There is much discussion in the media and within Bouddi about community batteries. This page aims to provide some clarity about the role and functioning of community batteries and how they can help to reduce greenhouse emissions and costs.
To help understand some of the terminology used on this page, please refer to the definitions section at the end.
On this page:
| Types of batteries | ||
|---|---|---|
| Battery type | Size range | Ownership |
| Home batteries | 1kWh - 50kWh | Homeowners and small businesses |
| Community batteries | 50kWh - 5 MWh | Network providers (like Ausgrid), community groups or other third-party owners, big businesses, and energy companies |
| Utility or grid-sized batteries | 5MWh – 2,000MWh | Network providers, large-scale electricity generators and distributors |
The term ‘community battery’ is used in different ways. Sometimes it refers to a battery owned by the community, and other times it refers to community-scale batteries. On this page, we use the second meaning – ‘community-scale’.
A community battery is a mid-sized battery – larger than a home battery but smaller than a utility or grid-scale battery – typically with a capacity of 50kWh to 5MWh. Community batteries are usually installed in or near residential areas.
To better understand where community batteries sit within the electricity network, we have categorised all batteries in this simple table.
Batteries of all sizes are essential for Australia’s transition away from fossil fuels for electricity generation. They expand storage capacity and strengthen the reliability of the electricity grid.
Greater storage capacity means renewable energy, generated from sun, wind and hydro, can be used at any time of day, not just when conditions are favourable. This reduces our dependence on coal and gas, which are largest sources of greenhouse emissions and are increasingly costly.
To share these advantages more broadly, Australia needs a mix of storage solutions ranging from home batteries to large utility-scale batteries.
Community batteries store excess power generated by solar rooftop panels during the day and discharge it during peak night-time periods of demand. This allows community members to use a greater amount of renewable energy within their local area, whether they have solar panels or not.
Community batteries are usually located in front of the meter, i.e. on the grid side of household electricity meters. They are part of the wider electricity grid and, depending on their capacity, can be connected to as few as 10 and up to 200 individual households. They are ‘two-way’, meaning that the battery takes energy from the grid when charging, and then provides energy to the grid when discharging.
Community batteries are not limited to rooftop solar from just one building, like a home battery, but can charge with solar energy from a number of buildings with the neighbourhood via its connection to the grid.
Community batteries typically come in one of two configurations:
Community batteries are similar to home batteries in terms of their construction. Lithium-ion is the main storage technology. Lithium-ion-based systems are financially viable and have a small enough footprint for urban settings.
Community batteries have the potential to:
The ownership of the battery is the very first design choice that shapes and differentiates a community battery project. Ownership influences the business model possibilities, how value is created and for whom.
In simple terms, there are three main ownership models, shown in the table below.
| Community battery ownership models | |||
| DNSP owned | Third-party owned | Market participant owned | |
| Typical owner | Distributed Network Service Providers (DNSPs) are the grid operators, such as Ausgrid in our region | Local councils, community-based organisation, or not-for-profit organisations | Registered people or businesses, who have some form of active role in electricity markets |
| Primary business objective | Grid stability and continuity of service to minimise future network upgrade costs and improve energy reliability for all local customers | To provide peak time renewable electricity to community members; to make some financial return to maintain the battery and reimburse investors | To make a profit from selling electricity on the wholesale market and providing grid support services |
| Control of community batteries | Retain sufficient control to support grid stability but may also partner with energy retailers who offer customers a retail plan linked to the battery | Retain community control but may engage energy retailers to deliver a retail plan to customers linked to the battery | Usually retain total control but may partner with energy retailers if that would be profitable |
The type of financial model for community batteries is influenced by the ownership structure, operating model, battery size, lifespan, and targeted revenue streams. All of these factors relate to the initial purpose of the battery project.
Detail of the main neighbourhood battery cost and revenue drivers are set out here:
The cost of batteries in Australia is approximately $1,000 per kWh of capacity. This is projected to halve by 2030 as battery technology improves and the uptake escalates. The exact battery costs however, are dependent on the desired use cases, battery size, construction considerations, and other requirements associated with the battery’s location and housing.
Battery control systems and supporting IT infrastructure are a crucial part of the operation of a community battery. Which system is used is dependent on the existing capabilities of the battery owner/operator and could cost as much as the battery. The opportunity to spread this cost over multiple batteries in a network can significantly decrease this cost with scale.
