Emissions and prices are anticorrelated in Australia’s electricity grid, undermining the potential of energy storage to support decarbonisation

Abstract

Recent work has shown that energy storage operating in a CO2 intensive grid can increase greenhouse gas (GHG) emissions. In this paper we sought to characterise the emissions of Australia’s electricity grid to inform the planning and operation of energy storage with the goal of minimising emissions associated with energy storage and supporting the rapid decarbonisation of Australia’s energy system.To do so, a marginal emissions factor (MEF), representative of the emissions intensity of the marginal generator (the generator with the highest bid price) in each time period, was calculated for the Australian National Electricity Market (NEM) from 2013 to 2021. Through analysis, significant variation was discovered in the MEF’s intra-day variability, with high MEF values occurring overnight and low MEF values occurring during times of peak demand. Compared against the average 30-min spot price across the day, a strong anti-correlation was calculated between the MEF and the spot price.Using these results, the importance of energy storage operated to minimise both costs and emissions was highlighted. By taking the key finding of its anti-correlation with price, the MEF can be simply implemented in the real world, including through dynamic carbon incentives and market tariffs, to ensure emissions are being reduced both in the short and long-term.