The big battery pioneers are now reaping the rewards

Graphic: Sean Creighton/The Progress Playbook
Graphic: Sean Creighton/The Progress Playbook

Big, grid-scale batteries haven’t been around for long – but they’ve already proven their worth, and the states that pioneered them are being handsomely rewarded.

The first sizeable lithium-ion battery came online just six years ago after Elon Musk placed a bet with the state of South Australia. He said via X – the social media platform formerly known as Twitter, which he now owns – that Tesla could install a facility north of Adelaide within 100 days from the contract being signed, or it’d be free. He won.

That facility, the Hornsdale Power Reserve, soaks up excess wind and solar during the day – when electricity is cheap – and then discharges during the evening as demand and prices surge.

It also provides critical grid services like frequency control and inertia, which keep the grid stable. That used to be a job for coal-fired power plants and other old technologies that rely on spinning generators, but times are changing.

If there are any disturbances on the South Australian grid, such as tripping fossil fuel-powered plants, the Hornsdale Power Reserve reacts within milliseconds to keep things steady.

In its first two years of operation, the facility saved South Australian consumers A$150 million by providing these services at a cheaper rate than traditional, fuel-powered units. It’s since been expanded, and the state continues to add others like it.

Another pioneer, California, is now rapidly scaling up its fleet of batteries, which are helping to muscle fossil fuels out of the electricity mix.

In a mere three years, the state has seen an elevenfold increase in battery capacity.

The chart below, taken from the state’s system operator, shows how batteries charge up on excess solar power during the day and then feed back into the grid in the evening.

On this particular day – in September, 2023 – batteries contributed 5.2GW of instantaneous power to the grid when demand was at its highest. That energy would’ve otherwise had to come from polluting gas plants or imports from states that have dirtier grids.

Texas, meanwhile, now has 2.2GW of energy storage capacity.

What’s perhaps even more interesting, however, is how the state is using household batteries to help cope with periods of high demand.

When air conditioner use skyrocketed during a recent heatwave, the grid operator turned to household Tesla Powerwall systems to shore up electricity supply.

Tesla can aggregate its Powerwall customers and use this combined capacity as a virtual power plant. Households that choose to participate get rewarded for doing so.

When demand spikes and pushes up prices, Tesla dispatches those batteries and shares the income with its customers. Both the grid and participating households benefit.

Meanwhile, big batteries are also being used as a replacement for power lines.

Italy’s transmission system operator was among the first to realise the potential of battery storage projects for delaying transmission upgrades, which can be costly and time consuming.

After evaluating traditional transmission investments, the operator changed course and approved a battery system to alleviate congestion in power lines running north to south in the country, and to reduce curtailment (waste) of wind generation in the south.

South Africa’s system operator is considering a similar approach.

Of course, no analysis of the battery market would be complete without mention of China – the world leader in clean energy by quite some distance.

Thanks to innovative state programmes, and policy certainty regarding the country’s decarbonisation plans, ordinary companies including food producers are becoming storage players.

The number of Chinese firms registered as energy storage companies has more than doubled over the past three years to 109,000.


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A pioneer of big batteries and other decarbonisation tech, the state aims to get to 100% net renewables within seven years.
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In March, prices dipped to just €19.26 per megawatt hour in Portugal as renewables covered 91% of the country's electricity needs.
That's up from 73% in the same quarter last year, according to the grid operator.


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