I heard this week that there is double the battery capacity in the connections queue (61GW) than is needed to reach the CP2030 targets (27GW). Another statistic was the increasing proportion of battery revenue that comes from price arbitrage (ie fill cheap and sell expensive) rather than providing grid stability services. It looks like the business case for batteries is very healthy, perhaps overly so?
Should allow them all to be built or to chop off the tail of the queue?
Batteries are an essential part of the renewables energy ecosystem, providing the buffer to spread excess supply and to smooth demand peaks. A system with sufficient battery capacity should see increased use of green power, reduced price volatility, and greater security of supply, and hence the overall system costs should be lower.
In the longer term, with 221 GW in the queue, it’s possible that batteries may cannibalise their own business case. In this smoothly running world with stable prices the opportunity for price arbitrage is reduced if not eliminated. In reality we are unlikely to get to this position in the next couple of decades so the business case remains strong.
Fears coming from this level of battery deployment include that they could game the market by withholding power until the price is super high, their fast acting nature and algorithms could actually increase grid instability, and of course all of these rare earth metals have to come from somewhere and today this is rarely ecologically sound.
For now it feels like we are on the battery gravy train and nothing will stop us.
