The proposal by the Australian state of New South Wales to shorten the definition of long-duration energy storage to four hours has sparked considerable controversy in the energy industry. The global LDES Council trade association strongly recommends "maintaining the eight-hour definition of energy storage duration".
Earlier this year, the New South Wales government released a consultation document on long-duration energy storage. The document sought feedback on several changes, including shortening the minimum duration requirement for long-duration energy storage and exploring support mechanisms to accelerate the construction of energy storage facilities.
The New South Wales government hopes that changing the definition of long-duration energy storage will help the state achieve its 2GW/16GWh energy storage target by 2030.
AEMO (Australian Energy Market Operator Services) believes that by 2038, long-duration energy storage will become an important part of Australia's energy mix, especially as coal-fired power plants begin to be retired across the country.
The same report also pointed out that energy storage must also be developed to support the high-growth new energy industry. By 2030, AEMO expects renewable energy generation to increase to 22GW and to 49GW by 2050.
The proposal to change the duration of long-duration storage has sparked mixed reactions in the Australian energy industry.
For example, Daniel Zelce, policy director at the Clean Energy Investors Group (CEIG), said Australia will need a mix of both short-duration (<4 hours) and long-duration (>12 hours) storage to fill the gap left by coal closures.
In light of this, Zelce said CEIG supports a change to a minimum duration of 4 hours, but advocates for a “more nuanced approach to addressing the need for storage longer than 4 hours”.
CEIG stressed that even if the negotiation results in a reduction of storage duration to 4 hours, support for longer durations should not be weakened.
This position is also supported by the Smart Energy Council, which wrote that “a flexible approach to providing fixed capacity for NSW cannot come at the expense of a clear and consistent investment signal for long-duration storage technology solutions that can provide at least 8 hours of energy”, before adding that long-duration storage technologies longer than 8 hours “require bespoke support to be built in the absence of a sophisticated capacity market”.
"It is strongly recommended that eight hours be the minimum duration for long-duration energy storage," the association said. "As the grid becomes more reliant on variable wind and solar PV generation, the requirements for energy storage duration will only increase. This will be the case in NSW and across Australia by the 2030s.
Therefore, the NSW government cannot focus on a single year (2030), thereby hindering consumers from reducing their energy bills and even affecting the achievement of carbon neutrality goals.
Maintaining investor confidence in Australia's energy storage industry remains a key focus of discussions around long-duration energy storage. Policy and regulatory consistency are important factors in attracting investment and establishing a robust, low-cost supply chain. Changing definitions could hinder this stability and hinder investment in the industry.
Long-duration energy storage is an important part of the state’s energy system, providing renewable electricity during peak demand periods. Due to the growing importance of the technology, the three pumped hydro projects – Stratford, Muswellbrook and Lake Lyell PHES – have been rated as “nationally significant infrastructure” for economic, social and environmental reasons. Pumped hydro is also a form of long-duration energy storage.
In May, German energy company RWE made a final investment decision on Australia’s first lithium-ion battery long-duration energy storage project, adjacent to its existing 249MW Limondale PV farm.
More than a year ago, RWE won the NSW government’s first long-duration energy storage tender and was awarded a long-term energy services agreement. Contracts for a total of 1.4GW of resources tendered by AEMO on behalf of the state government have been awarded. This shows the need for further government policy support for eight-hour long-duration energy storage projects.