Change regulations to improve energy security

Transgrid-Armadale

The current regulatory system is holding back Australia’s take up of utility-scale energy storage, according to Transgrid chief executive Paul Italiano.

While other developed nations such as the United States, Canada, Japan and South Korea are using grid-scale batteries in their networks to maintain energy consistency and security, Australia had none.

Speaking at the Re-Powering New South Wales conference in Sydney this week, Mr Italiano said innovation required more than a regulated return on a monopoly RAB (regulated asset base).

“So we do inadvertently create disincentives for innovation in the way our regulatory framework is structured.”

Transgrid deployed six “reactors” to stabilise voltage in the power supply system in 2013, taking it into an area of business that was outside the current regulatory framework.

It then used the reactors to bid into the “ancillary services” market against Snowy Hydro, making a substantial margin on the investment.

However government response to this was to modify regulations to include such investments and reducing the return Transgrid could make.

“The economic case we built to make the speculative investment and do the innovation evaporated,” Mr Italiano said.

Chairman of grid-scale battery developer ZEN Energy Professor Ross Garnaut called Australia “the big laggard in the developed world”.

“We don’t yet have a large grid-scale battery. We’re unique in the developed world like that,” he said.