Community Batteries – Do we need them?

Community Batteries, also known as neighbourhood batteries, are a shared energy storage solution that are emerging throughout Australia as individuals and wider communities look to implement new and improved solutions to powering their households. 

Shared among multiple households or businesses, community batteries enable the network to support rooftop solar in storing energy at times when it is abundant, during the day, and discharging energy when demand is high, at night-time. Ranging from a capacity of 100 kilowatts (kW) to 5 megawatts (MW), they are much larger than household batteries, which typically have a capacity of ~10 kilowatts (kW). A 1MW battery can power up to 1,000 average homes for about two hours. 

According to the data contained in the Australian Energy Regulator’s 2020 Residential Energy Consumption Benchmarks report the average annual consumption total for a household of three people in Victoria is approximately 5,000 kWh1

While capturing energy when it is abundant makes sense, community batteries also assist in providing a cost-effective way to improve reliability and stability of the grid. They act as sponges, soaking up extra energy that otherwise would flow back into the grid and flood both substations and individual households, harming infrastructure and appliances2. This may be overcome by upgrading the surrounding substations and improving the wiring of the network, but this can be an expensive exercise. 

Other benefits of community batteries are that they can increase the penetration of renewable energy sources and provide an opportunity for community members to participate in local energy markets where they may otherwise have been unable to do so. 

Dylan McConnell, an energy systems expert from the University of Melbourne, notes that while private home batteries may be good for local energy storage, a shared approach is more efficient2. “The overall shape of the aggregate load and generation is better managed at [the neighbourhood] level than at the individual level,” he said, noting that “individual houses have a peaky load (i.e. demand goes up and down), but at the suburb level, that demand is smoothed out.” 

However, what happens if the individual home batteries are able to connect to other home batteries via smart technology to support the grid via a virtual power plant (VPP)? Research out of Australia National University suggests that while this might seem appealing to some, particularly those heavily engaged, most are wary of the energy sector and trust is the main issue. 

One challenge associated with community batteries is ownership.  

One potential ownership model is for the community to come together and own the battery (with the potential for shares to be issued), with the community also being the “customers” of the battery. This approach requires strong leadership as the legal structure and governance needs to be robust and sufficient for the community to be engaged and to benefit fully. Funding is also an issue in this model, although government grants are becoming increasingly available to assist with this. 

Another ownership model is for either the distributors of the energy or the energy retailer to own the battery. The benefit of this model is that the management of maintenance could be at scale, whilst it also serves the purpose of assisting in achieving zero emissions and ensuring stability of the grid. In these instances, it would be expected that the distributor or retailer would ensure they recoup their asset costs, so a decision would need to be made as to whether this model would serve or benefit the community in which it operates.  

Another model is for the local government to take ownership of the battery. An example of this is the Yarra Energy Foundation, established in 2010, that is owned by Yarra City Council. In 2022, they successfully completed the Yarra Community Battery Project in Fitzroy, in conjunction with the distributor CitiPower and the Australian National University, resulting in the installation of the community battery Fitzroy North 1. The Yarra Energy Foundation collectively have a vision to roll out the Yarra Energy Storage System3, a network of community batteries. 

Community or neighbourhood batteries are still very much an emerging technology and, as a result, many stakeholders are new to the process and still learning. This has big impacts on the timelines and the budget of any community battery project. If community batteries are to proceed, strong leadership will be required. However, daunting this may appear, the opportunity to enable total solar saturation while supporting the grid to provide secure, reliable, local renewable energy, regardless of individual home circumstances, is appealing. 

Grants are currently available through the Victorian State Government’s National Battery Initiative to support pilots, trials and demonstrations of neighbourhood-scale battery ownership and operational models. Round 3 of this initiative is currently open, with applications closing on 21 April 2023. For more information, please visit Neighbourhood Battery Initiative.  

1 Residential energy consumption benchmarks – Final report for the Australian Energy Regulator 9 December 2020  Frontier Economics Australia 


3 Page 7 Final Report: Yarra Community Batter Project – Yarra Energy Foundation Oct 2022