Your guide to all things neighbourhood batteries
The Hon. Lily D’Ambrosio
Minister for Climate Action
Minister for Energy and Resources
Minister for the State Electricity Commission
Victoria is undergoing an exciting and rapid renewable energy transition underpinned by our commitment to reach 95 per cent renewable electricity by 2035, and net-zero emissions by 2045.
Energy storage is critical to this transition – providing the firm capacity needed to maintain energy security, reliability and affordability. In September 2022, we set new Victorian energy storage targets for at least 2.6 GW of energy storage capacity by 2030 and at least 6.3 GW by 2035. That is why the Victorian Government has also committed $42 million to install 100 neighbourhood batteries across Victoria.
Our commitment to great outcomes for communities and households builds on the success of the Neighbourhood Battery Initiative (NBI), which is a shining example of how the Victorian Government is delivering a cleaner, cheaper and stronger energy system for all Victorians.
Since the NBI’s launch in March 2021, a tremendous amount of work has been carried out. We have now launched three rounds of funding to develop and test business models and the best ways engage communities in the development of local projects. We have also held monthly knowledge sharing events with project proponents and worked closely with industry, communities and market bodies to understand challenges and barriers to delivering NBIs. Future work includes delivering on our commitment of 100 new batteries across the state and ensuring even more communities can benefit from cheap, clean, local solar.
Importantly, the NBI is facilitating trials and demonstrations of new energy storage models in Victoria, from feasibility through to implementation. We are proud to be working in partnership with the Battery Storage and Grid Integration Program team at the Australian National University. Together with the ANU we are delivering this Knowledge Hub, which brings together critical research and learnings from the NBI program (and other projects from around Australia) to equip new and existing groups to understand the process of developing a neighbourhood scale battery project.
The Knowledge Hub highlights our Government’s continued leadership in the energy transition. It is a one-stop-shop of information and advice for groups at all stages of the neighbourhood battery development process and a resource we know will prove a useful guide to all groups – local governments, retailers, distribution network service providers and community groups – on their neighbourhood-scale battery journey.
Click below to access the Neighbourhood Battery Knowledge Hub Landing Page we have created to help you get started.
Read through our list of neighbourhood battery trials and programs in Australia to learn more about the current state of neighbourhood battery projects.
Before you go any further, make sure you understand the potential benefits, need, and expectations of a neighbourhood battery:
Now that you have done an initial check that a neighbourhood battery is what you need and your community may want, let’s check you have all the project components you will need for a successful neighbourhood battery project. These include:
Chage up your “battery” as you travel through the stages of designing, testing, implementing, and evaluating your business model.
Design your model – this includes your business model and the operating model for the battery
Test your model – exploring the assumptions and elements of the model with partners and community, and feasibility testing
Implement your model – a timeline of things you need to attend to as you get closer to getting your battery on the ground (or up a pole!) and details on some key processes such as site selection
Evaluate your model – assessing whether your model is working and whether it’s delivering social and environmental benefits
Learn from those who have already been through the journey to installing a neighbourhood battery for their community
The term tariff is used to describe charges for electricity flows. The term tariff is used because, in other contexts, tariffs refer to charges placed on exports and imports. Of interest in the context of neighbourhood batteries is that tariffs have traditionally been used to promote local trading and self-sufficiency.
Without proper reading and measurement equipment, you are not able to directly read the actual poles and wires in your street. It is safe and fair to assume however that they will be operating at the nominal 230 V +10/- 6%. If you have more enquiries about the poles and wires of your distribution network on the street, you may be able to get in contact with your local DNSP and have them perform a reading for you, which would be performed at the distribution transformer.
Voltage level on the distribution network can be influenced by network characteristics, net-work equipment (so the settings and functioning of the distribution transformer), the size and locations of loads at any given time, and the size and load of any distributed generation at any time (i.e. household solar generation or that from a battery). DNSPs are therefore responsible for managing peak demand days, ensuring the load on the distribution transformer is not exceeded and stays within safe levels.
