In 2023 renewable energy accounted for 35% of Australia’s total electricity generation – solar generation jumped 17% last year, having grown about 21% per year since 2015.
That percentage will only grow as both rooftop solar and solar farms continue to expand – 3.7 million rooftops across Australia already have solar panels installed.
There are also more than 97 projects at the financial closing stage or actively under construction Australia wide, with potential for more than 12,000 megawatts of energy generation once they come online.
While that’s excellent news for Australia’s net-zero and green energy goals, it also offers some structural hurdles to overcome.
“The problem is that renewable energy must be stored to really be useful; there is too much of it when we don't need it, and not enough when we do,” Monash University associate professor Guillaume Roger said.
Energy storage critical to stable green energy future
A new white paper from Monash Business school has highlighted the vital role large-scale electricity storage will play in the Australian energy ecosystem as the country strives to reach its energy goals.
Professor Roger authored “The storage imperative: Powering Australia’s clean energy transition”, analysing how we trade electricity, and the financial instruments that support said trade – he says they’re inadequate to deal with intermittent energy and storage.
“Electricity storage on a large scale is the perfect, and very timely, complement to sporadically available renewable energy generation,” the report says.
“Storage enables the intertemporal shift of electricity production to make energy accessible when required rather than when available.”
According to Associate Professor Roger, “storage is very complicated to understand and operate, and the manner in which the National Energy Market (NEM) is currently operating is not conducive to efficient storage operation, nor of storage investment, and as a result Australia is stalling.”
Building better financial instruments
The report offers several recommendations to build out our financial instruments to better support clean energy uptake, mostly based on simply policies already in operation in other markets.
These include the introduction of adequate financial instruments to support investment, and further investment in research to design a market that can cope with the complete retirement of fossil fuel generators including:
- No-Regret Policies: Implementing Locational Marginal Pricing (LMP), a day-ahead market (DAM), and promoting forward contracting to enhance price signals and grid efficiency.
- Investment Incentives: Reevaluating schemes like the Capacity Investment Scheme (CIS) to better align with storage asset realities, encouraging full utilisation to minimise taxpayer burdens.
- Financing Reliability: Developing new approaches to ensure system reliability in a storage-dominated grid, possibly through long-term contracting or innovative procurement mechanisms.
- Research Investment: Funding further research to explore the limits of revenue generation through arbitrage and market design in a renewable-centric landscape.
“An important dimension of these reforms is that they do not cost much to taxpayers, unlike much of the subsidies various governments, state and federal offer now, and they can be enacted rapidly. Australians should demand them,” Associate Professor Roger said.
“As Australia seeks to transition to a robust and sustainable energy future, addressing the complexities of electricity storage is crucial.
“The insights provided in this white paper lay the groundwork for effective energy policies and regulatory frameworks, giving us a chance to meet Australia’s clean energy goals.”
The full white paper can be accessed with this link.