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August 22, 2023
The Orkestra team was asked by the Central Victorian Greenhouse Alliance (CVGA) to assess the viability of community batteries connected to the local distribution network, as part of the Victorian Government Neighbourhood Battery Initiative. For this report we use the term 'neighbourhood batteries' as it is a more accurate description of project scale, and a subset of the broader category of community batteries.
Download the full report from our CVGA investigation into Neighbourhood Batteries
DownloadSix communities with anecdotal evidence of solar PV connection limits and frequent outages were selected for participation in the study. Within these communities, load data was obtained from Powercor from 118 transformers, servicing an almost two-thirds of customers in those communities. At each transformer, we constructed hypothetical projects from a range of battery sizes and battery control algorithms. All in all, 11,640 hypothetical projects were assessed - in what is perhaps the most intensive study on neighbourhood battery economics conducted to date.
What sets this study apart is that we assessed the economics of community batteries holistically - that is - assessing both the direct values which flow to the project developer, as well as the indirect values which flow to other stakeholders within the community.
The value streams assessed in the study are summarised in the figure below:
The project assessed the following value streams:
Direct value streams are collected as revenue by a project developer (i.e. a community group):
Indirect value streams are benefits which flow to other parties, such as the distribution network, or customers connected to the grid within the transformer, or to the community. This included:
See the full report for all of our assumptions.
No. We didn't find a single project that came close to breaking even over a 15 year lifespan. (We must stress that this answer only applies to the projects we assessed).
In the chart below we rank project locations from best to worst (left to right). The best project only repays about half of the initial $96,000 investment, in Net Present Value terms.
A few observations help explain this disappointing outcome:
To highlight the third point above, let's walk through a simple example whereby a transformer is constrained due to reverse flow of solar exports exceeding its nameplate capacity. The network often responds to such cases by preventing new solar connections. Left unrestrained, solar output might breach the transformer capacity for up to 6 hours on the longest of summer days.
A 120kWh/36kW neighbourhood battery, if charging from empty and including losses, could provide ~18kW of sustained soft network capacity for 6hrs - enough for only 3 or 4 additional solar PV systems to safely connect the grid behind that transformer. At an assumed battery install cost of $800/kWh ($96,000), the cost of soft network capacity provision is ~$5,300/kW. However, simply upgrading the transformer capacity would be much cheaper, costing $250 to $1000/kVA, ($3,375 to $13,500) depending on the size of upgrade.
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Sign up todayYes, there is. Whilst the neighbourhood battery projects we assessed were not viable, the anecdotal grievances we heard from Central Victorian communities were validated by the data.
Network capacity constraints are already limiting new solar PV connections and solar export.
14% of transformers are already at, or near, their solar hosting capacity. Pomonal and Lyonville has 44% of their transformers already at solar hosting capacity. As solar uptake increases in the future, this problem will worsen as shown below.
Grid reliability is well below Powercor's stated targets
The average grid outage time in 2021 was approximately 8 hours for all transformers. Lyonville saw grid outages of up to 126 hours (over 5 days) with the longest continual outage being for 3 days. This performance is far worse than Powercor’s 2022/23 targets for unplanned outages:
Energy independence is currently estimated at 24%
This is the current percentage of energy consumed within the transformer which was generated from within the transformer. Whilst respectable, there is clearly room for improvement here in communities which are seeking to achieve zero net emissions by 2030. Interestingly, average solar PV self-consumption at the transformer level was 97%, indicating that additional solar at the right locations (i.e. at unconstrained transformers) would likely do more to boost energy independence than neighbourhood batteries would.
Instead of feeling disheartened by our findings, communities should pursue other approaches:
The definition of a 'neighbourhood battery' as part of the NBI initiative is limiting and locks out projects from additional value streams. Community battery projects worthy of investigation include:
Good question but not one for us to answer. The two things we will say on the matter are this:
Orkestra creates software for easy, fast and accurate feasibility analysis of new energy projects.
This report was commissioned by Central Victorian Greenhouse Alliance (CVGA) as part of the Victorian Government's Neighbourhood Battery Initiative. This article is a brief summary of the full report. The results are highly contextual, and limited by modelling assumptions and the data available.
The author would like to say thanks to the Orkestra team for contributing to this massive analysis and report: James Allston, Michael Jurasovic, Kelvin Liao and Georgina Hale. In addition, thanks to Taryn Lane (Hepburn Wind), Manny Pasqualini (Hepburn Shire), David Gormley-O'Brien and Rob Law (CVGA) and Ruchika Deora (C4NET) for your input.
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