The cost of connecting a battery project to the local distribution network vary based upon site specific dependencies such as proximity to existing network infrastructure, battery size, and the existing capacity within the local grid infrastructure. The larger the battery capacity, the more likely that local electricity networks may need to be upgraded to enable the additional load.
Alternative approaches to network tariffs or retail energy plans may be required to gain the most benefits from community batteries.. For example, if the aim of the battery is to support local use of solar energy, then the preference would be for the battery to charge during the day and then discharge at night. Customers serviced by the battery would need to be encouraged to consume much of their energy load in the evening peaks
Project risk identification and management may reveal additional costs that need to be factored into the business case.
A Market Participant is required to access this revenue stream. Access requires the ability to provide a minimum of 1MWh storage capacity. This may be achieved as part of an aggregated solution across a network of batteries.
A Market Participant is required to access this revenue stream, so that the battery can be traded on the wholesale electricity market. The battery location, size and connection will be influenced by the number of customers and size of the load to achieve the desired energy output for trading purposes.
Local capital funding, may assist in financing a battery project, however this would typically require a suitable process to distribute the return on investment to the relevant stakeholders. Community member/third party engagement and participation rates may impact the preferred location, as some areas may have a higher or lower interest from the community in co-investing.
DNSPs offer demand side revenue opportunities. They offer a financial incentive if batteries can respond to network signals to either increase charging or discharging at times when the network needs support. To access these incentives, the battery would need to be located in an area where network support services are required. This can be identified via discussions with the local DNSP.
Behind the meter, low capacity, community retailer, ground mounted
One of the earliest examples of a community battery in Australia is the ‘Yack01’ battery established by Totally Renewable Yackandandah (TRY), a behind the meter battery. It is operated by an electricity retailer, Indigo Power, to provide electricity to their customers via the National Energy Market which shares electricity with the Yackandandah community.
Yack01 was a pilot project to demonstrate the feasibility of a behind-the-meter community battery and its integration into the grid. TRY and Indigo Power originally raised $200,000 and received a $171,000 Victorian government grant to get the size to 274 kWh. The battery was coupled with a 65kW solar array installed at the site of an old sawmill. The battery charges with solar during the day and discharges in the evening. 274 kWh is not a big storage battery, but was perceived as a first step and pilot for larger community-scale projects.
Charge and discharge battery cycles are managed by a smart energy controller, the Mondo Ubi. The Ubi is a key feature of over 210 solar installations in Yackandandah and a smart, dynamic and two-way energy market system.
Front of the meter, medium capacity, DNSP ownership, decentralised pole-mounted
One of the earliest rollouts of community batteries occurred in the United Energy network when two power pole-mounted batteries were installed in a trial of the technology in 2020. The batteries, in Highett and Black Rock, were considered to be successful, and led to a project whereby pole-top batteries were rolled out in 40 locations across the Mornington Peninsula and south-east Melbourne suburbs by the end of 2023. These 30 kw or 66 kw batteries collectively store 1.2MW of power and provided limited support to an estimated 5000 households.
Each pole-top battery is installed in locations across the network as an alternative to upgrading local distribution sub-station transformers due to increasing peak demand. The units also regulate voltage, provide balancing of phases and increase the hosting capacity of rooftop solar in the network. In addition, the batteries provide frequency control ancillary services to support the grid.
The batteries have the capacity to service local homes and businesses, registered with the scheme, with just over two hours of stored energy. The batteries each have an expected life span of approximately 20 years and 20,000 cycles.
Front of the meter, small capacity, third party ownership, ground mounted
Yarra City Council established the Yarraville Energy Foundation (YEF) as an independent not-for-profit in 2010. It is governed by an independent board of directors.
In late 2021, the Victorian Government funded the YEF community battery. The Fitzroy North (FN1) project resulted in the installation of a front of the meter 110kW/284kWh Pixii Power Shaper battery system (four units). It was later upgraded to 120kW / 309kWh. The project was delivered in partnership with CitiPower, the City of Yarra, Acacia Energy, Pixii, the Australia National University’s Battery Storage and Grid Integration Program (BSGIP), Mill Software, and Ventia
FN1 was the first inner-urban community battery in Australia not owned or operated by an energy distributor and sought to be a model project to inform other community battery projects.
FN1 provides power to approximately 200 residential and commercial premises. Additional revenue streams include FCAS income and energy arbitrage. YEF made a profit of $8,000 in its first year of operation, primarily from FCAS market participation.