Power is always directed to the distribution transformer in the same manner. In times of peak demand, like in summer, the amount of power that is directed will be the characteristic that changes. This is controlled by the DNSP that will communicate what load distributed generation is allowed to deliver to the system and what demand is required to be delivered from the transmission network.
A neighbourhood battery doesn’t play any role in maintaining the voltage level. Rather, it is another source of generation, like that from a solar system, which must then be managed by the DNSPs to ensure it is delivering power within safe voltage and current limits and isn’t overloading the system. The DNSP will outline the amount of load a battery is able to discharge at a given time, which is then managed at the battery’s inverter.
In the case of household solar PV generation, the inverter attached between the solar panels and the home is used to maintain voltage. The role of an inverter is to convert the variable direct current (DC) produced from the solar panels and transform it to alternating current (AC), as used on the distribution network, at approximately 230V +10/- 6%. An inverter will therefore always exist when a household has a solar system as it is essential in ensuring the DC output from the panels is transformed safely to the acceptable AC power at the correct voltage level. The same would apply to the case of a behind the meter household battery, as the power delivered from a battery is DC, meaning it also has to be transformed to AC using an inverter before the power can be delivered to the home. In the case of no household solar generation, no inverter is needed, as power from the distribution network can be directly used as it is already at a safe current and voltage for powering the home.
The Australian solar (photovoltaic) systems standards, AS/NZS 5033, outline these installation and safety requirements for photovoltaic (PV) arrays. As a result, any household solar installer will have had to ensure that any solar system installed has the appropriate wiring, protection (including DC isolators and inverters), switching and earthing to ensure the safe operation of the solar system.
The voltage level of the distribution network is maintained by the Distribution Network Service Provider (DNSP). DNSPs are responsible for ensuring the distribution transformer is operating correctly and that power is delivered to customers in the allowable range that ensures appliances function as expected and are not damaged.
Retailers buy energy from the spot market and sell that energy on to customers. They act as a hedge, shielding businesses and householders from the volatile prices of the National Electricity Market (NEM).
Some retailers also own generation infrastructure (power plants or solar/wind farms) and are referred to as gentailers. The largest energy retail businesses in Australia are gentailers and the top 3 (AGL, Origin Energy, and EnergyAustralia) supply more than a third of the retail electricity in the NEM. AGL and Origin are Australian-based, publicly listed companies. EnergyAustralia is a subsidiary of Hong Kong-based China Light and Power (CLP Group).
A number of small, locally-based retailers have been established over recent years, many with an emphasis on renewable energy. Unlike gentailers, they are exposed to fluctuations in wholesale electricity prices, and struggle to compete with the large gentailers. Several such companies have gone out of business in the last few years or have been acquired by larger gentailers.
Small-scale, customer energy resources (CERs) such as rooftop solar panels cannot participate in electricity markets because they are too small to be eligible to supply power under the Australian National Electricity Rules (NER). This goes for neighbourhood batteries as well. However, some retailers have adopted a business model aggregating small-scale energy generation such as from residential solar panels and wind turbines. These ‘aggregators’ work with customers who produce this small-scale generation to buy and sell electricity in the electricity market.
Under the current rules, retailers can own neighbourhood batteries, adding them to their generation portfolio, and with them, participate in electricity markets. Neighbourhood battery projects can partner with retailers, including aggregators, to access market participation. Retailers also provide the legal and administrative means to interact with people as customers, through tariffs and plans/subscriptions.
Retailers have so far been working with neighbourhood battery projects to assist in their integration into the energy market system. However, it seems likely in future that individual neighbourhood batteries will be too small to be of much interest to retailers (or DNSPs for that matter). Various community groups and organisations are considering setting up networks of batteries (across a locality or region), to benefit from economies of scale and to facilitate market participation. For a community energy group, a good option may be to join one of these networks.
There are a number of different roles that local government can play for neighbourhood batteries, including:
• Buying and owning the battery
• Managing a battery financed by another organisation
• Leasing council land as a site for the battery
• Providing assistance with planning and other approvals
• Funding a community group or organisation to establish a neighbourhood battery project
• Auspicing a community group (e.g. through a grant application process)
• Assisting with community engagement through existing engagement
• Playing a part in the ongoing governance of the battery.
