The Australian NEM is becoming increasingly reliant on variable renewable energy firmed by battery energy storage. As a result, securing grid connections and maintaining the business case for their projects is becoming increasingly difficult. One emerging strategy is to build co-located facilities, combining battery energy storage systems with a wind or solar project.
These co-located projects share infrastructure, allowing developers to maximise the value of their grid connection and open up additional revenue streams. In this article, we explain the setup of co-located projects, and analyse the drivers behind their rise in the NEM.
Executive summary
- Co-located batteries are built alongside another type of asset, like wind and solar generation, or demand sources like data centres.
- Hybrid projects are a subset of co-located projects that share grid connection and other equipment. They may either be AC-coupled or DC-coupled.
- While only 0.6 GW of co-located batteries are currently operational in the NEM, there is significant capacity in the pipeline. Another 5 GW of co-located batteries are scheduled to enter the system by the end of 2028. However, we project that only 3 GW will come online on time.
- Co-location offers Capex and Opex savings, and maximises usage of grid connection capacity compared to standalone solar or generation. It can also reduce network curtailment of nearby assets, helping them win competitive network access rights.
What is co-location?
A battery energy storage system located on the same site as generation (or demand) is co-located. Some co-located projects have the generation and storage component share a grid connection and potentially other equipment, such as an inverter. These are known as hybrids.
Co-located batteries can have different levels of integration with the generation component of the facility. This depends on whether they are hybrids and alternating current (AC) or direct current (DC) coupled.
