Capacity Investment Scheme – Public Consultation paper

Energy Dome S.p.A
V.le Abruzzi,94,
20131 Milan (Italy)

Department of Climate Change,
Energy, the Environment and
Water

31 August 2023

Re: Public Consultation Paper on the Capacity Investment Scheme, August 2023

Dear Sir/Madam,

Thank you for this opportunity to comment on the proposed approach and design of the
Capacity Investment Scheme (CIS) as described in the Public Consultation Paper.

Introduction to Energy Dome and the CO2 Battery technology

Energy Dome, based in Italy, has developed the innovative CO2 Battery long duration energy storage technology which is already proven at commercial demo scale and now being implemented at full commercial (20MW/200MWh) scale in Europe. The CO2 Battery is based entirely on proven industrial components and standard materials with well-established supply chains, which means that it can be deployed quickly and at scale on a global basis.

Key characteristics of the CO2 Battery include its high round-trip efficiency of 75% without performance degradation over a realistic 30+ year product lifetime. When considered together with capital costs which are approximately half those of a corresponding Li-ion battery installation, it becomes clear that the CO2 Battery has a key role to play in enabling the transition to a net zero emissions energy system.

In view of the significant interest and relevance of the CO2 Battery to the Australian market,
Energy Dome is actively exploring opportunities to deploy its technology in Australia, both in terms of technology supply to third parties and as a potential developer, owner and operator of major projects. As such Energy Dome (“ED”) is pleased to provide comments on specific points raised in the Public Consultation Paper as detailed below.
Section 3: Core design elements and delivery stages

Question: What minimum storage duration should be required for tender eligibility, to
achieve CIS policy objectives?

ED comment: Given that CIS policy aims not only to ensure reliability of the system but also to
support the investment necessary to meet the target of 6GW of clean
dispatchable capacity by 2030, a minimum storage duration of 8 hours would
provide the significant energy storage capacity necessary to meet policy
objectives.

While shorter durations would provide some contribution to system reliability,
they would not be able to provide the kind of energy shifting function necessary
to reconcile intermittent renewables with demand and meet the broader
decarbonization objectives.

Question: What methodology for modelling and measuring duration requirements for
various technology durations would be appropriate?

With regard to measuring duration requirements, given that many technologies,
especially electrochemical, experience performance degradation over time, it
would be appropriate to include a regime of regular testing to ensure that CIS
payments are commensurate with the storage duration which is actually available
and that contractual minimum requirements are always met.

Section 4. CIS tender process and design

Question: The Department is seeking feedback on the eligibility requirement of projects in
the NEM for equal to or greater than 30MW registered capacity.

ED comment: From the perspective of both technology supplier and potential investor, we
believe that a threshold set at 30MW would discourage participation of innovative
technologies which will typically be deployed on smaller projects initially.

A minimum threshold set at a lower level, e.g. 10MW, would enable development
of smaller installations with innovative technologies, such as the CO2 Battery.
Similarly, a lower threshold would also enable development of portfolios of
smaller projects (using the same modular technology, such as the CO2 Battery)
at various locations on the grid which may potentially be useful from an overall
system reliability point of view. This would not necessarily mean a significantly
higher administrative burden.

We believe that there is a significant long-term overall system benefits which
can be captured if the CIS:
(a) Is designed in a way which tends to broaden the range of technologies and
projects which are eligible, and
(b) encourages deployment of a diverse range of energy storage technologies -
since innovative technologies (such as the CO2 Battery) benefit in particular
from support at the earlier stage of scale-up and often provide other critical
system benefits, e.g. natural inertia, which would not be otherwise available
if support tends to focus on conventional (inverter based) energy storage
technologies.

Question: The Department is seeking feedback on each of the eligibility requirements
including:
• the focus on a base level of development status of land tenure, planning and
connection approvals.
ED comment: As in other points, we draw attention to the importance of levelling the playing
field for development and participation of projects with innovative technologies.

A “base level” of development may (initially) be more easily and quickly achieved
with conventional, e.g. Li-ion battery technology, while a process of
familiarization is required with permitting authorities on newer technologies,
which provide a much greater system benefit over time.

Since project development takes time, it would be supportive of innovative
technologies if requirements for a base level of development are relaxed to the
maximum extent possible. In this way, early adopters will not be discouraged or
excluded from the CIS while more mature projects will, of course, be subject to
greater competition with associated benefits for the consumer.

Question: The Department is seeking feedback on each of the eligibility requirements
including:
• the technology risk appetite of the CIS

ED comment: As elsewhere we draw attention to the overall system benefit which can be
provided by inclusion of innovative technologies such as the CO2 Battery.

We expect that the sophisticated investors and project developers/owners active
in the market will be able to select viable technologies based on their own
evaluations, and as such it should not be necessary for tender processes to
narrow the range of technologies which are able to participate. In practice only
those technologies which are genuinely market ready will tend to be selected and
offered in tender processes.

Section 4.3 Merit assessment

Question: The Department is seeking feedback on the evaluation criteria, on the
appropriate structure to assess a project’s contribution to system reliability and
feedback on the potential development and application of de-rating factors.

ED comment: Evaluation criteria must be designed in such a way that they do not (perhaps
unintentionally) effectively enable participation of only well-established
technologies.

We have noted elsewhere that we believe that a minimum 8 hour storage duration
would effectively enable CIS policy objectives, and we would expect that this
would be able to compete with minimal or no de-rating.

Section 4.4.2 Summary of CIS commercial structure

Question 1: The Department is seeking feedback on all aspects of the high-level commercial
model including:
……
• the term of the contract, including financing requirements around revenue
tenor

ED comment: The best overall value for the consumer will be achieved with long term, 25-30
year contracts. Shorter contract terms, e.g. 15-20 years, inevitably mean higher
prices, and do not provide an effective long-term decarbonization solution.
We thank you once again for the opportunity to provide comments, and look forward to actively participating in future consultations and tenders.

Sincerely,

Paul Smith
VP Sales