Understanding what services need to be provided by the battery underpins the development of your operating model. It is important to link the battery services back to the benefits and values that have been identified for the project and make sure the services are delivering those benefits. It is important to note that many of the possible services that batteries can provide are not remunerated under the current rules. Many of the services listed below might be valued by stakeholders, but cannot at this time provide a financial revenue stream. Choices around which services to prioritise are controlled by algorithms and through metered tariffs. Digital platforms could allow people to participate directly in battery operation decision making. Transparency and support will be crucial for decision making, particularly for many community stakeholders who may lack time and knowledge to participate.
| Primary service | Associated services | Key benefits | Financial reimbursement? |
|---|---|---|---|
| Solar soaking – the battery stores electricity during the daytime solar peak and discharges to the grid during evening demand. | Improving demand management Increasing hosting capacity Congestion relief Resource adequacy Minimising household solar curtailment Minimising energy losses through avoided use of upstream grid | Decarbonisation Supporting renewables Network upgrade deferral Maximising household payments for solar exports Enabling local trading/sharing between energy users Local self-sufficiency | ✘ |
| Energy arbitrage and FCAS – charging when market prices are cheap and discharging when prices are expensive | Improving network function and reliability (FCAS) Maximising revenue for the battery business model Downward pressure on electricity prices | ✔ | |
| Flexiblity services – charging or discharging as a service to support local energy management | Increasing hosting capacity Minimising household solar curtailment | Supporting green EV charging Enables more customer energy resources (solar PV and EVs) | ✘ |
| Fast frequency response | Improving network function and reliability | Coming in 2023 | |
| Synthetic inertia – increasingly required as coal power is ramped down | Maintains reliable network during grid disturbances | By procurement, grid-scale only (AEMO) | |
| Congestion relief | Increasing hosting capacity | By procurement, grid-scale only (DNSP) | |
| Network resilience – storing solar energy for use in times of outage, requires an islandable system. | Emergency back-up Improving reliability | Resilience, equity, supporting local business | ✘ |
Clearly, many of the services neighbourhood batteries can provide are not yet reimbursed financially and this is one of the challenges and areas of development for neighbourhood batteries.
Two new markets for fast frequency response (very fast raise and very fast lower) will come into place in 2023. Other system services market proposals are currently being considered by the AEMC. For example, proposals for market ideas for congestion relief and inertia have been put forward and are currently being considered. The Hornsdale big battery recently became the first globally to be approved to deliver grid-scale inertia services to the NEM. There are various mechanisms for the DNSP to pay the battery for congestion relief, however, in practice these are rarely implemented. Traditionally, DNSPs have solved network problems with internal investments in infrastructure, which they have visibility and control over. Because neighbourhood batteries are generally not necessarily dedicated to providing network services (they provide a range of other services and benefits), and are potentially owned and operated by diverse organisations, this may create tensions, trade-offs and questions of responsibility and accountability. Providing network services that are valued by DNSPs will therefore require transparency and clear contractual agreements about how different services are prioritised in the operation of the battery.
Providing back-up power may be a desired service of the battery, particularly in remote or disaster-vulnerable communities. A neighbourhood battery could power a community or evacuation centre for days but could only power a community for a few hours at most, as the typical house consumes around 20kWh per day. Providing local backup requires reserving battery capacity, potentially creating trade-offs with other economic and environmental services the battery provides.
Note that there is currently no financial compensation in the energy market for contribution to decarbonisation, such as for displacing cheap but emissions intensive coal-powered generation overnight with zero emissions solar generation stored during the day. However, energy market prices will increasingly provide solar soaking incentives, as prices reduce during solar hours and increase during peak evening hours. Governments or corporations may be interested in investing in a neighbourhood battery project if it can demonstrate its environmental credentials (see Funding). As further payments for direct contributions to emissions reductions evolve, an assessment of the ‘decarbonisation services’ the battery could provide is worthwhile to take advantage of these policy developments. Estimates for emissions reduction can be found in the Environmental Goals & Impacts section. Finally, community enthusiasm for neighbourhood batteries is dominated by concerns about climate change. Community members will likely be more accepting and positive about the battery if it’s providing decarbonisation benefits. Being part of local climate action is a big motivation and a benefit of a neighbourhood battery.
A shared battery will reduce the total amount of battery storage required per house, which reduces materials required and also reduces household costs and the burden of purchasing, maintaining and disposing of an energy asset. It can also improve energy access for a wider part of the community, potentially improving equity and reducing energy poverty. It can also potentially build trust, catalyse community action, improve energy practices and support community building, place-making, environmental leadership.
The battery can provide a service to community members to store and consume their own renewable energy, or to share or trade between community members. This can occur without any direct charges or payments on customer bills or could potentially include these payments through subscriptions or signing up to special plans or tariffs. There are significant differences among energy users relating to energy tariff behaviour and some tariffs may impact energy use in unexpected ways or exacerbate inequality. Any model that requires active participation in order to benefit is inherently exclusive, in the sense that it favours those who have more time, knowledge and (personal) resources to sign up. In addition, developing and managing subscriptions and retail tariffs requires resources and savings can be greater and more equitable if passed on to all customers (in so-called ‘passive’ models).
Ultimately, it’s critical to be clear about what battery services and what project values are important and how they rank in importance. Considering equity and engagement at an early stage can lead to innovations that create new opportunities and avoid public resistance down the track.