Over the last week, we have been reading through stakeholder submissions to the Victoria to New South Wales Interconnector West (VNI West) Regulatory Investment Test for Transmission (RIT-T) Project Specification Consultation Report (PSCR). For the most part, the submissions were in support of options 7 and 6 (Figure 1). However, there was one submission that stood out, a non-network option to increase transfer capacity between Victoria and New South Wales from Fluence.
Fluence believe that the VTL can address near-term issues while enabling AEMO and TransGrid to evaluate further options at a later date. However, their proposal also fits in with the Victorian Govt’s System Integrity Protection Scheme (SIPS) program –to allow up to 250MW of additional import over VNI at peak times. During peak periods in Victoria, there tends to be increased output from generation assets in the Snowy region which has the practical effect of restricting southerly flows from NSW (at these times, flows can be restricted to only ~26% of capacity or ~350MW). Locating a battery at the end of this constraint can allow increased energy to be provided to Victoria when it otherwise would not have been possible.The proposal involves installing two 250MW/125MWh batteries that would operate as a Virtual Transmission Line (VTL) – at Wagga Wagga and South Morang substations respectively. This option could be built within 14-18 months (much faster than any of the other transmission upgrade options) and could be scaled further to meet required capacity. As a VTL, the batteries would operate in tandem; one charging while the other discharges. Of course, these assets would be limited by storage capacity (proposed half hour) which raises questions as to how the charge and discharge cycles will work in practice and whether it makes sense to operate the batteries independently to solve constraints at the respective substations. Other questions would be around ownership (regulated or owned/operated by a third party) and how these assets interact with existing spot markets and network services.
Whether storage plays a role as transmission assets ultimately depends on the ability of TNSPs to utilise it as an option as currently there are regulatory restrictions that hinder this development. However, with demand becoming increasingly variable, it is likely that batteries will be increasingly deployed in key network locations to manage voltage, reliability and security. It is important to note that it is not an either/or scenario; but an option to be utilised alongside traditional network upgrades. Significant transmission investment will still be required in the long term to unlock GW of renewable energy zones. However, this proposal highlights the potential for storage to offer alternative solutions, particularly in instances when additional capacity is required for short durations to address supply concerns or to address system security and reliability services more locally.
Battery storage will continue to be an increasing part of NEM operations and not just at the grid-scale level. At the distribution level (and households), batteries will provide increased optionality and control in how energy moves throughout the system. This includes a range of services that may not yet be costed and so effective price signals will be paramount to enabling a smooth transition.