Thoughts on investment opportunities in energy storage in Australia

Written by Mary Hendriks, on July 6, 2016

Being able to store energy in fast responding units is disrupting the way power is delivered, and out of that comes opportunities for new innovative solutions for investors.

Two areas of interest for investment in Australia are in new energy storage technologies and in emerging energy management software platforms.

In regard to the first of these, there are a number of Australian companies who have commercialised new energy storage technologies. Australian innovation was part of developing systems such as the ultrabattery from Ecoult, ZCell from Redflow, Gildemeister Cellcube battery from VSun, and lithium based options from Magellan Power and Zen Energy. Launching a new product in a crowded marketplace is not an easy pathway, and investment options for companies such as these have varied from self funding, to local or overseas share-holding, raising capital with an IPO, or taking industry partners.

Actual projects using these, and other energy storage systems, have developed with local incentives, usually as part of a renewable energy solution, many with some input from ARENA and the CEFC. However, many projects in remote areas now need few or no incentives to make financial sense, other than lower cost of purchase and transport of diesel to these remote sites or islands.

Investment in these renewable energy plus energy storage projects is becoming of interest, with some expressions of interest from overseas investors seeking projects with sound business models.

Another really interesting area for energy storage development is in software platforms for new energy management systems.

This is expected to be driven by large scale uptake of residential battery storage, once generous solar PV feed in tariffs end later this year, starting in NSW.   Government incentive schemes in the ACT and South Australia are also drivers for this uptake.

Investment in residential energy storage is being led by the early adopters, who are expected to mostly self-fund these projects for more self consumption from their solar PV rooftop systems. The bigger opportunity is in the software platforms to aggregate the power from these individual systems.

We need to think in terms of grids – not a main grid that we all know, but small flexible grids.

By having some ways to generate power, and a battery in your home or commercial building and being able to island that system, you effectively have your own tiny grid (called a nanogrid), and if this extends further to other power sources and buildings, for example, managing a district, a campus or small town, you are the proud owner of a micro-grid.

If you now, as that individual, or micro-grid owner, sign up with a company to access your energy storage system, then, subject to the regulatory systems in place, you are able to sell your power to others or the wholesale markets. This system is called a virtual power plant, able to provide power on demand at peak times. This is done via a software platform which aggregates that power from all those in one group who contracted to provide this service. In Australia, companies such as Reposit Power and Sunverge are already working in this space.

As the owner of the battery, it really doesn’t matter whether you are large or small – if you have excess power and you have invested in storing that power, then there is an opportunity. One that may not easily stack up now in terms of being financially viable, but with the cost of energy storage coming down significantly, and power prices going up, it’s likely that will change soon.

To summarise, there are two types of investment that I think are worth considering here – one is the investment in new storage technologies and in the projects that spin off from these, and the other is investment in software platforms for energy management or energy supply for virtual power plants.

New energy storage solutions are defining the future of our energy systems, and the question is how to encourage investment to support this innovation and to ultimately achieve more resilient grid services with lower electricity prices for Australia as well as developing world class products and services for export.

By Mary Hendriks, Industry Executive, Australian Energy Storage Alliance

For more on energy storage in Australia, see www.energystoragealliance.com.au