Australia has the world’s toughest grid codes, and BESS developer Eku Energy is fine with that

Eku Energy is a standalone battery energy storage system (BESS) developer-owner-operator, spun out of Macquarie Capital’s Green Investment Group (GIG) and headquartered nearby in the city.

Best says that Macquarie Capital had formed the developer with a thesis of “effectively linking infrastructure-style capital with energy storage, which hadn’t really been done to date,” and regular readers will likely be aware of Eku Energy’s projects not just in Australia but also in the UK, Italy and Japan.

However, we focus today on its ‘home market. ‘ The COO has just participated in a summit panel discussion on developers’ main challenges. One of the key takeaways of that session—which you can read our coverage of—was that suitable sites in the NEM are being quickly snapped up, and Best said from the stage that grid location is the most important factor in developers’ site selection.

Before a project connects to the transmission grid and accesses the NEM’s Frequency Control Ancillary Services (FCAS) and energy trading markets, they must obtain their relevant Generator Performance Standard (GPS).

These apply not just in NEM-connected states and territories, but also for projects seeking to access the Wholesale Electricity Market (WEM) in Western Australia. Energy-Storage.news has heard from various sources that the standard—through which the Australian Energy Market Operator (AEMO) ensures each generation asset connected to the network complies with obligations and set operating parameters—is likely the most stringent grid code compliance process in the world.

“I think that’s a fair assessment. The Generator Performance Standard (GPS) process we go through here is incredibly rigorous,” Best says, with it also being one of the longest and most expensive grid compliance regimes of any of the markets Eku Energy works in.

AEMO’s technicians test plants through “all manner of scenarios and ultimately push the plant or the model of that plant, until breaking point,” which requires project designers to undertake a “huge number of studies,” he says.

“AEMO try and break those models and prove that the plant performs the way that they would expect it to within the network.”

After that, the process is documented in a GPS which then needs to be agreed by the Network Service Provider (NSP) and AEMO, before finally a 5.3.4A letter of compliance is sent by the market operator.

It doesn’t end there. As the GPS is written up based on modelling, any changes made during the construction phase, including plant design, cabling configuration and anything else that alters its electrical characteristics, must be remodelled in what’s called an R1 process.

“Then when the plant is finally energised and comes online, you actually have to prove physical compliance against those models as well, through the whole point testing regime.”

See AEMO’s overview of the process of connecting to transmission and distribution in the NEM.

Despite all of that, developers rarely complain because they understand the need for such a stringent process, according to Best.

“We don’t complain, because I think the Australian network is now being pushed to areas beyond other networks globally.”

For instance, South Australia is seeing some of the highest renewable energy penetration levels anywhere in the world, and other NEM regions are largely following.

The grid, therefore, moves from a high-inertia system to a low-inertia one, and Best says new assets, including storage, solar PV and wind, need to be added without putting the whole system at risk.

GPS compliance will not get easier anytime soon. However, Tom Best said earlier in the panel discussion that the process today is far easier than it used to be and credits AEMO with having learned lessons from the early days of solar.

The Eku Energy COO had also discussed on stage in discussion with fellow developers Acen Australia and Valent Energy how community engagement is really key for project developers to get local acceptance for BESS projects.

In our post-panel interview, he mentions a different form of stakeholder engagement developers should cultivate regarding the grid connection process.

“I think the relationship is key. People treat AEMO as a government organisation. In some ways, they are, but we are allowed to converse with them,” he says.

“You can take them for a meal, you can build a relationship, and you can achieve a lot through that. I think the industry has been a little bit scared to engage directly. The 5.3.4A letter is usually the final piece in getting to financial close [on a project], so there’s a huge amount of pressure on that AEMO team. Things are usually strained. You get that letter, and basically, everyone ignores the fact that they’ve also worked tirelessly for nine months to get you to this point. It’s a thankless task [for them].”