From South Australia to Texas: The Benefits of Grid-Scale Lithium Batteries

Utility workers conducting maintenance on power lines
Introduction: Finding an Opportunity for Grid Scale Lithium-Ion Batteries

The state of South Australia is home to the Hornsdale Power Reserve, the world’s largest lithium-ion battery energy storage complex. It gained prominence thanks to a challenge issued by Elon Musk to a South Australian government seeking solutions to strengthen its grid and energy storage capacity following several severe outages. Not only did Musk claim that Tesla could build a massive lithium battery array capable of supporting the state’s grid, but that they could do it in under 100 days or complete it for free. State Premier Jay Weatherill agreed to the deal and within two months the Hornsdale Power Reserve was active.

The South Australian Case Study

Not only had Tesla comfortably completed construction prior to the 100-day mark, but it marked a change in how the world saw large scale lithium-ion batteries. Since entering operation in December 2017, the Reserve has been used multiple times to great effect. Less than two weeks after its inauguration, it activated itself within moments of a failure at a coal-powered plant, successfully stabilizing the grid and ensuring the state didn’t lose power. During two days of peak demand during the summer of 2018, battery operators Neoen were able to sell the Reserve’s stored energy for $1 million AUD ($800,000 USD). Within a year of operation, the Tesla Big Battery had saved up to $40 million AUD ($32 million USD) in service costs and had a major role in stabilizing the state’s energy grid.

No longer just an idea, grid scale lithium-ion batteries have become a viable energy storage medium for nations big and small, all the while promoting renewable energy and creating opportunities for cheaper operations and consumer costs. The Hornsdale Power Reserve was the first to highlight the benefits that lithium-ion batteries can offer at a grid-level, and as the world moves towards a sustainable future it certainly won’t be the last. What is even more interesting however, are the parallels between what has happened in South Australia in 2016 and Texas in 2021. The Australian state could serve as an example for the American one, but to truly understand how and why such a transition could be possible we should look further into what transpired in South Australia between 2016-2017.

A Tale of Two States

South Australia, September 2016, severe weather has damaged the Australian state’s electrical infrastructure, leading to a cascading failure that plunged the entire state into darkness. Less than three months later, the grid fails again at the hands of a severe storm. Two months following that failure, a heat wave during the Australian summer causes further blackouts across the state. Consumers were livid, the state government denied any responsibility, and utility companies refused to be blamed for the outages.

A rallying call was issued blaming the grid’s inability to cope with severe storms and demand surges on South Australia’s four wind farms – after all, renewable energy’s intermittency could only be to blame, right? “It has everything to do with wind – because that’s what blew over the transmission lines. But it has nothing to do with South Australia’s wind turbines,” said Dylan McConnell, a research fellow at the Melbourne Energy Institute,following the September blackout.

“In May (2016) South Australia closed its last coal-power station,” he continues, “If those coal-power stations were still operating, they still would have dropped offline and seen the cascading failure that tripped the generations. Having those thermal generators there wouldn’t have helped at all.” Although the state’s wind farms continue to be blamed by regulators, the series of grid failures served as a wakeup call for South Australians. Relying on neighboring states to provide baseload energy from fossil fuel plants while developing its own renewable energy sector was not enough – they needed better infrastructure, they needed grid-scale lithium ion batteries.

The public pressure against the Australian state eventually led to Jay Weatherill’s decision to accept Elon Musk’s challenge, and South Australia has not had a grid issue since. If this sequence of events somewhat reminds you of the events during the Texas winter and summer of 2021, you are not alone. Following the grid’s collapse during ‘Snowmageddon’, lawmakers blamed Texas’ renewable energy sector, while Texans asked for accountability and better infrastructure. The Electric Reliability Council of Texas (ERCOT) has made promises to improve their grid capacity and stability while still fixing the damage caused by winter storm Uri, but consumers are wary.

So why not seek out grid-scale lithium-ion battery storage?

Conclusion: The Case for Grid-Scale Lithium Batteries

Stateside, battery storage is already being rolled out in several states including California and a record-setting 1.2 gigawatts of energy storage were installed in 2020. In addition to this, the Biden administration has made clear that the United States wants to be a global leader in sustainable solutions. Whether it be securing international supply chains integral to the transition towards a low-carbon economy, or improving our own domestic infrastructure to both fight the consequences of the climate crisis and provide future generations with a high quality-of-life. Grid-scale lithium-ion batteries provide opportunities to fulfill all these goals.

Building grid-scale batteries like the Hornsdale Power Reserve in South Australia have a multitude of benefits that include a more stable electrical grid, cheaper consumer and operating prices, as well as more opportunities for renewable energy to be added in. The outages in South Australia opened a door for a better energy future, and Texas could follow in their steps and provide one of the best case studies for their use – should ERCOT implement them. Grid-scale lithium-ion batteries are the future, will we eventually see them be implemented in Texas?