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Why Batteries Outperform Gas in our Grid

Updated: Dec 7, 2023

Batteries are better, cheaper and faster than gas in providing peaking power services to our electricity grid. Batteries, at all different scales remove the need for gas powered electricity generation, including community batteries, like the one planned for Narrabri.

In many rural communities already, the “need” for coal seam gas is an abstract idea, given that most of our towns and farms have no access to piped gas for heating or cooking. Residents in northwest NSW and Narrabri use some LPG gas in bottles, but around half of this comes from the oil refinery process and half from natural gas refining, not from coal seams.

According Energy Consumers Australia’s Risks to gas consumers of declining demand report, less than half of all homes in NSW are connected to the gas network (43% or 1,491,000 homes in NSW are connected to the gas network).

So the only logical justification for coal seam gas would seem to be its use in providing peaking power when coal and renewables can’t consistently fulfil our electricity needs.

In 2022 New South Wales used a total of 120 PJ of gas. 17 PJ, or 14% of this gas was used in Gas Powered Generation.

Meanwhile, by the way, we exported 1,444PJ, or 72% of Australia’s total gas production that year.

17PJ of gas, according to the calculator would produce 4,723 GWh of electricity, which is around 7% of NSW’s total electricity consumption of 67.5TWh in 21/22 FY.

The use of gas is not so much about the amount of electricity it generates but when it contributes to supporting the grid. Gas Powered Generation (GPG) has the ability to provide “peaking” electricity, meeting points of high demand by being able to respond quickly for short periods of time.

Traditionally peaking plants have had a response time of around 15 minutes, which used to be fast!! With the advent of batteries, that can provide instantaneous electricity, 15 minutes is no longer considered a fast response time.

Usually gas peaking plants only kick in for very short periods of time, meeting specific demand spikes in the grid. At these points in time the price that they can sell electricity can be extremely high - up to a maximum cap price of $15,000/MWh or $15/kWh - compared with your normal retail price of around 30 cents per kWh. They normally run for an average of 3-4 hours.

Famously, the Kurri Kurri gas plant proposed for the Hunter Valley with federal government subsidies is expected to operate just 2% of the time - or one week per year.

Work done in 2021 by the Clean Energy Council (CEC) shows that batteries now outcompete gas on both capital and operational costs to provide peak electricity. Since then, costs of batteries have continued to fall and gas prices have continued to rise, so the CEC work is now considered a highly conservative comparison.

The levelised cost of energy (LCOE) for a new-build 250 MW gas peaking plant, when compared with a new-build 250 MW two-hour and four-hour battery storage systems, all located in New South Wales, sees the battery with both capital and operational cost advantages. Capital costs of the 4 hour battery are 25% cheaper on $/MWh than the open cycle gas peaker, and the fixed and variable costs are 23% cheaper for the battery. All the assumptions can be seen here.

What’s more, is that a key sensitivity of the gas peakers is their exposure to price fluctuations of gas. This Levelized Cost of Energy (LCOE) graph shows different price assumptions of the gas as forecast by AEMO in the grey bar. It is interesting to note that Narrabri Gas Project (NGP) gas’ expected production cost is $7.90/GJ. This would make NGP’s gas peaking plant energy cost around $260/MWh compared to a 2 hour battery at around $190/MWh – 26% cheaper.

Not only are gas peakers an expensive way and a slower way to meet peak electricity needs, they are also based on a carbon intensive fossil fuel. Our state, nation and globe have a climate imperative to move away from a reliance on fossil fuels. It would seem that replacing gas peaking plants with batteries of different scales is a cheaper, faster and better way to a more reliable grid and the technology is available today to make this happen.

Batteries are:

· cheaper to build

· cheaper to operate

· faster to respond to electricity demand peaks

· lower carbon footprint

Than coal seam gas!!!


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