Abstract chaotic background; Abstract chaotic background;

Accelerating energy storage is the only way to reduce Australia's rising energy costs

Australia is an energy rich nation and one of the largest global exporters of natural gas, thermal coal and blessed with bountiful renewable energy resources. Why then is the nation gripped with excessively high and rising power prices?

Australian businesses and households are feeling the pinch with an increasing number of energy users putting in place hedging or insurance strategies to mitigate future price exposure. For instance, this week Telstra announced its $100m investment in its North Queensland solar farm and Agribusiness Costa’s integrating solar and battery solutions at sites to avoid the shock of energy price exposure.

This investment trend has been occurring for some time in industry, however a number of greenfield resource or industrial developments are failing to stack up financially due to the increasing risk in terms of high long term gas and electricity prices.

Quite simply, the uncertainty and unreliability in our energy network is crushing future development. ”

Stephen Thompson Stephen Thompson Former Australasia Energy Leader

With the imminent release of the Finkel independent review of the national electricity market much of the energy policy debate in Australia has focussed on short term or reactive responses that fail to address the underlying issue of long term energy costs. Our energy network has failed to move in line with technology and market changes and this slow adaptation has caused major inefficiency causing a long term market failure of high and increasing power costs.

Abstract swirl pattern Abstract swirl pattern

In a 21st Century energy network we have power being generated at many levels and demand is becoming more variable and less predictable. In our current and future network, storage is the only way to achieve efficiency and reduce long term power costs. The recent announcement of Snowy 2.0 project and the Seawater Pumped Hydro project in Cultana South Australia are early signs of a change in course to address past and future closure of base-load power systems. But to achieve network wide efficiency we need storage integrated at all levels of the network.

Storage is vital

Storage is an enabling infrastructure that allows us to move, store and manage energy across the network. Storage systems can generate power, receive power, deliver network reliability and security as well as create major efficiencies levelling out peak pricing tariffs.

Storage is also the most efficient way to reduce our energy needs through wasted power generation and line losses.

In fact storage puts downward price pressure on all aspect of a power bill, from wholesale power costs, retail costs as well as network costs (which are 40-60% of electricity bills). Storage can play a major role in deferring billions of dollars spent annually on line and network upgrades and maintenance.

So if storage brings major reliability benefits and puts significant downward pressure on our costs why haven’t we moved towards implementing storage to achieve these benefits? ”

Stephen Thompson Stephen Thompson Former Australasia Energy Leader

The challenges are our current regulations and that the market disincentives’ storage as a non-traditional solution that sits outside of the structures and regulation that currently exists.

To make our network truly efficient we need storage at all levels, we need utility scale systems such as pumped hydro storage, we need distribution and regional level storage in terms of large scale –batteries and we need battery storage at a user level in households and business.


The financial return for investing in storage is largely from arbitrage – you buy power at a low cost in the day and sell it when power prices rise – the problem is that storage then brings overall power prices down which works against the investment. This is not a bad thing but the investment model can only work if we start to modernise are regulations and provide market and non-market incentives to support investment.

Solar on house roof Solar on house roof

And we have a precedent

Renewable energy systems have dramatically fallen in cost from similar incentive schemes and regulatory reform. It’s time to apply a similar focus to storage to accommodate the impacts of renewable intermittent power sources which are rapidly increasing and the progressive closure of Australia’s ageing coal fired power stations.

The benefits of network wide storage are potentially a game changer for Australia. A supported network of storage will even out peaks in consumption, lowering the overall cost of energy and provide the lowest cost reliability for the network. The road to reform is never easy but bigger longer term energy strategy is required if we are going to avoid the significant economic impacts of high power prices.