How does tariff risk affect a battery energy storage system (BESS) project?

Mitigating tariff risk in battery energy storage system (BESS) projects is crucial for ensuring project financial viability, as tariff changes can significantly affect cost structures and overall project economics.

Should battery tariffs be based on system costs?

The AEMC also highlighted that when developing tariffs for batteries, use of system costs must be considered. Under the Rules at the time, generators – including batteries when exporting –do not pay for using the network and consequently do not receive guaranteed access.

How do network tariffs affect a battery?

Rather, a battery must accept that it must optimise its operation across services. The consequence for network tariffs is that network operators are, by setting their tariffs, competing with different services (eg, ancillary services, wholesale energy) for use of battery assets.

Should batteries respond to a two-way tariff?

Batteries and other flexible loads are well suited to respond to truly cost reflective two-way tariffs that offer both charges and rewards. Tariff response by these customers provide an opportunity to reduce network costs.

What happens if battery tariffs fail?

If we can alter our tariff arrangements to harness the power of batteries, we may ultimately see a reduction in overall consumer costs. But if the network pricing fails to adapt, we may see batteries operating inefficiently, leading to an unnecessary rise in network costs and a poor outcome for consumers.

How will Australia's import tariff structure affect exporters?

The import tariff structure for Australia in 2025 represents a comprehensive overhaul of the existing trade framework. The implementation of these tariffs has created a multi-layered impact on Australian exporters seeking to access the American market.