Energy storage both opportunity & threat as regional grid operators look to shrink assets

The head of Australia’s Energy Networks Association has predicted that grid operators in Queensland and Western Australia are likely to offload some of their extensive “poles and wires” networks.

The move will likely pave the way for new players who can invest in min-grids that are based around solar PV and energy storage. Australia, because of its high electricity prices and excellent solar resources, is likely to be a world leader in this transformation.

ENA chief executive John Bradley, says network operators in at least two states, Queensland and Western Australia, are likely to shrink their asset base to allow new competitors in the market.

“Some businesses will welcome the opportunities for other commercial players to come in and take their business off them,” he told the 2XEP energy productivity conference in Sydney last week. “Those businesses are looking basically to see their asset base shrink, and I am expecting that they will.”

It cost the Queensland government more than $600 million last year to subsidise the cost of deliver of electricity to Ergon Energy, which has said that customers are likely find it cheaper to go off-grid – with renewables such as solar plus storage – than to remain connected to the network.

Western Australia’s Horizon Power, which services regional areas in the state, recently tendered large battery storage and solar systems for some towns, and said centralised generation may no longer be the best option in regional areas.

The WA government also pays out more than $500 million in subsidies between the retail price and the cost of delivery. Horizon CEO Frank Tudor said the cost of solar plus storage was already a fraction of the cost of delivery of centralized generation through part of the network.

“Our traditional energy business may be very different and very small (in the future),” Tudor said last month.

Bradley said it was clear that new business models were emerging, including those customers with solar on their roofs and storage in their homes. “Batteries are as much an opportunity as a threat,” he said.

Top image via GSES

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Giles Parkinson