Powering the energy transition – Delivering impactful battery projects

The timeline for six-hour battery projects entering the Australian market will largely depend on the specific use case and region.

Current Western Australia’s Reserve Capacity Mechanism mandates six-hour duration to receive 100% of capacity credits. However, from a straight energy arbitrage perspective, most markets are not volatile enough to justify that so increased renewable penetration may be required.

Additionally, there are not many OEMs offering a six-hour solution. For AC blocks, it may bypass six hours and go straight to eight hours, or it could provide a unique differentiation opportunity for DC block configurations.

Firefighting requirements vary from region to region. Early engagement with community and first responders is important. While the VIC CFA guidelines are not a regulatory requirement throughout all regions of Australia, they are being adopted by many councils and first responders as expectations. UL and NFPA standards are also increasingly becoming expectations.

It really depends on the sub-chemistry (i.e. Nickel, Manganese, Cobalt vs Lithium iron phosphate). For Lithium Iron Phosphate, which is most typical for utility scale stationary storage, traditional extraction methods can yield ~70% of lithium from the cathode, and more advanced methods >90%. However, it comes down to how cost effective it is.

The trade-off is between cost and ease of maintenance. Containers are cheaper and modular, but larger shed-style facilities may improve long-term operations.

There is currently a split in form factors — generally DC blocks tend to more containerised and AC blocks have bespoke skids. This, of course, varies from vendor to vendor.

The form factor will continue to evolve as we get increasingly larger blocks (>10 MWh) and there has been a recent shift to bespoke skids/blocks, but more based on driving costs down than operability/maintainability.

Mechanical storage solutions like Pumped Hydro can use synchronous machines, which provide very strong inertial response and system strength benefits. In some cases, though, they’re coupled through power electronics such as variable speed or frequency drives — and that makes their response times more similar to, or even slower than, lithium-ion BESS.

For real power contribution in fast-response uses cases, batteries often have the edge. Pilot projects with flow batteries have demonstrated response times under 100ms when switching from charging to discharging Pumped Hydro, by contrast, typically responds in the range of seconds to minutes, depending on pre-conditions like whether turbines are spinning or on standby.

So while pumped hydro is excellent for bulk, long-duration energy shifting, batteries still lead when it comes to ultra-fast frequency response.

Please refer to response to question one regarding six hours.

Regarding sodium-sulphur battery technology (NaS), there were a number of fires in 2010/2011 that arguably resulted in a negative perception for NaS which may have slowed its uptake.

While NaS OEMs (such as NGK) claim newer product versions are immune from similar failure modes, it doesn’t change the fact that you have high temperature materials, so there are still some perceived safety issues. Ultimately, until they are adopted at the same scale as Li-Ion, it is hard to verify claims that they are lower or higher risk.

Nickel Manganese Cobalt (NMC) chemistry is really only considered for very short-duration applications — typically less than an hour, often in the 20-30 minute range. That’s because NMC cells can handle continuous high charge and discharge rates, in the order of 2–3C, which makes them well suited to use cases like spinning reserve on non-interconnected systems or black start.

However, the cost premium of NMC compared to Lithium Iron Phosphate (LFP) usually makes it less attractive for anything beyond those short-duration, high-power applications. And on top of that, concerns about thermal runaway — whether actual or perceived — have also limited broader adoption of NMC in stationary storage.

Specifically for green hydrogen production, BESS helps balance renewable energy supply for the electrolysers, smoothing the variable output of solar/wind. In this case, we need stability and efficiency for hydrogen production, not long-term storage. There are some examples of this use case in Europe.

It’s always tricky to predict and we want to avoid limiting emerging technologies or innovation. However, in five years, the majority of the market will likely still be dominated by highly modular solutions that build on the scale of the EV and appliance sectors. That probably means advanced lithium-ion chemistries, with solid-state and sodium-ion starting to gain ground.

In ten years, we could see more divergence between sectors. Stationary storage might lean toward solid-state for safety and performance, while longer duration needs could be served by other emerging technologies.

It really depends on the structure and who the offtaker is. If storage is being used across a portfolio of assets - say synchronous generation paired with renewables — and servicing a large base of customers like retailers or “gentailers,” the agreements can look quite different than if you have a single dedicated offtaker.

For a sole offtaker, we’re seeing more hybrid agreements, where renewables and storage are bundled together — for example, solar-plus-storage PPAs. These structures give the offtaker both clean energy and firm capacity in one package.

For standalone storage, it’s common to see agreements that build in flexibility — a minimum committed offtake or annual charge, coupled with some form of risk-sharing between the offtaker and the project owner. Sometimes this takes the form of a revenue swap agreement, where both parties share upside and downside depending on market conditions.

And finally, virtual tolling is becoming increasingly common. In this model, the offtaker pays a fixed fee to use the asset’s capacity while the owner retains operational control. It’s a structure that provides predictability while still allowing optimisation.

Flexibility in how the asset can be dispatched is important. The control system needs to be future proofed with this in mind as it’s likely the revenue stack will materially change over the life of the asset.

Flexibility of Performance Guarantees is also key, if the utilisation/duty cycle changes, need methods to make sure this can be back-to-backed with warranties.

