United States-based energy storage specialist Fluence says the Australian energy market is emerging as a test bed for hybrid projects combining multiple technologies, including solar and battery storage, behind a shared grid connection.
The country’s first large-scale solar-battery hybrid facility – Potentia Energy’s Quorn Park facility near Parkes in western New South Wales – only started sending power into Australia’s main grid late last year but the next-generation clean power model is fast becoming the norm in the National Electricity Market (NEM).
Data shows that 100% of the utility-scale solar committed in the NEM for 2027 and 2028 is paired with a battery energy storage system (BESS). Not all will be under one grid connection, but Fluence Chief Growth Officer Jeff Monday told pv magazine that true hybrid assets provide the blueprint for how to deliver flexibility, reliability, and grid stability as renewable penetration increases.
PV: Why is co-locating BESS with renewable generation becoming essential, especially across Australia?
JM: Pairing battery storage with renewable generation is foundational to building a reliable, modern grid. In a market like Australia, with its world-leading solar resources, this combination is essential to smooth out the variability of renewables, reduce energy curtailment, and ensure a consistent power supply when the sun isn’t shining.
However, while the industry often uses the term “co-location” – which technically just refers to placing two assets on the same site with separate grid connections – the real value, and the future of the Australian market, lies in true hybrid systems.
A hybrid system integrates multiple assets, like solar and a BESS, behind a single transmission connection point under a highly sophisticated control system. This allows the assets to operate in a coordinated and intelligent way, unlocking advanced capabilities like firming the renewable output to create a single, dispatchable power source.
This deep level of integration is becoming essential for grid stability as the share of renewables continues to grow. Furthermore, this highly reliable hybrid model will be increasingly utilised to provide secure, 24/7 power to energy-intensive infrastructure like data centres.
PV: Where are the biggest opportunities and risks with this hybrid asset model?
JM: The biggest opportunity with the hybrid asset model lies in its ability to deliver reliable, dispatchable, clean power. By using an advanced control system, a hybrid asset can do much more than just store and shift energy. It can actively manage the power output to meet specific grid needs or market opportunities, creating new revenue streams for asset owners through ancillary services and energy trading.
This intelligent dispatch improves the overall financial viability of renewable projects. Furthermore, hybrid systems can defer or even avoid the need for costly grid infrastructure upgrades by providing localised grid support with a level of precision that a simple co-located system cannot.
The risks are primarily centred around the complexity of both integration and grid connection. Navigating the strict Generator Performance Standards (GPS) required by the Australian Energy Market Operator (AEMO) is a significant challenge for developers. Ensuring seamless interplay between the generation and storage components requires sophisticated controls and deep market expertise.
At Fluence, our advanced system modelling, intelligent control platforms, and industry-leading AI bidding software, Mosaic, are designed specifically to mitigate these risks and de-risk the GPS and overall grid connection process for our customers, ensuring hybrid assets deliver maximum value over their lifecycle.
PV: What will determine long-term financial viability of the solar and BESS model?
JM: Long-term financial viability will be determined by three key factors: technological innovation, market design, and operational excellence. As battery technology advances, costs will continue to decline, making the economics of hybrid systems increasingly attractive. However, technology alone is not enough.
Market and regulatory frameworks must evolve to properly value the full range of services that integrated BESS provides – from energy arbitrage and capacity firming to advanced grid services like grid-forming inertia. This includes creating stable policy environments that provide long-term revenue certainty.
Finally, operational excellence is critical. Hybrid systems introduce new layers of complexity, requiring operators to constantly forecast renewable availability, adjust to headroom changes, and respond to rapid market signals like Aggregate Dispatch Conformance (ADC) status, which can change every five minutes in Australia.
Early integration of advanced bidding software is now critical to ensure these systems perform exactly as intended. This is where Fluence’s AI-powered software, Mosaic, plays a crucial role. By leveraging advanced analytics and machine learning, Mosaic automates these complex decisions in real-time, helping asset owners maximize revenue and maintain strict market compliance in highly volatile energy markets.
PV: Why is Australia seen as a test bed for this solar and BESS model?
JM: We see Australia not just as a test bed, but as a global pioneer and a blueprint for the energy transition. This is due to a unique convergence of factors. The country has one of the highest levels of rooftop solar in the world, which has driven the need for innovative solutions to maintain grid stability, and BESS has proven to be a key enabling technology.
Australia’s advanced and dynamic energy market, the NEM, has also been a driving force. Its design provides multiple revenue streams for BESS operators and has fostered a vibrant ecosystem of innovation.
The Australian government and regulatory bodies have also been proactive in supporting the deployment of energy storage through various policies and programs. Landmark frameworks like the Capacity Investment Scheme (CIS) are prime examples of this, directly encouraging the deployment of clean, dispatchable capacity at scale.
This combination of high renewable penetration, a sophisticated market design, and a supportive policy environment has created a fertile ground for testing and proving the value of the solar and BESS model at scale, setting an example for other markets to follow.
Looking ahead, we are eager to see how the NEM Review and post-2030 market design shapes up to further support this transition.
PV: What would give investors in Australia’s renewable energy sector more confidence?
JM: Investors in Australia’s renewable energy sector are looking for long-term policy certainty, stable revenue streams, and confidence in the technology and partners they are investing in. A clear national energy policy that supports the growth of renewables and energy storage is fundamental. This includes well-designed market mechanisms that appropriately value the grid services provided by BESS and provide long-term revenue visibility.
Beyond policy, investors need confidence in the underlying technology and their partners. This is where Fluence’s industry experience and proven track record become critical. With over 50 GWh of energy storage deployed or contracted globally, we have a deep understanding of the complexities of these projects.
Investors are looking for certainty in project execution, and our track record of on-time delivery helps mitigate supply chain risks. This, coupled with our unwavering commitment to rigorous safety testing and the financial backing of Siemens and AES, provides the assurance investors need.
PV: How do you see BESS technology evolving in the next five years?
JM: The next five years will be a period of rapid evolution for BESS technology, particularly in system intelligence. While battery chemistries will continue to improve, the most significant advancements will come from the software and controls that manage the assets.
At Fluence, we are at the forefront of this with our storage technologies.
Looking ahead, the other major driver of BESS evolution will be the exponential growth of the digital economy. The massive energy demand from AI and data centres requires power smoothing and fault ride through capabilities. Integrated BESS and solar assets are ideally suited to meet this need to deliver secure and affordable power prices to Australian end-users.
The future of BESS is about smarter, more integrated, grid-forming solutions that can unlock the full potential of a renewable-powered grid and support the growth of new industries.
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