This is based on the quarterly survey report issued by the Australian Energy Market Operator (AEMO). The latest quarterly energy performance report of the Australian Energy Market Operator (AEMO) covers the period from January 1 to March 31, 2022, focusing on the dynamics, statistics and trends affecting the Australian National Electricity Market (NEM).
The household battery energy storage system accounts for the largest proportion of frequency regulation services, which is the first time in history. It has 31% market share in eight different frequency control ancillary services (FCAS) markets in Australia. Coal fired power generation and hydropower ranked second with 21% shares respectively.
In the first quarter of this year, the net income of the battery energy storage system in the Australian National Electricity Market (NEM) is estimated to be about AUD 12 million (USD 8.3 million), an increase of AUD 2 million compared with the net income of AUD 10 million in the first quarter of 2021. Although compared with the revenue after the first quarter of last year, the comparison with the same quarter of each year may be more fair due to the seasonality of the electricity demand pattern.
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At the same time, the cost of providing frequency control decreased to about A $43 million, about one-third of the cost recorded in the second, third and fourth quarters of 2021, roughly the same as the cost recorded in the first quarter of 2021. However, this decline was mainly due to the impact of the upgrading of Queensland's transmission system, which resulted in the higher price of frequency control ancillary services (FCAS) in the first three quarters when the state had planned outages.The Australian Energy Market Operator (AEMO) pointed out that although battery energy storage systems occupy the first place in the frequency control ancillary services (FCAS) market, other relatively new frequency regulation sources such as demand response and virtual power plants (VPPs) are also beginning to erode the share provided by traditional power generation.
The power wall battery energy storage system is not only used for power generation and storage, but also for power generation
Perhaps the biggest gain for the energy storage industry is that compared with the revenue obtained through the energy market, the share of revenue obtained through frequency control ancillary services (FCAS) is actually decreasing at the same time.
In the past few years, Frequency Control Assisted Services (FCAS) has been the main source of income for battery energy storage systems, while energy applications such as arbitrage are far behind. Ben Cerini, a management consultant of Cornwall Insight Australia, an energy market research institution, said that about 80%~90% of the battery energy storage system's revenue comes from frequency control ancillary services (FCAS), and about 10%~20% comes from energy trading.
However, in the first quarter of 2022, the Australian Energy Market Operator (AEMO) found that the proportion of total revenue of battery energy storage system in the energy market jumped from 24% in the first quarter of 2021 to 49%.
Several new large-scale energy storage projects have driven the growth of this share, such as the Victorian Big Battery energy storage project of 300MW/450MWh operating in Victoria and the Wallgrove battery energy storage system of 50MW/75MWh operating in Sydney, New South Wales.
AEMO pointed out that compared with the first quarter of 2021, the capacity weighted energy arbitrage value increased from A $18/MWh to A $95/MWh.
This is largely driven by the performance of Wivenhoe Hydropower Station in Queensland. Due to the high price fluctuation in the state in the first quarter of 2021, the hydropower station will gain more revenue. Compared with the first quarter of 2021, the utilization rate of the power plant has increased by 551%, and it can sometimes generate revenue at a price higher than AUD 300/MWh. The price fluctuated sharply in just three days, which made 74% of the quarterly revenue of the power generation facility.
Fundamental market drivers mean that Australia's energy storage capacity will grow strongly. The country's first new pumped storage power station in nearly 40 years is under construction, and more pumped storage power generation facilities may be built. However, the market of battery energy storage industry is expected to grow faster.
New South Wales approved battery energy storage system for alternative coal-fired power plants
The Australian Energy Market Operator (AEMO) said that although there are 611MW battery energy storage systems in operation in the Australian National Electricity Market (NEM), there are 26790MW battery energy storage projects proposed to be deployed.
One of them is the Erasing Battery Energy Storage Project in New South Wales, which is a battery energy storage project with a total scale of 700MW/2800MWh proposed by the main integrated energy retailer and power generator Origin Energy.
The project will be built in the location of 2880MW coal-fired power plant of Origin Energy, which hopes to retire it before 2025. Its role in the local energy structure will be replaced by battery energy storage system and 2GW aggregation virtual power plant, including the existing thermal power generation facilities of Origin.
Origin Energy pointed out that in the evolving market structure of the Australian National Electricity Market (NEM), coal-fired power plants are being replaced by renewable energy, energy storage systems and other more modern technologies.
The company recently announced that the Ministry of Planning and Environment of the New South Wales Government has approved its battery energy storage project planning, which will make it the largest of its kind in Australia.
