Soaring demand for electric vehicles has driven up prices for lithium-ion battery components, casting doubt on the financial viability of future neighborhood battery projects.
- Global economic pressures are compressing the viability of neighborhood batteries
- A report has found a neighborhood battery for an isolated Victorian community is unlikely to be financially viable
- Residents say the need for reliable electricity must factor into the business case
The tourist town of Apollo Bay on Victoria’s Great Ocean Road has long struggled with unreliable power and prolonged outages, with its only two grid connections traversing steep, heavily forested terrain.
Apollo Bay Bakery co-owner Sally Cannon is one of many who have taken drastic measures to ensure the lights stay on.
She and many other people in town bought backup generators to make sure their businesses could keep running during blackouts.
“It also impacts vacationers, they paid a lot of money there, a power cut would be a big inconvenience,” she said.
The Southern Otways Sustainable group has been working to find a solution.
A feasibility study of options for the city recommended a 5 megawatt battery with the ability to operate off the grid.
Such a battery would act as a reserve in case of power failure and also provide the city with the ability to store solar-generated energy on the roof, if needed.
But the report compiled by the Mondo company found that the initial cost of the battery would be between $10 million and $18 million, assuming a 39% share of government funding.
“The battery system is unlikely to be financially viable and would struggle to attract third-party owners and investors without additional government funding,” the report’s authors wrote.
Despite this, Southern Otways Sustainable president Matt Armstrong said the battery could still have a future.
“While a battery may not be commercially feasible at the moment, I think industry and government see it as a matter of time before they are profitable,” said Mr Armstrong.
Since the completion of the report, expected battery revenues have also increased in line with rising energy costs.
The report noted that there are several ways to improve the battery business case, including lobbying for more government funding, reducing battery size, or assessing the value of reliability for inhabitants.
Ms Cannon said any solution would be welcome as local line service agents who respond to outages in areas around Apollo Bay are set to be made redundant next month.
“Anything that can improve power and reliability in towns like ours across Victoria… can only be a good thing,” Ms Cannon said.
Global pressures weigh on sustainability
Battery energy storage systems have been touted as a crucial step in decarbonizing the power grid, as supply and storage become more decentralized.
Professor of Electric Power Systems at Pierluigi Mancarella said the growing demand for electric vehicles had led to the first-ever increase in the price of battery components also used in neighborhood batteries.
“The world is changing, in the last six months we’ve seen a bit of everything,” he said.
He said common assumptions about the falling cost of battery technologies in policy-making may need to be reassessed.
“If we assume that the trend for renewables and battery costs will continue to fall, we will see more and more opportunities for community batteries…but that’s a big ‘if’,” Professor Mancarella said.
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