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Published on August 5th, 2014 | by Giles Parkinson

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Why Australians Want Energy Storage (For Now)

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August 5th, 2014 by  

Originally published on RenewEconomy.

So, who wants to be an energy pro-sumer? In some states in Australia, around one in four houses already boast rooftop solar PV systems, and it’s having a big impact on the operation and the optics of the National Electricity Market, with big implications for the traditional business models of generators, retailers and network operators alike.

The next big question is by how much this penetration will increase, and to what extent will it be accompanied by battery storage? The anecdotal evidence suggests there is a lot of inquiry about storage from consumers and grid operators. But where will the best value proposition lie – in the household, or in the grid? And who is going to deliver this service?

First of all, however, let’s understand the reasons why Australian households might want battery storage in the first place.

Mostly, it is due to the fact that households are not getting paid for exports of solar electricity back into the grid. In NSW and parts of Queensland, any payments are voluntary. Even where retailers are offering 5.1c/kWw, they are then selling those same electrons to the solar household’s neighbour for as much as 48c/kWh if that household in on peak rates. Someone is making money, and it’s not the solar households.

Gordon Weiss, a solar and storage expert from Sydney-based Energetics, produced some interesting graphs and observations at the Clean Energy Week event last week.

He said that to limit a solar system to have no exports – based on average daily household consumption of 19kWh, the array would have to be sized at just 600 watts – just two or three panels. It would look something like this.

weiss solar not export

A larger system of around 2.5kW (see graph below) – of about 8-10 modules – results in a huge amount of exports during the middle of the day. Some things can be done to address that – timing appliances to operate during that period, for instance – but the most effective option is to find a way to store the energy, to put it in a box for use later in the day or the evening.

weiss solar export

Let’s also remember that the average system size installed in NSW when those generous gross feed-in tariffs of 66c/kWh were on offer was 3kW. Since then, the average system has increased to nearly 4kW. When those NSW systems come off those tariffs at the end of 2016, there will be some 160,000 households wondering how best to leverage the value of their output.

Here are a few simple rules that Weiss has on the attraction of rooftop solar and battery storage.

Rooftop solar: When the levellised cost of solar PV falls below the sum of the wholesale price and retail margins, then it doesn’t matter what happens to network tariffs – even if they went negative! This is similar to what we said a few weeks ago when we pointed out that even if the cost of coal-fired generation was free, it could not compete with solar. The price of wholesale and retail margins is 13c/kWh. In the sunniest states, rooftop solar is not so far from that.

Battery storage: Weiss says that when the levelised cost of solar PV plus battery storage falls below the evening peak price, then batteries will appear in garages and basements.

Off-grid: And when the levelised cost of solar PV and batteries falls below the average cost of power to the consumer, then consumers will go off-grid. Of course, networks will have ways of repackaging tariffs and moving away from volumetric rates, adding in fixed components and capacity tariffs, but it seems unlikely that they will be able to bring the average bill down below $2,000 a year. That is the key benchmark for solar and storage (and back-up – which is another problematic issue if this happens en masse).

Of course, it’s not quite as simple as that – but that is the basic maths that households are facing. Once again, we are brought back to the fact that it is up to the utilities – be they network providers or retailers – to tailor their product to match the cost options being presented by the new technologies. It is not good enough to simply repackage tariffs to make solar and storage more expensive, as networks are inclined to do, and as we reported yesterday.

It seems inevitable that regional communities will look to evolve in some form of micro-grid arrangement, using locally generated energy and local storage. Network operators in South Australia, Western Australia and Queensland accept this as inevitable. The NSW government is promoting the search for the first town in that state that could do the same and become the first zero net energy town.

The difficulty comes in how to manage the issue in the cities.

On Weiss’ rough numbers, to take an average household off grid would need a 7kW solar system, around 35kWh of storage, plus a generator of some sort. That is not what you want to see happen in huge numbers in the suburbs.

As Weiss says: “Do we want, as a society, lots of 35kwh battery storage systems in the suburbs and lots of backup generators? Maybe a better solution is centralised storage – a big battery pack next to sub stations.”

But that requires the network operators to get cracking, and to do this at a competitive price.

“Right now, the pricing signals that are going out to consumers may result in people going off grid in metro areas in large numbers. That wont be environmentally or economically desirable,” says Weiss.

