The Australian electricity market is rarely boring these days. Coal stations are closing, solar is flooding the grid during the middle of the day, and the wholesale market is increasingly behaving like a commodity trading desk rather than a utility service.
That was the theme of our recent webinar on commercial batteries, and why more businesses are starting to look at them not just as a sustainability project, but as an investment.
Here are five takeaways.
1. Volatility is the new normal
Electricity prices in the National Electricity Market are moving around more than they used to. Solar generation can push daytime prices extremely low — sometimes even negative — while supply constraints later in the day can cause sharp spikes.
For most businesses on retail contracts this volatility is hidden behind fixed pricing, but it still exists in the underlying market.
And it’s that volatility that batteries are designed to capture.
2. Futures markets smooth things out
Most commercial electricity contracts are priced off the futures market, where retailers hedge expected wholesale prices years in advance.
That provides stability for customers, but it also means the real-time drama of the spot market is largely invisible.
Meanwhile traders and grid-scale batteries are increasingly profiting from those short bursts of price volatility.
3. Batteries are becoming part of the grid
Large batteries are now appearing across the grid as coal generators retire and renewable generation expands.
Their role is simple: store excess energy when supply is high and release it when supply tightens.
But that same concept can increasingly work at a commercial scale, particularly for large energy users.
4. The revenue model is expanding
Commercial batteries are no longer limited to simply reducing peak demand charges.
They can participate in multiple revenue streams including wholesale energy arbitrage, grid support services and demand response programs.
Stacking these revenue sources is what is starting to make the economics work.
5. Costs are falling
The final piece of the puzzle is cost.
Battery prices have been falling steadily for years, while electricity market volatility has been increasing.
That combination is improving the potential return on investment for many commercial sites.
The question for most businesses isn’t whether batteries will play a role in the future energy system.
It’s whether the timing now makes sense for their particular site.
Interested in exploring the opportunity?
Our consultants provide independent assessments and connect you with trusted suppliers to secure compliant, cost-effective energy projects and savings. For the latest information or to speak to an expert at Sustainable Energy Solutions for a tailored conversation on your business’s needs and goals, please get in touch or call us on (02) 8044 0335.