Front of the meter, medium capacity; DNSP owned, ground mounted
In 2021, Ausgrid launched the Beacon Hill Community Battery, a front of the meter, utility-owned battery in a northern suburb of Sydney. It was internally funded via the Ausgrid Network Innovation Program. Ausgrid employed a utility-owned, front of the meter virtual solar storage subscription business model for the mid-scale 500kW battery. The battery is considered a network asset.
Augrid also has a lease relationship with an energy retailer/aggregator who, controls the battery in order to access the electricity market. Compared with a community-owned battery model, the key difference is there are more partners who hold multiple roles and potentially reduce the margins and overall costs.
Ausgrid was seeking a flexible alternative to augmenting existing network infrastructure while helping to reduce peak and minimum demand periods in neighbourhoods with high solar PV penetration. For members of the community, this was considered to be an easier, lower cost alternative to purchasing and managing home batteries. The wider community benefit was that the battery helps increase the capacity of the neighbourhood’s network to connect and export locally generated electricity from solar.
Front of the meter, huge scale capacity, market participant owned, ground mounted
Evoenergy is the main DNSP in the Australian Capital Territory (ACT). In 2020, Evoenergy identified the need to address a constraint in the network to ensure the continued reliable supply of electricity to the Molonglo area. This greenfield development area is located approximately 10 km west of the capital’s central business district. Over the next 30 years, the area is expected to see considerable development with new suburbs being established.
It was initially intended that the project developer would also finance, own, and operate the battery system. However, it was subsequently decided that the battery system would be sold to a finance company who would instead own and operate it. The Molonglo battery therefore is a market participant owned asset. In terms of revenue streams, the battery owner will access electricity market revenue through energy arbitrage and FCAS. It will also receive payments from Evoenergy for providing grid services, such as voltage control and peak shaving.
The Molonglo battery is considerably larger than the batteries featured in the other case studies (thousands of MWh as opposed to hundreds of kWh). While no direct benefits flow to the community, it is stated that there are indirect ones for all energy consumers through the deferral of network upgrade costs. No survey of the community and its perception of the benefit is known to have been undertaken and made publicly available.
Front of meter, large scale capacity, DNSP owned; ground mounted
Bawley Point region has an isolated, ‘end-of-the line’ grid connection that makes it vulnerable to outages. It’s $8 million microgrid was jointly funded by Endeavour Energy (the DNSP), and the NSW and Federal government-backed Bushfire Local Economic Recovery (BLER) Fund.
It acts as a self-contained energy system, harnessing electricity from about 2 MW of existing residential solar and 1.2 MWh of new subsidised residential solar batteries installed in about 100 homes in the two adjoining communities, along with the 3 MW grid-connected battery. This configuration empowers the microgrid to operate autonomously during outages, forming an island of power for the entire community. The microgrid replaced a 1 MW diesel-fuelled generator.
Behind the meter, medium scale capacity, community owned; ground mounted
In 2020 NEV Power invested in a behind-the-meter community battery supplied by ABB Hitachi and assisted by a grant from ARENA. The battery has a 430-kWh usable capacity and stores some of the excess power generated by community household solar systems. The battery is used to supply power across the local network which is limited to 90 houses, when solar power generation is limited by weather or at night-time. The storage capacity has proven sufficient to avoid using grid supplied power on approximately 75% of days of the year.
NEV Power has stated that as the number of customers grow, its ability to meet overall increased energy demand will become more constrained. NEV Power has determined that it will not be economically beneficial to customers to expand its battery capacity due to current financial constraints. It has found it difficult to balance the need to generate sufficient revenue to cover costs whilst also maintaining a competitive tariff structure.
Front of the meter, medium scale capacity, DNSP owned, pole mounted
Essential Energy, a regional NSW energy distributer, is conducting a trial of pole-mounted batteries that operate as a neighbourhood battery system. Essential Energy will own, install, and maintain the batteries.
The trial is being run in five different communities: Armidale, Bathurst, Dubbo, Port Macquarie and Wagga Wagga and is expected to run for at least two years. Essential Energy will be installing 35 pole-mounted batteries across these communities with a total capacity of approximately 2.5MWh, serving around 630 customers. Customers participating in the trial can rent a portion of the battery, up to 4kWh per day, to virtually store and access neighbourhood generated solar energy.
The pole-mounted batteries will store excess solar energy generated during the day to use later during times of peak demand. This is shared across the local community with non-solar neighbours, including renters and apartment owners. This approach will give local communities the opportunity to make the most of renewable energy resources during the day and reduce pressure on the electricity grid in the evening.