There are, as yet, no examples of council-owned or managed neighbourhood batteries in Australia (see trials above). Neighbourhood batteries certainly align with local councils’ policy goals around decarbonisation and energy affordability. In some parts of Australia, community members trust councils more than energy businesses and see them as potential ‘honest brokers’ in facilitating neighbourhood battery projects. Local governments vary greatly in their resources and appetite for participating in renewable energy projects. As such, it is recommended to research your local council and check if they have climate policies or renewable energy targets in place that could align with and help leverage your project and partnership with them.
Distribution Network Service Providers build, maintain, and operate our distribution networks. Distribution networks transport electricity between the high voltage (transmission) network and the lower voltage part of the network, where our houses are. DNSPs are allowed to own neighbourhood scale batteries but cannot use them to participate in retail electricity markets. If they choose to participate in energy markets, they must obtain a waiver and form a relationship with a retailer.
There is only one DNSP for each part of the network i.e. they are a regulated monopoly. DNSPs are an essential partner in front-of-the meter neighbourhood battery projects because the battery, once connected, will be part of the network that they are responsible for. The project will need to negotiate a network connection agreement with the local DNSP. Note that the DNSP will regard the battery as a generator and a load/user of energy and both capacities need to be taken into account. The connection agreement will involve scheduling a complex connection process, which needs to be initiated at least 6 months before the launch of the battery.
As part of this, the DNSP will charge the battery (owner/manager) a tariff to make use of the distribution network. This network tariff will be a crucial factor in the feasibility of the project. In existing arrangements, batteries have to pay to use the network for charging and households have to pay to use the network for the energy that is discharged from the battery to their houses. This double charging makes most neighbourhood battery projects uneconomic. Network businesses are currently developing new tariffs for neighbourhood batteries. These new tariffs, in addition to charging the battery for use of the network, can also pay batteries for the network services they can provide (see network tariffs section).
In future, DNSPs may also develop other ways of costing and paying for network services that neighbourhood batteries provide. This will require negotiation in relation to the goals and benefits the battery is designed to serve, and how these can be balanced with the requirements of the network.
Even in the absence of agreements around network services, projects need to access network data in order to understand energy generation and demand, as well as mapping out constraints and the services a battery could safely provide in the locality to select a suitable site in the network (which may also involve DNSP owned land) and for feasibility studies. While this data may be available in future through online portals (see Data section), at the moment it relies on the goodwill of the DNSP.
During the day at times of peak solar, solar generation from rooftop solar often exceeds that needed to meet energy demand. Some excess solar can be exported to the distribution network, however, there are limitations on how much can be exported. This is because distribution transformers, which feed locally generated rooftop solar to the distribution grid, are restrained by maximum voltage constraints. As a result, often excess solar has to be curtailed, which refers to a process that occurs at the inverter, connected between a rooftop solar system and the distribution transformer, to make the solar system operate at a lower power point.
Battery storage, however, can utilise this excess solar generation, capturing it for use during times of low solar generation. In doing so, battery storage enables greater use of locally generated solar energy and reduces the amount of energy that energy users need to import from the grid during times when demand exceeds that of solar generation. Batteries charged on excess solar generation can also be used to export electricity to the grid, potentially displacing fossil-fuel generated electricity.
Behind the meter batteries are connected to a particular household’s or building’s electricity supply, separated from the wider electricity system (‘the grid’) by the household’s meter (see diagram). The meter is the device that monitors energy consumption (and generation) by that household or business. Behind the meter batteries can store and supply energy to and from that household (e.g. store solar energy produced during the day and provide that as electricity to the household in the evening).
Batteries that are in front of the meter are connected to the electricity system ‘in front’ of meters, i.e. the battery sits on the wider electricity grid. Neighbourhood batteries are usually located within the distribution network, i.e. the low voltage network that distributes electricity from substations to neighbourhoods. Grid-scale batteries are located on the high voltage transmission network, which connects the regions of national electricity market (NEM), transporting energy long-distance from the top (Cairns) to the bottom (Hobart) of the NEM.
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