Midnight power raid by big batteries puts them in regulator’s crosshairs

Western Australia’s large batteries were supposed to ease power-price pain. Instead, unusual charging behaviour has put their owners on notice from the state’s economic watchdog.

Economic Regulation Authority chair Steve Edwell confirmed that the agency is examining the pricing activities of batteries in the state’s wholesale electricity market, known as the WEM. The scrutiny focuses on batteries owned by state-controlled utility Synergy and French company Neoen. The Australian Energy Market Operator is also believed to be watching the issue.

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We have been actively undertaking enquiries on these matters, as we always do when we see unusual behaviours or unexpected outcomes in the wholesale electricity market.

Large-scale battery capacity in Western Australia’s main grid has grown to about 1,400 megawatts from almost nothing a few years ago. The batteries regularly meet more than 20% of demand during peak periods and can sometimes supply more than a third. They now set prices in the main grid more than 90% of the time.

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Where we suspect non-compliance with the Electricity System and Market Rules, we will investigate and take compliance action.

Edwell said batteries had quickly become an essential part of the power system and could benefit consumers by storing renewable energy when supply is plentiful, then releasing it when power is scarce. But he warned that those benefits depend on a properly functioning market. “We have been actively undertaking enquiries on these matters, as we always do when we see unusual behaviours or unexpected outcomes in the wholesale electricity market,” he said. “Where we suspect non-compliance with the Electricity System and Market Rules, we will investigate and take compliance action.”

The comments followed revelations that batteries appeared to have pushed prices higher in recent months. In one incident, coordinated charging by Synergy’s batteries shortly after midnight drove spot prices from A$120 to more than A$350 per megawatt hour. An unnamed market participant said it was one of several cases in which Synergy’s batteries appeared to materially increase prices. Although the short-term market covers only about 10% of electricity traded, experts regard it as a vital signal of supply and demand. Prices are highest in winter, when wind and solar output are seasonally lower.

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These batteries are an important part of the energy transition, but only if we maintain a well-functioning market.