“We have to acknowledge the reality of new technologies. We have to begin to think of he grid as fundamentally different thing. It’s no longer here to deliver centralized energy to consumers, but to circulate energy. Solar PV with storage is now part of the landscape. The challenge is to use it efficiently.”

And just how far away are the economics of solar and storage?

Weiss pointed us to these fascinating graphs, produced by the University of Sydney this month as part of a report being prepared with the CSIRO.

They might give you a bit of a headache at first glance, but allow me to explain.

In the first graph, the purple line is zero NPV (net present value) – and to the right is a rising grey colour, illustrating that smaller to medium size solar PV systems, with no storage, offer some positive returns in the current market. Those figures are based on $3,000/kW solar PV and $1,000/kWh battery storage costs.

Hop to the second graph, which is based on $1,600/kW solar PV – some say that already exists, but be careful about the quality – and $400/kWh battery storage.

On that basis, it is a bit of a no-brainer. The NPV increases sharply, and does so by the same margin when large battery storage systems are installed. That is more than $10,000 of savings over 10 years with large solar and storage systems.

Hence, Weiss’ conclusion that we could see homes with very large arrays and very large battery storage systems in the suburbs. Hence the need for utilities to get on the front foot – and not just by twisting tariffs. This is going to be one of the big social equity issues of the day.

weiss solar NPV

weiss storage npv

 

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About the Author

is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia's energy grid with great interest.



  • vensonata

    Some of the comments are getting into electric cars and charging times etc. Basically another reason for a home battery bank is you can charge your car anytime at short or long time frame off of solar. Remember a solar car charging station at home needs

    to be on grid or you can’t charge in the night. Off grid with storage means if your car is available in the day you can charge directly, but if not, take it out of the home battery. By the way the Tesla solar stations use battery storage to Zap the cars at high energy. So basically you will be using the same model.

    There is another presumption in the comments: that utilities and large scale can do it cheaper than off grid home storage etc. Yes, often that is the case, but not always…I think we need a freakonomic specialist to analyze this particular case. We may be surprised!

    • Bob_Wallace

      It’s hard to imagine any conditions that would allow individuals to purchase storage cheaper than utilities could purchase given their much higher volume.

      There might be a difference in “affordability”. End users are working with retail prices, utilities are working with wholesale prices. In a place like Australia where retail prices are extremely high but production costs relatively low end user storage may win.

      • vensonata

        Yup, each place will have its unique conditions. Where I am, British Columbia, 90% electricity is hydro, basically produces and stores it all in one. But to build a new dam (called site c) in the final analysis it is more expensive than large scale solar! That is staggering! Old dams are already paid for so, what the hey, cheap power. Also the new dam would flood huge amounts of grade A farmland…another consideration. Anywhere where electricity is more than say 20cents kwh, off grid with storage is competitive, that means most of Europe, New York City and Australia, and ….?

    • Ronald Brakels

      Today in South Australia the cheapest wholesale electricity price was about 3.5 cents a kilowatt-hour. The highest was 13 cents a kilowatt-hour at around midnight during our peak of stupidity when all the off peak hot water systems turned on. Sometimes this is the highest peak of the day. However the peak was very short. The most expensive hour might have averaged 9 cents. Nine cents minus 3.5 cents is 5.5 cents. That’s how much grid storage could make today by buying electricity during the cheapest hour and selling it at the most expensive hour. But the feed in tariff for new rooftop solar in South Australia is now 6 cents a kilowatt-hour while the cost of grid electricity is about 33 cents a kilowatt-hour. Thirty-three cents minus six cents is 27 cents which is how much money a home or business saves by storing a kilowatt-hour of electricity and later using it instead of grid electricity. So you can see how home or business energy storage can pay a lot better than grid storage.

      • Bob_Wallace

        We’ve already established that you’re in Australia where everything is upside down.

        • Ronald Brakels

          Next you’ll be making fun of me because our bats don’t come out when it’s dark.

  • Indiano

    An Energy marketplace/exchange, a distributed system where buy/sell per kW happens as Real time auctions would be best.

  • Indiano

    Charge your electric car during mid day.

    • http://www.michaeljberndtson.com/ Michael Berndtson

      This may be the most intelligent thing I’ve ever read on the internet. The solution is so simple it’s beautiful. Or elegant as mathematicians would say. It seems like much of the deployment problems of electricity from renewables is institutional and habitual. Technology solutions seem to improve nicely with time. Human habits and stubbornness seems to be a bigger problem.

    • Ronald Brakels

      Most Australian cars are parked at home for most of the day. We do have about eight each you know.

