Power Up: Do community batteries hit the sweet spot?

Community batteries might be where batteries show their strength in backing up renewable energy
Household solar contributes more than 11% of our electricity generation but there is considerable wastage
Batteries serving households or communities could harness excess power generated by rooftop solar

It is a known fact that for all their strengths, renewable energy needs to be backed up by either batteries or peaking gas plants that can supply power when there’s little wind or no sun.

For batteries, the discussion almost always goes in one of two ways, either small kilowatt hour-scale batteries for home use or giant megawatt hour or even gigawatt hour batteries that back up the electricity grid.

Home batteries are great for storing electricity generated during the day, which typically gets sold back into grid for peanuts, and making that energy available for the home during peak periods of demand.

In theory that will significantly reduce the homeowner’s bill and reduce strain on the grid.

The reality of course is that while solar panels pay for themselves fairly quickly, the same isn’t true for home batteries due to their higher cost, which limits their uptake to those with more pennies to throw around or who are serious about their environmental footprint.

At the other end of the spectrum are the huge banks of batteries that are often (but not always) developed by power companies shifting away from coal and/or gas.

While these are great for backing up grid-scale, their size means they have to go through an often lengthy permitting process, so getting them up and running isn’t going to be the quickest.

Taking the middle road with community batteries

This is why the Australian Renewable Energy Agency’s decision to conditionally approve up to $143m to support the roll out of up to 370 community batteries across Australia under its Community Battery Funding Round 1 is intriguing.

Community batteries take the middle road.

While significantly larger than home batteries with capacities in the hundreds of KWh range – enough to support a couple hundred households, they do essentially the same thing, which is to take solar power generated by the surrounding households, store it and then dole it out to participants when needed at a nominal cost.

As an example, Western Power’s Powerbank projects provided participating households with between 6-8KWh of virtual storage – at the community battery, allowing them to store excess solar energy and draw it out when needed for $1 to $2 a day.

ARENA certainly thinks this is a great idea, noting that the community batteries would “have a tangible impact on local network constraints and will expand rooftop solar capacity, reduce emissions and reduce electricity costs for consumers”.

Of course its systems won’t just be limited to households with the agency flagging that hospitals, schools and tertiary education institutions, council facilities, and more would also benefit.

“We are encouraged to see this important asset class being demonstrated at such a scale and expect that this funding round will kick start the neighbourhood-scale storage sector,” ARENA CEO Darren Miller said earlier this week.

Interest in delivering these batteries certainly seems high with ARENA receiving 140 eligible expressions of interest for Round 1 with funding conditionally allocated to 21 applications from 20 applicants.

The batteries will have an aggregated storage capacity of up to 281MWh, which actually compares favourably to grid-scale batteries.

ARENA is already planning to launch a second round of community battery funding in late 2024, with a funding allocation of at least $28 million.

Why this works

So why is this a good idea that could go a long way towards addressing the shortfalls of renewable energy?

For starters, household solar makes up a massive chunk of all installed renewable energy generation in Australia.

Our collective solar generation accounts for about 11.2% of our electricity generation and while it is hard to place exact numbers, a large percentage of this is wasted.

Community batteries provide a possible way to harness this massive source of electricity without forcing homeowners to purchase an expensive battery that they will struggle to break even on.

It could also help manage grid stability as the fluctuations caused by varying levels of sunlight to power flowing back into grid can impact its reliability.

Community batteries also highlight one of the key advantages of the renewable energy/battery combo, the ability to scale from small home systems all the way up to large grid level projects.

Nuclear family?

The same simply cannot be said about nuclear reactors with even small modular reactors being too large for anything but grid-scale applications.

Even if nuclear reactors could be built small enough, it would certainly be interesting to see the reactions to a community-scale nuclear reactor being placed right smack in the middle of a suburb.

The ability for batteries to scale up and down, and choose between competing technologies, also has implications on the cost side.

As an example, Frontier Energy (ASX:FHE) recently flagged that it would enjoy lower capital costs for its grid-scale Waroona renewable energy project, which combines a 120MWdc (megawatts of direct current) solar facility with an integrated battery storage facility, due to being able to choose from a wide range of battery options.

That said battery option (which is lithium iron phosphate for the battery nerds) is able to provide power for a longer time is certainly welcome as well.

The same is likely to be true for community batteries and since they are constructed when needed, later developments will benefit from lower costs, better technology and the ilk.

This contrasts with a single giant (or not so giant) nuclear reactor, which represents billions of dollars in sunk costs without even touching on the extremely high likelihood of cost overruns.

At Stockhead, we tell it like it is. While Frontier Energy was a Stockhead advertiser at the time of writing, it did not sponsor this article.