Batteries: a gap in guidance for landowners and developers
Despite the spectacular growth in the installed capacity of batteries in the National Electricity Market (NEM), and their significant role in the Frequency Control Ancillary Services (FCAS) market, there are no expansive national guidelines governing the development, construction and installation of batteries, thus making it difficult to provide definitive advice or negotiate related agreements.
The gap in guidance for landowners, developers and investors around identifying, assessing, avoiding, and mitigating impacts of battery energy storage system (BESS) facilities is somewhat unusual and was a missing piece in the NSW Renewable Energy Planning Framework released in November 2024[1]. This article explores what guidelines are required to ensure that parties engaging in the development of BESS facilities are fully informed.
How batteries work
Batteries act as energy storage devices, allowing excess electricity to be stored and released on demand, essentially balancing the grid by providing power during peak usage times and absorbing surplus electricity when generation exceeds demand. Technically, it is the conversion of electrical energy into chemical potential energy for storage followed by reconversion of chemical potential energy into electrical energy when desired. Batteries primarily:
Support grid stability
- Batteries provide grid stabilisation through voltage and frequency regulation and peak demand management.
Store excess energy
- Batteries store electricity generated during periods of low demand then release it when demand is high, for example by bidding into evening peaks.
- Batteries play a crucial role in integrating intermittent renewable energy sources such as solar and wind into the grid by storing their output during peak production times.
Ensure energy security
- Batteries may be used to provide backup power during outages and emergencies.
- Batteries also allow sections of microgrids to operate independently during outages, ensuring the resilience of the distribution network and continuous supply of electricity to remote or vulnerable areas.
The approval processes
Firstly, it is important to distinguish there are two separate but concurrent approval processes that relate to BESS facilities, one that is governed by state and federal agencies and relates to the development approval process, and the other governed by the Distribution Network Service Providers (DNSPs) and Australian Energy Market Operator (AEMO) that relates to market participation in the NEM and FCAS markets. Participation in the NEM and FCAS is for the most part, well defined.[2]
The National Electricity Rules (the Rules) govern the operation of the NEM and include wholesale markets, the economic regulation of monopoly transmissions and distributions networks and transmission network pricing.[3] The Rules are made by the Australian Energy Market Commission and apply to all states and territories except for Western Australia and the Northern Territory.
The Clean Energy Council’s Battery Assurance Program includes a list of lithium-based battery system (BS) and BESS products that meet the Australian or international version of the lithium battery safety standard.
There are also Australian standards that address specific considerations relevant for participation in the NEM or FCAS markets. For example, the AS/NZS 5139:2019 covers electrical installation of battery systems with power conversation equipment, and the AS/NZS 4777.1:2016 covers grid connection of energy systems via inverters. It is relevant to note that these standards are developed to protect consumers, and are therefore mostly relevant for household BESS installations, not large scale installations, which is a common issue for application of the standards.
Risk factors
There are a number of risk factors associated with the widescale use of batteries. For example, ‘there have been numerous self-heating and thermal runaway incidents associated with Li-ion batteries, highlighting that there are “unknown unknowns” associated with large-scale electrochemical storage.’[4] Environmental impacts include heat pollution, noise emissions, contamination from a containment event, and specific environmental impacts relating to fire events such as fire water runoff and air emissions[5] to name a few. Considering the relatively modern technologies, the impacts from decommissioning are also largely unknown.
In September 2024, GHD prepared a report titled ‘Battery Energy Storage Systems Guidance Report’, which was commissioned by the Australian Energy Council with the intention to ‘produce a high-level risk assessment and develop guidance material’ on grid-scale BESS facilities (the GHD Report). The GHD Report considered site selection, facility orientation and configuration, as well as a ‘safety case’ approach, emergency management planning and environmental offsite effects. The GHD Report recommends BESS facilities are classified into ‘types’ based on their storage capacity and have varying assessments based on this classification.[6] The GHD Report also recommends a risk-based approach with each facility assessed on a case-by-case basis ‘so the specificities, such as battery chemistry consideration, fire water requirements, and broader site selection and configuration, can be justifiably presented to relevant stakeholders’.;
While it may be relevant and important to assess facilities on a case-by-case basis, there is still a need for general guidelines around identifying, assessing, avoiding, and mitigating impacts of BESS facilities so that landowners and developers can negotiate on clear terms.
Recommendations
Clear national guidelines are required to support investment certainty and community concerns around the increasing development of BESS facilities. These guidelines should be aligned with the National Electricity Rules. We consider the following to be primary considerations for the drafting of such guidelines:
- The classification of grid-scale BESS facilities as ‘Critical State Significant Infrastructure’ (CSSI) in all states and territories, requiring certain reliability criteria early on in the design.
There have already been shifts in this direction in NSW with, for example, the NSW Large-scale Solar Energy Guideline[7] confirming that if requested by a proponent, the Minister will consider declaring a solar energy development as CSSI if it includes a significant energy storage system (eg a 750MW battery);
- Guidance on managing known environmental impacts as well as perceived environmental impacts.
- Guidance on managing the unique risks associated with combining storage facilities (for example, sites that have hydrogen and energy storage systems).
- Guidance on managing cybersecure design and operation.
For further information, please contact Catie Moore, Brendan Tobin, Mark Dessi or Mark Montag.
[1] NSW Government, “Renewable Energy Planning Framework,” November 2024. [Online]
[2] See for example the ‘Battery Energy Storage System guide to Contingency FCAS registration’ prepared by the AEMO’s Operations Department on 28 June 2024 [Online].
[3] Australian Energy Market Commission, ’National Electricity Rules’ [Online].
[4] Australian Energy Council Limited, ’Battery Energy Storage Systems Guidance Report’, 12 September 2024 [Online].
[5] Y. Peng, L. Yang, X. Ju, B. Liao, K. Ye, L. Li, B. Cao and Y. Ni, ‘A comprehensive investigation on the thermal and toxic hazards of large format lithium-ion batteries with LiFePO4 cathode’, Journal of Hazardous Materials, vol. 381, 2020.
[6] Australian Energy Council Limited, ’Battery Energy Storage Systems Guidance Report’, 12 September 2024 [Online].
[7] NSW Government, “Large -Scale Solar Energy Guideline,” August 2022. [Online].
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