The renewable power gentailer will seek bids from Tesla and others to build a 100MW battery in the lower North Island, 50 times bigger than New Zealand has seen before
When network operator Vector installed its first Tesla batteries at a substation in the Auckland suburb of Glen Innes, the company faced push-back from the community, other power companies, and regulators.
They had to find a shipping company willing to transport the lithium batteries to New Zealand, sound-insulate the building to avoid an annoying hum, and put together robust plans in case there was a fire – a legitimate concern as shown by a big three-day fire this month at a new 160MW Tesla battery being installed in the Australian state of Victoria.
Five years on, Vector chief executive Simon McKenzie admits he feels a little bit vindicated, as the Electricity Authority changes the rules to allow batteries to play a big role in firming the country’s power network, to enable a last shift to renewable energy.
“There were some some parts of the energy sector that didn’t think we should be engaging in batteries,” he told Newsroom. “The irony of that was of course that none of them were doing anything themselves, but all of a sudden it created a healthy debate about whether batteries should be allowed into the network. They said Vector would be messing with the wholesale electricity market.”
But as the rules change, the first big mover isn’t Vector. It is Meridian Energy. This week the hydro and wind generator has detailed plans for an enormous 100MW battery in the North Island, most likely Hawke’s Bay, Manawatū, or north of Auckland. It is bringing forward its commissioning to 2023.
Meridian chief executive Neal Barclay told Newsroom it was being expedited, because of the power outages on August 9. On that night, generators couldn’t or wouldn’t provide sufficient power to meet demand.
Meridian and Genesis, two of the country’s biggest gentailers, are both reporting their full-year results to the sharemarket this week – and it comes under the shadow of black-outs on the coldest night of the year.
Barclay said that in his view, the electricity industry had failed its customers in several respects that night – most markedly in planning their outages, and communicating slowly and poorly with the households and businesses that depended on them. “Through that planning process we failed, effectively, collectively, on the 9th of August. That will be one of the learnings that comes out of the multitude of various reviews that are taking place at the moment,” he said. “And if you’re going to take people’s power away, you need to let ’em know about it.”
But where Meridian had not failed, he said, was in switching on all possible power generation; indeed, it had fed in more than 100MW by delaying maintenance to its West Wind farm. But it hadn’t been clear that Huntly’s third 250MW coal-fired unit would take six hours to fire up, he said, and Meridian didn’t have enough hydro power available to be cranked up at short notice to meet the big surge in demand.
That’s where the 100MW battery would come in, in the future. He said it would be switched on in time to take advantage of Transpower improvements to the Clutha Upper Waitaki Lines network in the South Island, and an industry initiative to enable more power to be sent north over the Cook Strait cable.
The company has extended a contract to supply discounted electricity to Rio Tinto’s big Tiwai Point aluminium smelter near Bluff, and Rio Tinto is not now scheduled to be out of the market until early 2025. By then, Meridian would be equipped to feed electricity to the North Island – electricity that is at present being sold to the energy-hungry smelter.
As Meridian became better able to sell its electricity to the North Island, the Rio Tinto deal would become marginal. “There might be a year or two when we’re effectively taking one for the team.”
The new battery would be built in the lower North Island, and would draw power from the Cook Strait cable, then supply it back to the market as required.
Barclay welcomed the Electricity Authority code change, saying it would allow the construction of big batteries that could draw on the grid at times of low demand, then feed it back in when businesses and households needed power.
“For families and communities, the best thing that could happen adding energy storage like large-scale batteries is, they don’t notice a thing because the network is more stable.”
– Steven Goldman, Fluence Energy
He said big international players like Tesla and Neoen, which are building a 160MW battery in Victoria, would be likely bidders to provide the 100MW New Zealand battery. “We’re trying to find a property, design it, and make sure we can connect it to the grid appropriately.
“It’s the size of a decent-sized wind farm. Of course it doesn’t generate energy, but it can put the equivalent of a wind farm’s energy back into the grid, in an instant.”
Tesla’s brilliant, maverick chief executive Elon Musk earlier wagered to build South Australia’s battery within 100 days, or deliver it for free. He won his bet. This year he said the challenge to speed up battery cell production was fundamental to a sustainable energy future. “Very important problem,” he tweeted.
