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Batteries key in the future energy storage landscape

Batteries key in the future energy storage landscape

In this article Aurecon’s Managing Director – Energy, Resources and Manufacturing, Paul Gleeson, explores the key outtakes from the technical and market impact study of Hornsdale Power Reserve’s first year in operation. In doing so, he demonstrates how and why battery energy storage is an essential part of the mix required to ensure network reliability in a controlled transition to renewables.

The need for battery energy storage

The future of Australia’s rapidly growing renewable energy sector depends on addressing the issues of grid reliability and stability – both of which are critical barriers in the uptake of renewable energy across Australia.

After one year of operation, Hornsdale Power Reserve (HPR), developed, owned and operated by Neoen in response to a process run by the SA government, and supplied by Tesla, is an undeniable success. It has exceeded expectations and told us a significant amount about how we can integrate an increasing proportion of renewables into the National Electricity Market (NEM).

HPR has also shown us that some of the current market mechanisms aren’t well suited to the introduction of batteries and there are numerous things that can be improved to allow future installations. However, from a technical point of view, the battery operates unlike any other device connected to the network – particularly around providing a range of services with extremely fast response times to support a stable network and security of supply.


In response to several events in 2016 and 2017 which resulted in a State-wide blackout and a load-shedding incident, the South Australian Government created an Energy Plan, comprising multiple components including temporary generators, a solar thermal project and small scale solar storage residential projects. HPR is a significant part of this plan in terms of technical innovation, not just for Australia’s electricity network but for issues that need to be resolved globally. 

As specialist technical advisors to the South Australian Government for the implementation of the Energy Plan, Aurecon played a key role in setting the foundations for the success of the HPR project – shortlisting expression of interest submissions, developing the technical and functional requirements of the system, evaluating proposals and supporting negotiations to enable the final contract to be signed.

We also supported engagement with various stakeholders, including the Australian Energy Market Operator (AEMO) and South Australian network service providers, in order to identify and advise on grid connection and registration matters. The outcome of this process was the selection of Hornsdale Power Reserve as the Government’s preferred partner.

HPR was ultimately designed to work as part of a system which reduces the likelihood of power failure in South Australia. HPR was intended to specifically combat issues and challenges relating to:

  • SA’s dependence on interconnection to Victoria (i.e. security challenges relating to the Heywood Interconnector)
  • Availability and pricing of system security services – supply and pricing for these was materially impacted by the retirement of synchronous thermal generation in 2016 
  • SA’s rapid transition to a greater reliance on variable renewable energy, including rooftop solar (SA has one of the world’s highest penetrations of renewable energy generation – 48.9% in 2016/17, up from less than 1% in early 2000s and predicted to rise to 73% in 2020/21).

Why it’s a success

Partnering renewable energy with large-scale battery storage will be a key enabler for an affordable, reliable and sustainable energy future for Australia. HPR addresses a specific technical and market need in the South Australian network and creates a high value option as part of the State’s Energy Plan. 

Three times larger than any other lithium ion battery ever constructed, HPR achieves system security, reliability and a stable supply through its ability to provide short bursts of input and output power. It can rapidly discharge and charge over fractions of a second to support the safe and stable operation of the grid when it’s under threat, or when something unexpected happens elsewhere, not just in the State but in the National Electricity Market. 

Key findings

The key areas of HPR’s market and network impact are around system security: HPR’s Fast Frequency response leading to the ability to provide a premium Contingency FCAS, and also high-quality Regulation FCAS. In addition, significant market impact has been achieved by way of contributing to the removal of the need for the 35 MW local FCAS constraint.

– System security

HPR reduces risk of a black out event, separation of SA from the National Electricity Market and load shedding. With 70% of HPR’s output reserved for the SA government in emergency situations, the remaining 30 MW power capacity and 119 MWh energy storage is available to Neoen for market participation. The 70% (or 70 MW of 100 MW discharge capacity) of output available to the SA government can provide a burst of power to prevent load-shedding blackouts, or to provide system-security services to the energy grid.

