By Andrew Bonwick, former CEO of Power Direct and Chairman of EnergyOne
Background
Historically, Australia’s energy market has been based on the physical constraints of its production system. Around a half to two-thirds of our electricity is consumed during daytime hours, and with base-load generation being difficult to turn off, the principle strategy for cheaper energy was to move the load to night-time, when there was a significant surplus of capacity.
With the energy production moving to renewable sources of generation, the amount of energy available during daylight hours has increased significantly. This is mainly due to the massive increase in solar capacity and a small bias towards daytime wind generation over that for the night.
Meanwhile, major reductions in the cost of lithium batteries and a renewed focus on pumped hydro storage have created commercially viable opportunities to move energy (via storage) rather than moving the load.
Graphene is a material that opens up several advantages over current lithium battery technologies. This article describes how those advantages may lead to a transformation in Australia’s energy market through the integration of new battery and capacitor technologies into our electricity system.
The dynamics of supply and demand
With excess generation being the norm during daylight hours, batteries can be used to absorb cheap energy during periods of over-supply and discharge it when energy shortages develop.
There are several periods during the day when there can be short-term shortages.
This diagram represents a snapshot of the load on the South Australian electricity system over a working day. It shows the reduction in demand on the electricity network due to the impact of daytime generation from renewable sources over the coming years.
This is sometimes referred to as the ‘duck curve’, a tag that requires a bit of visual imagination.
Most Australian States are seeing this dynamic begin to play out at some level. This load profile cannot easily be served by traditional coal-fired power stations.
Implications
Lithium batteries are currently economically feasible for charging during the day and discharging at night. The arbitrage associated with this supply and demand dynamic will increase as the middle of the duck curve drops further over coming years.
Graphene-enhanced electricity storage (GES) [1] has the potential to be cheaper than current lithium ion technologies and has charge/discharge advantages that will enable a transformation in how energy is stored, distributed and marketed.
In the short term
Electricity utility customers will be familiar with the cost of energy that appears on their bills. The market system behind this is significantly more complex than meets the eye. As well as the real-time market for energy itself, there are separate real-time markets for the services that keep the electricity market stable. These are generally referred to as ancillary service markets. Australia currently has eight of them. The Tesla battery in South Australia is reportedly earning most of its revenue from these ancillary services markets.
These markets represent significant potential sources of revenue for graphene-enhanced energy storage technologies. Graphene enables both higher energy storage capacity and higher discharge and charge rates compared to orthodox lithium ion batteries. GES products will therefore be at a competitive advantage to current battery technologies as these markets open up.
As well as these wholesale energy market niches, the recent Australian Graphene Industry Association webinar discussed graphene energy storage behind the metre for domestic solar panels.
Attaching the storage device behind the solar panel is transformative when it’s associated with the distributed decision-making power of IOT devices in the panel’s inverter. If solar panel batteries are controllable (via IOT) and assembled into a portfolio (probably associated with the installer) then a large quantity of dispatchable power can be made available for commercial dispatch to the highest value use in real time.
In addition, most Australian local distribution systems (the poles & wires in the street) are close to or exceeding their capacity to absorb power generated through domestic solar panels during daylight hours. Less expensive storage at greater power density and high charge/discharge rates would allow each roof-top micro solar installation to move more energy to peak demand times – either for use at home or to export to the grid when the systems is less congested.
In the longer term
Australia’s ancillary energy service markets are an example of systems devised to help manage an existing problem. There is some discussion at present about increasing the number of markets (or evolving them) due to the fundamental shift in the assets used for generation as we move from a predominantly thermal power station portfolio to a much more distributed wind /solar/thermal /hydro portfolio mix.
There is little doubt that these markets are becoming a much larger proportion of the total energy market value (in which GES will win an increasingly larger share). This will mean new revenue streams for rapid response energy technologies like those enabled by GES.
Compared to current battery technology, the high energy density of GES means that they can be installed closer to the load (i.e in domestic residences). In addition, GES-enhanced batteries do not have the heat generation issues of lithium ion batteries, overcoming a safety issue that has reduced the popularity of current storage products.
For ‘legacy’ baseload generators
The combined properties of higher energy densities and high discharge and charge rates also opens up the opportunity for transformative new uses and revenue streams. The principle problem with the duck curve is that, during the morning and in the evening peaks, the rate of change in demand is so high that it is beyond the capability of thermal power stations to manage.
