EIR Insights: Dispatchable renewables – how bright is the future?

This article is part of our EIR Insights series from our Energy, Infrastructure and Resources team. Stay tuned for regular updates and commentary on topical issues across the sector.

In the first article in this series (see link), we discussed the need for and rise of dispatchable renewable electricity generation in Australia, highlighting that in recent years there has been a marked shift from baseload coal balanced by open cycle gas turbines and hydro, to increasing levels of variable renewable energy generation (VRE) balanced by dispatchable renewable generation.

But this transition is and will not be without its challenges and the oft cited “energy trilemma” of having an energy system that is secure, affordable and reliable still rings true. Here, we consider these challenges and some of the proposed solutions and opportunities.


If the fundamental opportunity for renewables is their abundance and relatively widespread occurrence, the challenge is applying these to meet demand given their variable nature over the long-term. This for the most part means the availability of large-scale electricity storage. Battery storage systems are emerging as one of the key solutions to effectively integrate high shares of solar and wind renewables in power systems worldwide. In Australia, battery storage for renewable energy is increasingly being used in a variety of designs, sizing and locations for the main purposes of load shifting and supporting the stability of the grid. Batteries are also now being included more and more in project planning as mitigation against future storage costs, penalties or to account for future legislative or market requirements.


A fundamental question when considering whether the long-term goal of net zero emissions will be achievable is whether the technology needed for dispatchable generation will be cheap enough. If so, in theory enough of it can be added to the grid to absorb just about any fluctuations.

In general, costs are likely to continue to fall for all renewable energy technologies in correlation with their growth in global deployment. This should improve the competitive position of dispatchable renewables compared to other forms of energy such as gas. Readily achievable growth rates (around 25% per year) in dispatchable renewables could keep pace with coal retirements and enable an orderly transition to a large share of renewable energy.

In the solar space, the falling costs of essential equipment such as panels, tracking systems and smart inverters are resulting in generators adding more panels to produce more power in times of lower sunlight and curtailing their output during peak times. Coupled with this, the cost of batteries is also decreasing rapidly as the global and Australian supply scales up.

A variety of technological options should provide solutions for different demand profiles and can contribute to minimizing the overall system cost. Ultimately, policy decisions on electricity market design will decide which degree of dispatchability is required and rewarded. As the system value for short and long term storage is not the same, revenues from these segments might also be different and yet, technologies to serve both segments will be needed and as such, should be supported.


The main market objective is and will continue to be overall reliability, ie providing electrical power when it is most needed. This is the issue that will require the greatest long-term planning and investment. Some dispatchable generators are more flexible (ie faster in response) than others. Consistent renewable energy sources such as bioenergy and geothermal are inherently dispatchable, while VRE inputs such as solar or wind energy can be converted to dispatchable generation when combined with a form of energy storage (such as batteries, pumped hydro or hydrogen).

To be reliable and secure, a high penetration renewable power system will need to make use of a blend of dispatchable and VRE technologies with a mix of different technologies, durations and locations. As referenced above, it is therefore important that energy policy is technology neutral and the services that are required to support system reliability and security are appropriately defined and valued.

Other factors 

Government policy and incentives will largely dictate the growth and uptake in alternative means of electricity generation and storage. As recently as last week, we noted the House Standing Committee on the Environment and Energy’s inquiry into the current circumstances and future need and potential for dispatchable energy generation and storage capability in Australia (see link to bulletin).

Support in the form of grant funding will be critical in the formative stages of this market, as it was in the early years of large scale solar. Absent ARENA and CEFC funding of early Moree, Nygan and Broken Hill solar farms as path finder projects the multi-billion dollar Australian solar market would arguably not exist (see “Insights from the First Wave of Large-Scale Solar Projects in Australia” (ARENA report, January 2020)).

In the current landscape, CEFC’s Dispatchable Power Program which is designed to complement grant funding offers for emerging technologies is available to support contracted, partially-contracted and uncontracted projects and it is expected that large-scale battery projects will meet CEFC’s investment criteria eligible for finance, with such projects being assessed on a case-by-case basis. In NSW, the $75 million NSW Emerging Energy program has allocated funding into capital projects and pre-investment studies streams to support activities that accelerate the development of on-demand, electricity projects and as of the date of this article, grants have been awarded to five capital projects with a combined capacity of 220MW and nine investigative projects with the potential to deliver 2,700MW. We at Hamilton Locke are actively assisting our clients in relation to these programs.

Equally critical – and which will assist in unlocking the tidal wave of private investment eager to invest in energy storage – is legislative support and regulatory certainty both in terms of the orderly retirement of existing coal generation and the market in which dispatchable renewables will operate over the long term.

Looking ahead, the retirement of coal generators will inevitably require alternative energy supply technologies to fill the gap left behind. Effective dispatchable renewable electricity generation is currently mooted as one of the key solutions to this as renewables become more controllable and affordable. While the ultimate solution will likely require a holistic approach using multiple energy sources and technologies, having a high volume of renewable energy in the system that is dispatchable on demand would appear to be an essential part of this approach. The future is likely dominated by dispatchable renewables.

The Hamilton Locke team advises across the energy project life cycle – from project development, grid connection, financing, and construction, including the buying and selling of development and operating projects. For more information, please contact Matt Baumgurtel.