HPR is an integral element of the System Integrity Protection Scheme (SIPS), a three-staged progressive scheme developed to prevent a loss of the Heywood Interconnector in the event of a loss of multiple generators in South Australia. HPR’s near instantaneous activation in stage one of SIPS, can prevent moving to the next stage of the scheme – load shedding in South Australia.

– Fast Frequency Response/FCAS (contingency and regulation)

The incredible flexibility of the battery, and its Fast Frequency Response (FFR) (i.e. the fast dispatch of power in response to a frequency disturbance outside of normal range) provides a premium Contingency FCAS service on the NEM with the speed and accuracy of its response. Aurecon’s modelling of a hypothetical contingency event demonstrated the HPR’s FFR has the potential to provide significant support to arrest falling frequency, which in some cases will avoid or reduce load shedding – this is of particular benefit to South Australia in the event of the loss of the Heywood Interconnector and synchronism with other mainland NEM regions. HPR’s FFR capability was proven in a major system security event on 25 August 2018 (detailed in case study) where HPR operated as required, accurately dispatching energy to support the network through both high and low frequency periods.

In addition, operational data shows HPR provides a high-quality, rapid and precise Regulation FCAS service, (in contrast to existing large steam turbines that can lag by up to several minutes) which would further improve frequency control on the NEM if incentivised to deploy more widely.

– Market Impact

HPR’s most significant market impact has been in the Regulation FCAS market where the introduction of the HPR has boosted competition for these services and contributed to removing the need for a 35 MW local FCAS minimum constraint – which was estimated to have added nearly $40 million in Regulation FCAS costs in both 2016 and 2017.

HPR’s 30 MW market capacity bid into the market provides additional competition and a degree of downward pressure on energy prices.

Emerging opportunities

The one year technical and market impact case study identifies the increasing demand for and uptake of renewable energy presents growing opportunities for batteries including: 

  • Increasing share in ancillary services markets
  • Enabling Volume Firming Agreements to complement Power Purchase Agreements
  • Non-network solutions to transmission and distribution network constraints – particularly with increasing solar PV and electric vehicle deployment
  • Enabling firm / dispatchable generation from variable renewables to manage reliability obligations and characteristic changes to net operational demand.

Next steps

To fully realise these opportunities, a number of regulatory changes could be developed that recognise the value of services that batteries provide, strengthen the commercial case for new storage projects, and facilitate their deployment in support of the energy transition. These key regulatory changes include: 

  • Creating an energy storage registration category to enable registration as a single facility
  • Modifying the Transmission and Distribution Use of Service (TUOS/DUOS) charging structures to reflect the services provided, and energy-end-customer
  • Amendments to FCAS registration rules to enable full registration of capacity provided
  • A frequency control framework to value Fast Frequency Response capability

While battery projects are an important step to ensure network reliability in a controlled transition to renewables, they are just one piece of the energy storage jigsaw. The industry needs to continue to invest in other energy projects that will further diversify the supply and security mix, including pumped hydro energy storage, and hydrogen, in addition to more battery projects such as the Alice Spring’s BESS, which is transforming Northern Territory’s energy sector.


The Future Energy system needs system stability and security to be provided by a new asset type, as we transition from fossil fuels to renewable energy... HPR provides this vital service every day, for milliseconds and seconds at a time – which means significantly improved system stability and significantly reduced risk of a System Black event.

Most Australians are in favour of renewable energy, we also know they don’t want to pay more for their electricity and we know they want their lights to stay on. Wind and solar are the lowest cost form of new build energy source, however the impact of their increasing share of generation in the market are on system strength and stability. 

Projects like HPR are truly transformational as they enable us to integrate increasing amounts of wind and solar as existing coal and gas generation comes to the end of its operating life. HPR is an integral part of achieving that goal – giving consumers what they want, through supporting a secure network and providing stable, affordable and reliable generation. 

About the Author

Aurecon's Managing Director – Energy, Resources and Manufacturing, Paul Gleeson has over 20 years' experience on major power generation projects in Australia, New Zealand and Asia, and manages multidisciplinary teams across all project stages, from project development to feasibility studies, concept and detailed design, construction, and commissioning.

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