As the sun rises and solar generation picks up, the thermal power stations need to turn down their output. But the inertia involved in very large boilers and massive rotating generators means there are physical limits to how quickly changes in output can occur. Similarly, at the other end of the day there are physical constraints that affect how quickly turbines can be spooled up to meet the increasing demand. These factors significantly reduce the profitability of thermal power stations in those two (critical) parts of the day.
At present it is almost economically feasible to install a battery in front of the major generators and behind their connection to the grid. This would enable them to suck up this excess power in the morning or to give it back in the evening, so the apparent rate of dispatch by the generator (as seen by the grid) can shift with demand. With their lower cost, very high discharge rates, and high energy density, graphene-enhanced energy storage products may soon make this new market entirely feasible, augmenting the commercial flexibility of these major assets and potentially extending their useful lives as the load shape changes.
For the renewables industry
There is currently considerable pressure on solar and wind technologies to provide some of the characteristics evident in the disappearing thermal power station system that the market has so far enjoyed for free. If there is a disturbance in the electricity system (which could be the result of a rapid load reduction or larger generator dropping off the grid) the effect is fluctuations in the power quality across the grid. The mechanical and boiler inertia of thermal power stations provides a significant stabilising effect, allowing the control systems time to adjust generation to suit the new real-time demand/supply balance. In addition, these large physical assets are naturally tolerant of these disturbances.
Wind and solar power stations’ mechanical and electrical configuration do not provide this stabilising effect, nor are they particularly tolerant of disturbances. One of the contributing factors to the South Australian blackout several years ago was this lack of tolerance within the very large wind portfolio which was delivering a high proportion of South Australian generation at the time.
The regulatory authorities are now requiring developers to fit (and retrofit) additional plant and equipment to wind and solar assets to make them more fault tolerant and to provide better resilience. A principle component of this equipment is the ability to store energy and dispatch it under specific circumstances. GES devices with their high energy density and rapid response have the potential to deliver this stability – a factor that will be more important with the increasing proportion of energy entering the system through wind and solar generation over the next 10 to 20 years.
Emerging storage technologies
Existing technology batteries have begun to dominate the ancillary services markets, particularly to provide ‘fast frequency response’. GES equipment cost advantages should support both growth and profitability in the servicing of these markets.
In addition, given the need for the replacement of retiring traditional power stations, GES storage solutions will provide a much more effective technological solution to some pressing macro energy market issues.
Traditionally, gas generators have been used to enable a response to system events and to provide generating capacity at a lower capital cost. Indeed, the political discussion in the last couple of years in Australia has been around a “gas-led strategy” to ease the path to renewables. The recently released 2020 Integrated System Plan by Australian energy market operator, AEMO, suggests a different future.
Contrary to the expectation of many industry and political participants, AEMO has forecast energy storage, over a wide variety of technologies, will offer current and realistic competitive advantage over gas-fired ‘peaking’ generation plants.
AEMO has forecast a large investment in new battery technology in preference to the expected fleet of gas-fired power stations envisaged for the next 10 to 15 years.
The largest opportunity for batteries and other GES devices to replace a whole class of generating equipment is a very realistic one.
Breakeven cost analysis – new GPG versus battery capacity for providing daily peaking support
Source: AEMO 2020 Integrated System Plan
Figure 18.
In conclusion
The electricity market is evolving. It is becoming apparent that batteries and capacitors will move from their current niche in ancillary services markets to be a fundamental enabling technology. This will lead to a rapidly accelerating appetite for battery and capacitor products.
Graphene-enhanced batteries, whether lithium ion or aluminium ion, are demonstrating significant cost and effectiveness advantages over existing battery technology. Graphene is even increasing the effectiveness of solar panels.
Graphene, it seems, has a bright future in helping to keep the lights on.
About Andrew Bonwick
After graduating in Science & Economics Andrew worked with General Motors and PA Consulting before joining McIntosh Securities as Australia’s first Utilities Equity analyst. He moved to Mercury Energy (NZ) in a number of executive roles before returning to Australia as Director Marketing for Yallourn Energy then CEO of the specialist SME electricity retailer Australian Energy Ltd. He is currently a Chairman and Director of the specialist Energy One energy software company ASX:EOL. He joined Fish & Nankivell in 2012, with specific expertise in energy and infrastructure.
[1] graphene electricity storage could be via batteries or capacitors.
