The regulations covering community batteries are consistent across the National Electricity Market (NEM). However, Western Australia has a separate regulatory framework.
This discussion paper focuses on challenges that face community batteries in the eastern states NEM.
The diagram below illustrates where a community battery can be placed in the electricity market.
The diagram shows how the battery:
- provides network support services;
- provides local storage and supply to local customers;
- trades in the electricity market.
The diagram also shows that the battery could support remote supplies in the future.
Challenge 1 – Generating revenue
A community battery can generate revenue from the following sources:
- Customer demand management,
- Demand management for the distribution network service provider (DNSP)
- Network support;
- Arbitrage from the spot market; and
- Frequency Control Ancillary Services (FCAS)
In order to achieve economic viability a battery will need to obtain value from all or most of these revenue streams. In order to maximise revenue, the battery operators will have to make choices where maximising one revenue stream may involve reducing revenue from another.
1. Customer demand management
The battery can generate money by storing energy exported by customers during the day and feeding it back to those customers during the evening peak. However, the market operator has yet to introduce rules for small batteries and the battery and customer will incur network charges, retail charges and NEM charges for each cycle of the battery. Without changes to charges, demand management for customers may be unprofitable.
2. Demand management for the Distribution Network Service Provider
The battery can provide these services to the Distributed Network Service Provider (DNSP). However, in the past DNSPs have not paid for these services and have solved their capacilty and voltage problems by reinforcing their networks. Battery owners will have to negotiate fees for these services with DNSPs.
3. Network support
The battery can also provide other network support services to the DNSP including voltage management. Again, DNSPs are not accustomed to paying for these services and negotiations will be necessary if the battery is to receive revenue.
Arbitrage is the simultaneous purchase and sale of the same asset in different markets in order to profit from tiny differences in the asset’s listed price. The battery can also target revenue from arbitrage. However, this assumes that there is spare capacity in the battery not used for managing demand.
5. Frequency Control Ancillary Services (FCAS)
FCAS provides a fast injection of energy, or fast reduction of energy, to manage supply and demand. The revenue from these services could possibly be the largest revenue stream for a battery but:
- Community batteries are too small to enter the FCAS market and may have to participate through an aggregator;
- FCAS revenues are forecast to fall. In fact A recent report by AECOM, commissioned by ARENA, assumed that FCAS prices in each market would reduce exponentially to 10% of current values by 2040.
Network charges and billing issues
It will probably be necessary to negotiate lower network charges for local traffic if a battery is to be economic. However the charges and the rules surrounding such charges need to be negotiated with the DNSP and approved by the regulator. Depending on the negotiated charges it may be necessary to undertake complex matching of energy movement at the customer meter with the battery meter and make changes to DNSP and retailer systems.
Maintaining battery capacity
Home battery owners will experience battery degradation and will probably accept this degradation as unavoidable. However, a community battery consumer is likely to contract for a number of Kwh and will expect that amount of storage to be available for the duration of their contract.
There are already discussions taking place regarding equity issues with solar owners being seen as paying reduced network charges while the solar is necessitating further expenditure on the network. If the community battery offers a value proposition to its customers this will provide further benefits to solar customers. However, the community battery will be providing network services providing stability to the network.
 Western Power, “Powerbank community battery storage,” Available at: https://westernpower.com.au/energy-solutions/projects-and-trials/powerbank-community-battery-storage/.
 Synergy, “Alkimos beach energy trial,” Available at: https://www.synergy.net.au/Our-energy/Future-energy/Alkimos-Beach-Energy-Storage-Trial.
 H. Ransan-Cooper, “Stakeholder views on community involvement in local storage,” 2020, Available at: https://arena.gov.au/.
 AECOM, “Energy storage study, funding and knowledge sharing priorities,” Available at: https://arena.gov.au/assets/2015/07/AECOM-Energy-Storage-Study.pdf.
 d. . N. Evoenergy, title = Appendix 4.14: Distribution Substation Monitoring and Supply Voltage Optimisation Program – Revised regulatory proposal for the ACT electricity distribution network 2019–24.
Yarra Energy Foundation & Citipower/United Energy Collaboration (YESS)
- Yarra Energy Foundation post on new collaboration
- Chris Wallin’s talk for ANU’s BSGIP program including slide set which covers a lot more recent detail about battery operations, the ownership structure, value to the community and householder, and particularly looks at the batteries place in the subnetwork, and ANU’s role in developing the operating software which will become open source.
- Comprehensive Webinar on YESS Project
- YEF webinar slideset
Victorian Government Neighbourhood Battery Initiative (NBI)
Comprehensive ARENA report on ANU community batteries trial
Lighter Footprints’ Community Batteries initiative is a project of the Energy Transition Group (ETG). You can find out more about the Energy Transition Group on our ETG page here.