Neoen spokesperson Emma Jewell said the company was not able to comment.
Fluence, another international player in the battery market, told Newsroom it, too, was interested in builds on this scale. Asia-Pacific regional marketing manager Steven Goldman wouldn’t comment on the specifics of Meridian’s project, but said Fluence had more than 2,700 MW of projects deployed or awarded around the world.
This year alone, the Fluence team had commissioned the 100 MW/400 MWh Alamitos project in Long Beach, California, and was deploying other such projects in the state.
“Fluence launched our latest-generation technology platforms last year, including Gridstack, which was designed for the most demanding market applications with industry-leading reliability, scalability, and safety. We currently have a range of projects using Gridstack under construction at the moment, the largest being the 100 MW/400 MWh Luna project in Lancaster, California.
“We can’t comment on any projects we may or may not be responding to tenders for, but Fluence has not supplied any projects in New Zealand to date.”
Goldman said the best thing about adding large scale batteries to the network, for families and communities, was that they wouldn’t notice a thing, because the network would be more stable.
“Energy storage adds flexibility to the grid, able to both inject power when needed or absorb excess power when there’s too much,” he said. “That flexibility helps the grid operator better balance intermittent generation from solar or wind, balance electricity demand second-to-second (and in some places, balancing in less than a second), and reduces the need to call on gas or diesel plants when demand for electricity spikes or if generation goes offline temporarily.”
He said batteries were helping economies around the world keep grids stable as they transitioned towards being powered by a variety of resources, including a higher percentage of renewables.
For example, about 30 percent of Ireland’s electricity currently comes from renewable sources, but the country aims to increase this to 70 percent by 2030. Batteries were providing ultra-fast grid services to manage ebbs and flows in solar and wind output, Goldman said.
“Across the Tasman Sea, the state of South Australia got 99.6 percent of its power from solar and wind for the first time one day last December and batteries are playing a key role there as well.
“So why wouldn’t families notice? Because battery-based energy storage projects have no direct emissions, no water or wastewater impacts, and blend into the landscape – either as a field of cabinet-shaped enclosures, like any other electrical equipment, or inside a building similar to a big box store or a data centre.”
“A 100MW battery connected to the grid as proposed by Meridian would represent a significant block of capacity and support this maintenance of supply.”
– James Tipping, Electricity Authority
James Tipping, the chief strategy officer at the Electricity Authority, said there was a range of traditional technologies that provided ancillary services to Transpower, the system operator, to maintain secure, reliable and stable electricity supply.
“A 100MW battery connected to the grid as proposed by Meridian would represent a significant block of capacity and support this maintenance of supply,” he said.
In order to keep the grid secure, Transpower bought an ancillary service called “instantaneous reserve” that could quickly and automatically replace the capacity lost if a large generator unexpectedly tripped offline, for instance. Properly set up, batteries could provide this service.
“At commercial scale, batteries are a relatively new technology,” Tipping said. “The Electricity Industry Participation Code, the market’s rulebook, was not written with batteries in mind. As a result, the Authority has reviewed the parts of the Code that deal with ancillary services so that batteries can provide instantaneous reserve while they are charging or discharging.”
This code change would also require amendments to Transpower’s ancillary services procurement plan, and he said consultations on that would close this week. The amended code and procurement plan would then come into force in April 2022 – well ahead of when Meridian’s battery project is expected to come online.
The Authority had recently launched a project looking at how to ensure the electricity system remained secure and resilient as it evolved over coming decades, Tipping said. “Moving towards 100 percent renewables in New Zealand will present new challenges to the operation of, and investment in, the electricity system, and to maintaining a secure, reliable and resilient electricity supply.”
Dr Stephen Jay, the operations general manager for Transpower, said having the ability to switch on a big battery at a moment’s notice would be valuable, as it would inject power into the network when there was a peak in demand – and, of course, when prices were highest.
Transpower already bought 6-second and 60-second reserves off generators, to feed back into the market when there was a sudden shortage, like another generator tripping.
“Batteries in the past have been excluded from providing that because the code is quite specific,” he said. “So there’s been work progressing with the Electricity Authority to change that code, to allow technology like batteries to contribute to that reserve market.”
