How storage is enabling Australia’s energy future

Australia has worked hard to secure a reputation as a clean energy powerhouse. Ranked fifth worldwide in consultancy EY’s Renewable Energy Country Attractiveness Index, ahead of low-carbon generation behemoths such as the UK and Spain, Australia has led the world in per-capita solar and energy storage deployments.

But it still has a way to go. Renewables accounted for 35% of total electric power generation in 2023, well above the roughly 10% level seen at the end of the 1990s but still far behind countries such as Norway, which gets 98% of its electricity from renewable sources, or Brazil, at 89%, or even New Zealand, with 88%. 

Decarbonising the remainder of Australia’s electricity generation will require major cleantech investments, with the country already planning for 20 GW of new wind power by 2030.

Battery projects such as Pacific Green’s 500 MW/1.5 GWh Limestone Coast Energy Park group, which has just been given planning consent and is among the largest of its kind in the world, will play a key role. The first asset at the site, Limestone Coast North (250 MW/500 MWh), is progressing towards financial close later this year, with construction beginning in 2025. 

The second—and standalone—asset, Limestone Coast West (250 MW/1,000 MWh), is strategically co-located on the same site to utilise connection access to the adjacent 275 kVA South East Substation.

According to the Clean Energy Council, Australia saw a record-breaking year for large-scale battery storage in 2023, with projects under construction significantly up compared to 2022, and massive levels of new investment.

By the end of 2023 there were 27 large-scale battery projects under construction across Australia, up from 19 in 2022, with a combined capacity of 5 GW and 11 GWh, compared to just 1.4 GW and 2 GWh the year before. The year also saw AUD$4.9 billion being committed to large-scale storage projects, up from $1.9 billion in 2022. 

The second quarter of 2023 saw the two-billion-dollar mark for new large-scale storage investment broken in a quarter for the first time, and the fourth quarter of the year matched that record just a few months later. 

Australia’s energy storage market is growing at breakneck speed—the largest battery project to be commissioned in 2023 was the Riverina Energy Storage System in New South Wales, with 150 MW and 300 MWh of capacity. 

But as of 2024 the biggest battery project under construction in Australia is the Waratah Super Battery in New South Wales, with 850 MW and almost 1.7 GWh—a more than five-fold increase in capacity in one year. 

The Waratah Super Battery will soon be overtaken by the Portland Energy Park that Pacific Green is developing in Victoria, which will have almost 1.5 times more energy storage capacity, at 2.5 GWh. 

The project is so huge it could help cut wholesale energy costs in the state by an estimated 3.8%, according to modeling from Cornwall Insight.

And even this is but a tiny fraction of what Australia needs. March 2023 modelling by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) predicted that an additional 11 GW to 14 GW and 59 GWh to 69 GWh of storage capacity will be required across Australia’s National Electricity Market by 2030.

That is more than a tenfold increase on the capacity being built out at the end of 2023. By 2050, meanwhile, energy storage is set to grow by a factor of 19. 

The analyst firm Wood Mackenzie has named Australia as one of the most attractive markets in the world for the development of battery energy storage projects, thanks to daily spot markets for power and system frequency control services.

Wood Mackenzie expects battery energy storage system costs to drop by 18% over the next decade, while falling lithium carbonate prices could entice more capital flows into the market. 

Helping the case for battery projects is the fact that corporate power purchase agreements, which increasingly will need energy storage to ensure firm supplies, reached new heights in 2023, rising to 1.7 GW from 1.5 GW in 2022. 

The massive predicted buildout of battery storage could help overcome some of the grid constraints that the Sydney Morning Herald has warned are “thwarting renewables and pushing up prices.” 

Reuters added: “Australia's power industry is struggling to meet the government's target for 82% renewable power by 2030 from around 40% now due to challenges in expanding transmission networks to handle new renewable projects located far from demand centres.”

Taking a strategic approach to Australia’s battery rollout could help the grid manage congestion and thus allow more renewable energy onto the network. Beyond this, experience from markets such as the UK suggests there will be a need to invest significantly in the electricity network. 

In March 2024, the UK’s National Grid ESO published a report called Beyond 2030, which proposes a £58 billion (AUD$113 billion) investment in the grid to meet the growing and decarbonising demand for electricity in Great Britain by 2035.

Decision makers in Australia have also identified transmission network investments as a priority, with the Australian Energy Market Operator’s 2022 Integrated System Plan requiring roughly AUD$30 billion to upgrade 4,000 km of lines up to 2050. 

But investments will likely also be needed on the distribution side, based on Britain’s experience. As more homes install heat pumps and electric vehicle charging points, around 45% of primary substations in Britain may need upgrading by 2035, according to a report by the not-for-profit market insight provider Regen.

Finally, another area that the UK experience shows Australia will need to address is skills. As grid connection gets more challenging, the premium placed on people who have relevant experience—usually from working in public sector or network operator positions—grows. 

And as experts are lured from network operators and government agencies, the capacity for these bodies to deal with connection queues diminishes, making it harder for companies to get connections and creating a negative feedback loop that slows renewables deployment.

This means any moves to invest in infrastructure should also address skills gaps, for example by increasing recruitment and training for grid-related roles. 

It should be an easy ask for lawmakers, as creating employment is often cited as one of the big benefits of the energy transition—and training people to tend to the grid will fill a need that is growing day by day.