Generally higher renewable penetration systems provide more benefit/potential use cases for BESS’s compared to lower penetration systems - however connection process and revenue streams can be more complicated.

System Strength is more of an issue for higher penetration systems, as the displacement of synchronous generation is contributing to reduce short circuit ratios and system strength. This can however be a potential use case of a BESS (if grid forming) to improve system strength

Equally, higher penetration systems are more likely to experience curtailment, which again BESSs can mitigate.

EPCs have been perceived as the lowest risk delivery strategy and one that lenders were most comfortable with (provided the project’s revenue can recover the premium) but are certainly not immune from delivery issues. They can prove to be especially problematic if the contractor reaches their cap for liquidated damages as there is little incentive for them to continue with timely delivery.

While there are good EPCs out there, struggling EPC Contractors can be broadly categorised as follows:

• Multi-sector companies that are good at construction and project management but lack any BESS subject matter expertise and therefore act as “letter boxes” to their sub-contractors and vendors.
• BESS vendors or integrators pushing into the EPC space that while are very familiar with the technology, lack discipline and structure to manage multi-disciplinary tasks.

In both instances, having thorough Technical Specifications and Principal Requirement documentation are essential. Striking the right balance of being functional and performance-based in certain areas to allow the Contractors to optimise delivery but prescriptive enough in areas that impact operability and maintainability is also important.

Equally, during delivery, having either in-house capability or project partners for design review and construction/commissioning management is key.

Performance Guarantees for BESSs are now >90% for lithium-ion, especially LFP systems — which sets a very high bar for emerging long-duration technologies.

Flow batteries, by contrast, often come in lower on round-trip efficiency, but they offer advantages in end-of-life state of health (SOH) — because their active materials can be replenished, they don’t degrade in the same way lithium-ion does.

So while flow batteries may not match LFP on efficiency today, their longevity and cycling stability make them compelling for certain long-duration use cases.

Typical Construction and HSE risks are present on BESS projects.

One that doesn’t always get enough attention is calendar fade- the accelerated degradation of energy capacity in higher ambient conditions, especially before the auxiliary HVAC system is up and running. If a project faces delays and batteries are sitting on-site before energisation, that can affect performance guarantees right from the start.

On the operations side, it’s important to have continuous logging of battery management system (BMS) data and doing annual capacity tests in accordance with the OEMs requirements to confirm warrantees are not voided.

It depends on Contracting Strategy — but most often the OEM will provide a Long Term Supply Agreement either directly or via the contractor, where they or their accredited partners must undertake the O&M in order to offer Performance Warranties.

Balance of Plant can be managed by others, but is often managed by the contractor for the first five years, with options either to extend that arrangement or transfer responsibility to the owner.

A BESS is not a generation source, however both BESS and generators can provide capacity (generators continuously, BESS for a defined duration).

Generators such CCGT and OCGTs have higher power and energy densities, Gas and Diesel reciprocating engines may be more equivalent or lower compared to BESS.

The main constraint is access to gas infrastructure for a utility scale gas generation project and potentially more complicated development approval pathways.

From a lifetime perspective, a BESS would typically require some capacity augmentation/re-powering over a ~25-year project life (although recent OEM claims of 25-year warranties are emerging).

LCA and ESG are becoming part of every decision now. It’s not just about the cost or the efficiency of the batteries anymore — people are looking at the whole picture. Where do the materials come from, what’s the footprint over the life of the project, and what happens at the end of life?

So, for example, lithium-ion is very efficient and proven, but you have to account for mining and recycling challenges. Flow batteries might not be as efficient, but they use more common materials and can often be refurbished instead of replaced.

On the ESG side, things like responsible sourcing and how you work with local communities are starting to make a real difference in which projects get financed and approved.

When the technology readiness level is lower, it’s much harder to secure a full turnkey or fixed-price contract. In those cases, the proponent usually has to be more hands-on and actively involved in the delivery, because contractors aren’t willing to take on all the risk.

Yes, for specific use cases — this has already happened with lower volume markets like Australia’s National Electricity Market (NEM) ancillary markets (Frequency Control Ancillary Services or FCAS specifically) reaching saturation, hence why we are seeing more revenue coming from wholesale arbitrage compared to FCAS. Previously. it was the other way around.

Generally, however, BESS uptake will follow renewable penetration, so if renewable uptake continues-saturation points will continue to move.

It is fair to say that organisations and individuals within organisations have different experience with BESSs which influences their comfort levels. Generally, the first-of-its kind BESS (same for grid following and forming or new use cases) gets a lot of attention, and then comfort levels come up.

A system integrator usually refers specifically to the BESS package — things like the battery enclosures, the power conversion systems, and the plant control systems. Their role is to make sure all those components work seamlessly together.

An EPC, on the other hand, covers the full scope of engineering, procurement, and construction. That includes the civil works, foundations, cabling, grid interconnection, and often the medium-voltage equipment. In some cases, the integrator might bundle in part of that scope — for example, if the PCS skid comes with MV gear — but generally the EPC takes care of the broader balance of plant and actually delivers the project on site.