On 4 April 2023, the Australian Renewable Energy Agency (ARENA) released $120 million of funding for community batteries in the first round of the ARENA Community Battery Program. ARENA aims to fund at least 342 batteries with a nameplate rating of 50kW - 5000kW. Expression-of-interest (EOI) applications close on 30 June 2023, with Full Stage applications due next year.

This is great news for the battery industry. We've been inundated with enquiries on how Orkestra can help funding applicants. This blog summarises the program and how Orkestra can assist you to prepare and optimise funding applications.

In addition to the guide at the end of this article, Orkestra has prepared a financial model template [link to form] that we believe meets ARENA's grant funding application requirements.

What projects can receive funding?

According to ARENA, projects must meet the requirements of a Scope of Activity set out in the Funding Announcement. At the time of writing, these requirements are:

1. Each community battery must have a nameplate rating of 50 kW to 5000 kW
2. Must be connected in the distribution network, either front-of-meter or behind-the-meter.
3. Must not be connected to individual households
4. Proposals must involve the deployment of at least five batteries
5. The Grant Funding requested should be between $3 million to $20 million and not exceed 100% of Battery Capex Cost.

Community batteries may be co-located with loads or generators, but only the community battery component will be funded.

In practice, applicants must propose a fleet of batteries with roughly a minimum aggregate capacity of 3000 kWh - e.g. five 300kW, 2-hour batteries. These are materially large batteries!

Who can receive funding?

ARENA specifies two streams of funding:

• Stream A - for distributors (DNSPs) to install front-of-meter community batteries.
• Stream B - for anyone else to install either front-of-meter or behind-the-meter batteries, assuming the applicant is eligible under the Advancing Renewables Program.

(The funding is allocated 50:50 between the streams, but ARENA notes they may redistribute the funding depending on the quality of the funding submissions.)

How can Orkestra help?

Orkestra is Australia's leading solar and battery feasibility modelling software for commercial applications. Orkestra’s software can model front-of-meter and behind-the-meter battery projects that incorporate all common battery revenue streams.

Orkestra is easy, fast and accurate compared to spreadsheets and legacy software. Orkestra will enable you to test hundreds of potential solutions in literally minutes.

Modelling front-of-meter projects in Orkestra

Examples of front-of-meter projects in the context of community batteries include:

• Batteries co-located with a community generation (e.g. Hepburn Energy or Grong Grong Solar Farm)
• Batteries that are directly connected to the distribution network (but see the note below).

Front-of-meter projects can be set up in Orkestra in this easy 3-step process:

1. Create a new site without a load, and optionally with existing generation and apply import and export limits appropriate to the site (e.g. 5MW). (The limits are especially important if modelling DC-coupled batteries with generation)
2. Apply a wholesale passthrough tariff and the appropriate network tariff for the battery.
3. Add your potential battery options in a scenario

Using Orkestra, you can test hundreds of different front-of-meter community battery configurations, including batteries with:

• Different types of battery (we have a library of commercially available batteries)
• Different capacity (kWh) and durations (hours)
• Different battery control algorithms (we call these control profiles) - from solar-self-consumption to market-linked ruled-based and advanced optimisation algorithms
• Battery value streams - generation-shifting, wholesale market arbitrage and contingency FCAS
• Different market forecast scenarios. Using our rich library, model using historical data, inbuilt forecasts from Endgame Economics, or upload your own.

Figure 1: Example “front-of-meter” Orkestra Project - a community solar farm co-located with a battery.

Modelling behind-the-meter projects in Orkestra

Examples of behind-the-meter projects in the context of community batteries include:

• Projects installed at local government facilities (e.g. town halls, libraries etc)
• Projects installed at community facilities (e.g. sporting grounds)
• Projects installed behind-the-meter at co-operatives
• Projects funded by community groups of investors (e.g. Repower Shoalhaven)

But for all intents and purposes, these projects match commonly deployed commercial battery applications and will not be too out of the ordinary.

Behind-the-meter projects can be set up in Orkestra via this easy 3-step process:

1. Create a new site with a load, and optionally with existing generation. Optionally set  import and export limits appropriate to the site (this is generally recommended!)  
2. Apply the current retail tariff and network tariff for the site. Orkestra supports and has a library of most large-customer and battery tariffs in Australia.
3. Add your potential battery options in a scenario

Using Orkestra, you can test hundreds of different behind-of-meter community battery configurations, including batteries with:

• Different types and models of battery (we have a library of commercially available batteries)
• Different capacity (kWh) and durations (hours)
• Different control profile types - ruled-based and optimisation algorithms
• Various battery value streams - demand charge reduction, (network) tariff arbitrage, wholesale market arbitrage, contingency FCAS market participation and backup power value PV
• Colocation with solar
• Various site adjustments including tariff changes and the addition of loads (e.g. EV chargers)
• Different market forecast scenarios. Using our rich library, model using historical data, inbuilt forecasts from Endgame Economics, or upload your own.

We can also assist you in understanding the metering requirements to gain access to wholesale market arbitrage revenues.

A note to LV-connected Neighbourhood Batteries

Low-voltage (LV) connected “neighbourhood batteries” are batteries typically co-located and downstream with LV transformers. As we discuss at length in our community battery report and our blogs here and here, we are sceptical about the economics of community batteries with this configuration. Sure, proponents may achieve viable projects with grant funding covering the majority of costs, but as we point out in the report and blogs, the barriers extend well beyond the upfront costs. We don’t see a path for LV-connected neighbourhood batteries ever to achieve viability without funding except in rare outlier cases. With many other good options alternate to LV-connected neighbourhood batteries, it begs the question - are these projects a good use of taxpayer funds? To that end, we do not (currently) support the modelling of virtual shared storage or soft network capacity revenue streams that are commonly associated with LV-connected neighbourhoods.

Submitting a financial model to ARENA

Applicants for ARENA grant funding must submit a dynamic financial model as part of their application.

Orkestra has developed a template that can be used to submit battery models to ARENA. This template is available in Google Sheet format (that can be downloaded in Excel format if required).

This template has the following features:

• Present the financials for up to five community battery projects (or one community battery project with five variants)
• Accepts cashflows and input assumption CSV summaries exported from Orkestra's software
• Allows the user to adjust grant funding, battery capex and O&M costs
• It is completely unlocked and comes with a Creative Commons Attribution 4.0 licence (i.e. you can redistribute, alter and build upon the model as long as you credit Orkestra for the original model).

IMPORTANT: Please carefully read the disclaimer to this financial model template before using it.

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Ready to start modelling your community battery projects? Kick off your three (3) free weeks of Orkestra access here.