Tesla’s Hornsdale Power Reserve battery (129 MWh) in South Australia continues to amaze us and generate huge financial savings for Australia.
Renew Economy estimates that the battery saved a whopping $5.7 million in its second quarter of operation, based only on the 30 megawatts (MW) of capacity it is selling, with a gross margin of $8.9 million. Included in this is the $3.2 million saved in its first quarter of operation as estimated by Renew Economy, providing a good savings record.
It is important to note that this analysis was based on the market prices available to the public and not on the actual income or losses of the CRP, which is based on the prices of private contracts. Your contract can be based on market prices, fixed prices, or some combination of both, among other variables.
The savings were estimated using the same analysis that the Australian Energy Market Operator (AEMO) used in the first quarter, but with a few variations resulting from a higher estimate for Frequency Control and Ancillary Services.
Looking ahead to the second half of the year, savings for the annual total are estimated at $18 million, providing a good return on initial investment. Currently, only 30% of the system’s 100 MW capacity is being used commercially, so the revenues generated could be much higher with the system operating at full capacity.
Detailed analysis of battery charge and discharge trends reveals that the battery is getting smarter as the grid evolves into the new reality of having a sizable storage system. In the first quarter, the battery was working as expected: it charged during the day and discharged at night, when solar production begins to decline dramatically.
In the second quarter, the patterns began to change. The HPR is still primarily discharged at night, but a morning discharge period has been added that supposedly soaks up the peak of utility grid usage in morning tasks, before solar production can supply enough power.
Energy prices are changing as a result of the new installation, with a weighted average sales price during the first 6 months of system operation of $191 / MWh. This was largely due to the extremely high prices in January, which, once removed, show a weighted average selling price of $141 / MWh. In contrast, the system purchased energy at an average price of $79 / MWh.
These prices demonstrate how inflexible traditional grids and power generation are, and it pays off for pioneers in grid-scale batteries. The need for on-grid storage will be even greater as more and more renewables are added, with intermittent generation making the ability to store wind power off-peak more and more valuable.
The HPR battery currently holds the fleeting title of the largest battery in the world, at 129 MWh, although seen the results it is giving, it will surely be a title that will lose in not long time, as utilities turn more and more to stationary storage facilities to replace older coal or natural gas plants.