This concept is perceived, by Essential Energy, to be a good use of its existing infrastructure and it means it won’t need to occupy land. Existing power poles across the network area provide many options to place the batteries without the need to consider easements. The pole mounted batteries also provide flexibility to get close to the distribution substations where existing network constraints occur.
Over the past five years, community batteries in Australia have shifted from being a concept to a reality. However, there are significant and obvious variations in the case studies set out above. Community battery projects are not easily scalable, and models are not necessarily transferable across different communities. They are highly contextual.
However, some consistent issues and patterns can be identified:
Conducting a thorough feasibility assessment is an essential prerequisite for any community battery project. Before beginning the assessment, it’s crucial to have a clear understanding of the need and purpose of a neighbourhood battery in the local context.
Definitions of important concepts and structural relationships, used on this page, are set out below.
Investment in the distribution network to improve the services offered to customers or improve electricity reliability.
Customer or household side of the electricity meter.
Systems that control and coordinate the safe operations of the battery. This includes monitoring the battery, determining when to import or discharge electricity, and optimising the performance of the storage systems. These usually involve advanced telecommunications capabilities linked to distribution network operations.
One of the steps in the energy supply chain, distribution networks take power produced by generators and supply it via high voltage transmission lines, then lower the voltage and distribute the power to customer connection points.
Owners and operators of distribution networks, also commonly known as grids. Ausgrid is the DNSP in our region.
This is the practice of taking advantage of a price difference in buying energy at a low price and selling it into the National Electricity Market at a higher price. In the case of batteries, it refers to storing electricity when the price of power is low, and then discharging it at times when wholesale electricity prices are high.
A process used by the Australian Energy Market Operator to maintain the frequency of the power system within a normal operating band of around 50 cycles per second. FCAS provides a fast injection of energy, or fast reduction of energy, to manage supply and demand.
Major electricity generators that produce large volumes of wholesale energy sold through the National Electricity Market. These include solar and wind farms, hydro, and fossil fuel-fired generators like gas or coal.
High voltage transmission networks transport large amounts
of electricity from large-scale power generators and over long distances to towns and cities. The electricity is carried at a capacity between 220,000 volts and 500,000 volts.
The utility or grid side of the household electricity meter.
Refers to the distribution network that transports electricity to customer connections. This infrastructure is managed by DNSPs and carries electricity at between 6,600 volts and 66,000 volts. At the customer connection point, the voltage is reduced to 230 volts.
A measure of one thousand watts of electrical power.
A unit of measurement of how much energy a device is consuming. For example, 1 kilowatt hour (kWh) is the energy consumed by a 1 kilowatt (kW) electrical appliance operating for one hour.
Registered people or businesses that take part in the electricity markets operated by AEMO this includes: Small Generation Aggregators, Market Ancillary Service Providers, Wholesale Electricity Market participants.
A megawatt is a measure of one thousand kilowatts of electrical power.
A self-sufficient energy system that services a defined geographic location or footprint. These usually rely on one or more kinds of distributed energy (like a solar or wind farm) to produce electricity locally and can be disconnected to operate autonomously from the distribution network.
The volume available on the distribution network to transport electricity to a high standard of reliability and power quality.
Parts of the distribution network which have no or limited capacity to supply additional energy to customers as their energy needs or the number of customers serviced in that area increases (demand related constraint) or absorb and transport electricity sourced from a new connection (such as solar PV) without impacting on network voltage and stability essential to ensure reliability (solar capacity related constraint).
A connection point between, in this case, the neighbourhood battery and the distribution network to enable electricity to flow between the two.
Fixed daily charges that cover the cost of operating, maintaining and managing the distribution network. These charges are fully regulated by the Australian Energy Regulator and set annually. They are often referred to as the ‘supply charge’ as part of customers’ electricity bills.
Periods of electricity demand on the distribution network when customer consumption is highest, typically characterised on a daily or seasonal basis. Weekday peak demand for example, is between 3pm and 9pm Monday to Friday.
A demand-side management strategy used to reduce electricity consumption during periods of high demand, known as peak times.
A type of solar system that converts sunlight into electrical energy. For homes this is often referred to as a rooftop solar system.
Excess power generated from a solar PV system and not used in the home or building, may be exported into the distribution network. Customers can receive a credit for this power in the form of a feed-in-tariff rate.
Part of the electricity distribution network and where voltage levels change from high to low. Electricity typically flows through several substations where voltage goes through a step change at each level.
The cost for each unit of energy consumed by a customer and measured in kilowatts (kW). These tariffs are offered under energy plans by energy retailers and form a part of electricity bills.
