An alternative to building more gas peaking plants in South Australia – which would take years and require hard-to-get-gas – is to build a lithium battery storage plant to act as a peaker.
Lithium batteries can provide the same service as a peaking gas plant only better. In addition to stopping high prices they can also help to prevent negative prices by absorbing power when wind generation is high relative to demand.
Furthermore, it can be built in less than a quarter of the it takes to build a new gas peaker, and can be built in modular 1-50MW units allowing maximum flexibility for deployment.
Battery capital cost is comparable to peaking gas capital cost. ITK thinks Lithium storage can be built and installed at around the $1.2 m/MW mark, while operating cost is much lower.
There are no barriers to entry for battery peakers, so in the long run returns will go to the cost of capital. However, over the next two-three years after Hazelwood closes, prices in South Australia could well go higher, even assuming Pelican Point gets back to running flat out.
A battery would also help the gas generators. It would charge when wind supply is high and pool prices low. This would reduce the losses gas generators incur in those conditions.
So why build a 400MW gas peaker costing say $500 million (if your lucky), plus fixed operating costs including renting gas transmission capacity for 70 hours a year?
Why force a combined cycle gas generator into supplying Victoria when wind generation exceeds South Australian demand (5 per cent of the year or 400 hours a year)?
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