This takes the country’s cumulative storage capacity to 2.7GWh.
Australia is set to add 1.2GWh of energy storage capacity in 2020, more than double the 499MWh installed in 2019, according to a research from Wood Mackenzie.
This takes the country’s cumulative storage capacity to 2.7 GWh this year.
Front-of-the-meter (FTM) capacity at 672MWh will overtake the 581 MWh back-of-the-meter (BTM) capacity in 2020, a result of funding programmes by the federal and state governments, as well as ARENA.
However, Wood Mackenzie senior analyst Le Xu warns that the FTM market’s leading position is likely to be short-lived as the industry faces many uncertainties, and likely to contract in 2022.
“The coronavirus-led restrictions and economic downturn could cause delays or cancellations to the 4.6GWh announced projects in the pipeline over the next five years,” she added.
This is due to storage developers being pressed to seek private equity to cover 10%-50% of initial project investments, with ARENA’s advanced renewable funding phasing out. Revenue uncertainties and risks of grid connection may also prevent projects from attracting funding.
Despite this, the research noted that the future of the FTM market is still bright as the cumulative capacity could hit 4.2GWh by 2025 and would come from solar-plus-storage. Renewables-plus-storage costs are also expected to be about 20%-29% lower in 2025.
“The costs of energy storage systems will decline 27% over the next five years. By 2025, the levelized cost of electricity (LCOE) of both solar-plus-storage and solar-and-wind-plus-storage are expected to be cheaper than gas plants,” Xu added.
Xu suggested the switch from coal to green energy is more about “short-term pain for long-term gain” as Australia gradually phases out its 31GW coal fleet.
“By 2025, we estimate Australia’s cumulative energy storage investment to hit $6b. This translates to 12.9GWh of cumulative storage deployments,” she notes.
