of government.
Enquiries received by the EIT often include a battery system component ' both FTM and BTM ' as innovators consider new ways to utilise the technology. Check out our regulatory use cases on microgrids, and virtual power plants to understand how batteries may be integrated into a project.
FTM battery systems can generate revenue in a number of ways, including:
BTM battery systems are installed in residential, commercial, and industrial settings. They enable the owner to store excess energy generated on site, or to import energy from the grid when prices are lower, to consume during subsequent peak pricing periods. In this way, batteries can provide a mechanism for consumers to reduce the costs of their usage of electricity from the grid.
Depending on the configuration of the battery system there are also options to generate revenue or reduce energy costs. For example if your battery has its own connection point to the grid, you can sell energy to a Small Generation Aggregator (SGA). SGAs are market participants that supply energy aggregated from multiple generation sources. These generation sources must be exempt from registering as a generator and are usually under 5MW each.
Where a battery system shares a connection point, for example a house with rooftop solar all behind a single electricity meter, they can sell excess energy to their electricity retailer, or they could participate in a Virtual Power Plant (VPP). In this way, through aggregation services, BTM battery systems can provide an additional source of electricity supply to the wholesale electricity market, potentially reducing the costs of electricity for all consumers.
Since , around 30% of detached homes in the NEM have rooftop PV, generating approximately 15GW of capacity whereby excess energy is exported back into the grid. By , this figure is expected to reach 65% with 69GW of capacity, and with most systems complemented by battery energy storage.1
As the transition continues, it will be important for Consumer Energy Resources, such as BTM battery systems to be effectively integrated into the energy system to reduce costs for all consumers. Energy Security Board analysis has found the potential benefits of harnessing flexible demand and the successful integration of Consumer Energy Resources to be around $6.3 billion in reduced system costs over the next 20 years.2 Similarly, another report commissioned by AEMO highlighted the significant potential benefits from better integration of Consumer Energy Resources of up to $6.5 billion in reduced system costs by the end of .3 However, it also noted that if the uptake of Consumer Energy Resources follows a lower trajectory the corresponding benefits will be lower ($2.5 billion).
The successful integration of Consumer Energy Resources provides both direct and indirect benefits to consumers. Direct benefits will include consumers using their Consumer Energy Resources to reduce their energy costs by using less power from the electricity grid at times when it is more expensive. Indirect benefits will stem from the successful integration of Consumer Energy Resources to optimise the energy system. As noted above, Consumer Energy Resources can be utilised through aggregation and new energy services, to help operate the energy system and thereby avoid higher generation, network or intervention costs. This reduces the cost for all consumers.
Generally anyone can own, operate or control a battery system ' with or without certain authorisations depending on the size of the system ' however, the electricity rules impose specific obligations on regulated electricity network businesses, including in relation to the leasing of batteries owned by these businesses. These obligations are known as ring-fencing. The purpose of ring-fencing is to prevent regulated businesses from discriminating in favour of their related parties to disadvantage competitors operating in these markets and using revenue earned from regulated services to cross-subsidise contestable services. You can read more about ring-fencing here.
Connecting a FTM battery system to the NEM is arranged through the relevant Network Service Provider (NSP) based on the location of the project. Most projects will seek to connect with a distribution NSP rather than to a transmission network.
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While connection of a battery system may not necessarily be a complex endeavour, each connection process is dependent on the requirements of the individual project and the technical specifications of connection to that unique point in the network.
The terms and conditions for a network connection and the provision of network services are negotiated as private commercial agreements between the two parties of the agreement. The NSP is responsible for providing information to an applicant and we encourage innovators to contact the relevant NSP as early as practicable to discuss their project requirements. A list of Distribution NSPs and their contact information is published here and Transmission NSPs here.
Generally, anyone that owns, operates, or controls a battery system with nameplate rating of 5 MW or above will need to register with AEMO. In some circumstances, an automatic or deemed exemption from this requirement may apply depending on certain factors including size of the system.
A battery that is connected to the grid is typically considered for registration purposes to be a generating unit (market generator) when it exports electricity, and as a load (market customer) when it imports from the grid.
For anyone who wishes to participate directly in the NEM, including associated trading activities facilitated by AEMO under the National Electricity Rules (NER), registration is required in one or more participant categories.
Registered participants are obliged to abide by requirements set out in the NER, including compliance with performance standards, maintenance and restoration requirements and operating standards to ensure the stability and safety of the national energy grid.
If you just want to back up a few critical loads, your solar battery cost will be on the lower end. If you're looking to back up your whole home or go off-grid, expect to pay a lot for battery storage. We're talking $80,000 to over 100,000 in some cases.
Compared to solar panel systems, batteries are a bit less customizable in terms of size. It's usually pretty easy to add or subtract a single solar panel to get the ideal system size. It's more challenging to fine-tune the size of the battery, though this is improving. Some companies today offer very modular options for more flexible configurations.
Batteries store direct current (DC) electricity, but your appliances use alternating current (AC) electricity. You need an inverter to convert the DC electricity stored in your battery to usable AC electricity. Some batteries come with a hybrid inverter that also works with solar or a storage-specific inverter. If yours doesn't, you'll need to purchase one separately. The inverter could add a couple thousand dollars to your system cost.
Energy storage installations require significant electrical work. If you install storage at the same time as your solar system, you save money by getting the electrical work completed simultaneously. If you retrofit a battery to an existing solar system, you'll pay extra for labor, wiring, and in some cases, equipment.
As we said, big storage projects cost a lot of money. Most home battery systems today aren't large enough to cover all your electricity usage. This means you need to put specific circuits onto a critical load panel. A critical load panel functions like a secondary electrical panel. On the panel, you include the essential circuits that you want to remain energized in the event of an outage.
While the critical load panel itself isn't costly, the electrical work required to install one can add up. Some battery companies today offer load management devices that make critical load panels unnecessary. If you have or choose to install a smart electrical panel, you also won't need a separate critical load panel for your battery.
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