There might not be much of an ancillary services market left for other projects.
JASON DEIGN MAY 18, 2018
Figures show that Tesla’s "big battery" in South Australia is so good at delivering frequency control ancillary services (FCAS) that there might not be much room left for copycat projects.
As first reported in RenewEconomy, in its first four months, the 100-megawatt, Neoen-owned Hornsdale Power Reserve, built with Tesla batteries, snapped up 55 percent of all FCAS revenues in South Australia, according to an analysis by consulting firm McKinsey & Company, based on data published by the Australian Energy Market Operator.
In addition to gobbling up FCAS revenues, the McKinsey research showed that Hornsdale’s arrival cut ancillary services prices by 90 percent across South Australia’s eight FCAS markets.
The problem is that Hornsdale has done such a good job of mopping up FCAS revenues that it might have significantly altered the business case for further battery plants.
Exactly how much Hornsdale makes for its owners is not clear, since the figures are not disclosed and in the McKinsey analysis, “We just looked at the societal impact,” Godart van Gendt, the McKinsey expert associate partner who carried out the analysis, told GTM.
However, it is clear that a 90 percent drop in FCAS pricing is going to make things hard for any future players looking to make their money from ancillary services.
“The second and third batteries being built will need to take account of the fact that the ancillary services revenue continues to come down,” said van Gendt.
There are other sources of revenue for battery plant operators, of course. Even the Hornsdale plant doesn’t only rely on FCAS.
According to the Australian Energy Market Operator (AEMO), it has been active in all the markets available on the National Electricity Market, which is the interconnected power system stretching down the east of Australia from Queensland to Tasmania. This includes energy trading on the spot market.
