Green Energy: Melbourne to rock down to Electric Avenue, and capacity payments could cost you how much?
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Poles and wires operator United Energy is set to roll out Australia’s biggest network of community batteries this year through its Electric Avenue project in Melbourne.
The $11 million investment, which includes a $4m contribution from the Australian Renewable Energy Agency will see the installation of 40 30kW batteries on power poles across Melbourne’s east, south-east and the Mornington Peninsula.
United Energy says the installations over the next 18 months will improve electricity reliability and solar exports in areas where low voltage distribution networks are constrained, supporting 3000 homes.
“A community battery is a way of storing energy that can then be used locally when it is needed,” United Energy general manager electricity networks Mark Clarke said.
“It is a great way of ensuring solar PV exports from homes in the community are consumed locally.
“From a network perspective, it also helps defer traditional investment so can save money for
customers on future network tariffs.”
The batteries will be installed by retailer Simply Energy, with the aim of helping electricity customers store energy to be distributed into the network at times when solar panels are no longer operating.
Think tank the Institute for Energy Economics and Financial Analysis says the Energy Security Board’s recommended capacity payments could send almost $6.9 billion into the pockets of gas and coal generators even if they are not supplying energy to customers.
The controversial market change has endorsement from Energy Minister Angus Taylor, but has been heavily criticised by renewables advocates, who say it will subsidise fossil fuel generators who would otherwise be priced out of the market by cheap wind and solar power.
The change is predicated on the idea the rapid increase of renewable penetration on the grid has made it less reliable.
The AEMO, which says it is preparing for a grid that can handle temporary 100% renewables generation by 2025, has said market interventions, particularly focused on wind rich South Australia, have significantly increased in recent years.
However, analysts from IEEFA and Green Energy Markets say a new capacity market could see an effective $2.9-6.9 billion flow into the coffers of fossil fuel generators to keep them running at “reserve capacity”.
Based on analysis of the cost of the reserve capacity market in WA’s South West grid they also claim household electricity cost could rise by $182-430, above the cost of $112-150 imposed on NSW, Victorian and Queensland by the Gillard Government’s carbon tax.
IEEFA electricity analyst Johanna Bowyer said network reliability was not at risk over the next 10 years.
“While it is true that several coal power plants are facing financial difficulties, our analysis finds that reliability is not at threat by the level of likely coal power plant exits over the next ten years,” Bowyer said.
“Thanks in part to actions of the Federal Government, there is a flood of dispatchable capacity entering the NEM.
“This covers a range of controllable sources of power from hydro to batteries, bioenergy, gas and even some small coal power plant upgrades.”
GEM’s Tristan Edis said the 6500MW of ‘dispatchable’ energy generation entering the grid will double the capacity lost from the grid after 2027 in Yallourn, Callide B and Vales Point B.
“This means that all states across the NEM have enough power capacity for the next decade to meet the strict reliability standard of satisfying more than 99.998% of demand,” he said.
“There are also thousands of megawatts of further battery projects in development which could be committed to construction if required.
“Meanwhile, the extra cost imposed on consumers to keep coal power plants afloat could be very large.”
On the release of the ESB’s recommendation last month Taylor said: “This will be crucial to ensuring that we can absorb renewables into the grid without threatening reliability and affordability.”