      • http://www.michaeljberndtson.com/ Michael Berndtson

        Doesn’t the sun shine counter clockwise in Australia?

        • Ronald Brakels

          Of course. If it didn’t you wouldn’t have to reverse the lenses on your polarised sunglasses when you cross the equator.

          • http://www.michaeljberndtson.com/ Michael Berndtson

            So that explains why everything appeared upside down in Melbourne, when wearing my US Ophthalmological Society compliant sunglasses. I should have purchased the ISO world compliant ones.

          • Ronald Brakels

            There’s a reason why they call the place Down Under, you know.

      • Bob_Wallace

        About half of all US drivers now have a place to charge where they park. 56% at night, 14% during the day, 52% over all (there’s overlap).

        As the price of solar continues to drop it’s likely to make more sense to install lots of daytime charging, especially for those who park curbside or other places where they don’t have fixed parking.

        • Ronald Brakels

          Yeah, that whole parking by the side of the road thing, that’s just creepy, man.

          • Bob_Wallace

            Oh, we have people parking in the middle of the street as well. Mostly delivery trucks….

          • Ronald Brakels

            What if you want to hug and kiss your car in the middle of the night? People could see you.

          • Vensonata

            Ronald I am nominating you for green comedian of the year!

          • Bob_Wallace

            Thing is, down there there’s nothing funny about his posts. Have to be an upper hemisphere award.

  • StefanoR99

    “Do we want, as a society, lots of 35kwh battery storage systems in the suburbs and lots of backup generators?”

    Erm yeah especially if such storage can be packaged neatly into say… a car. If everyone switched to say a Tesla tomorrow, then everyone would be sitting on 60-80kwh of storage per car. So two / three car household = 160kwh – 240kwh? And those old used obsolete battery packs with “only”40kwh left? Sounds like household storage will be ideal.

    Tesla have already thought of this – maybe Weiss needs a quick reminder.

    • bink

      has anyone realized you will be creating a longer second or a third demand period with all these EV’s charging in the wee hours of the morning?

      • Offgridman

        For now that is happening in the US because people get on variable rate plans and that is when the off peak rate occurs. When there is enough solar flowing in off peak rates will occur in the middle of the day and people will make arrangements to charge their cars then.

      • Bob_Wallace

        That’s a good thing.

        Onshore wind blows hardest late at night when demand is low. That means that prices are low and profits slim.

        Create a new late night “wee hours” market, profits rise, investment increases, more wind farms are built, more cheap wind gets fed into the grid during the expensive hours of the day.

  • JamesWimberley

    The analysis makes sense. Utilities can always buy storage cheaper than households; they have scale, and a much wider menu of technologies. But will policies and pricing adjust in time to prevent inefficient large-scale grid defection? The utilities are still trying to tweak a broken system to protect their stranded fossil assets. It can’t be done, or not for long. The stranded assets will have to be socialised and written down.

    • Bob_Wallace

      Socialization of the cost of closing coal is not objectionable when one understands the cost that is now being paid to cover coal’s subsidies.
      In a few years we would have paid off the stranded assets (give the owners less than 100 cents on the dollar) and would then enjoy decades of lower health costs.

      • Ross

        The fossil fuel utilities could help that process by agreeing that the target is zero carbon and making constructive proposals about market changes that get us there. What they have to gain is not completely losing control of changes the will realign their industry in ways they don’t like.

  • vensonata

    This article is very, very important. A thought is dawning…off grid with storage is cheaper than on grid. That is the trembling of Mt St. Helens, remember lots of people didn’t believe that the volcano would erupt, even seismologists! Now the last graph speculates on storage at $400 kwh. What the heck? Top grade batteries are $150 kwh now and are ready to go at any decent off grid supply store. By the way we need to talk in cents per kwh with storage not other units. So best lead acid batteries can hit 11 cents per kilowatt hour, the rest of the apparatus (panels, inverter, wiring, racks, labour etc) are equivalent to 2.5 cents per kwh per $1000. So if it costs $3 installed per watt then that equals 7.5cents per kwh…plus 11 cents best case battery. Total 18.5 cents. If the grid price is above that, then that is the tipping point. By the way, quit worrying about generators in the suburbs….it is called a car! A good generator is as clean as a car and if it runs more than 30 hours a year you need more panels. The car can run 300 hours a year, with a much bigger engine. Actually you can economically get close to zero generator hours now with pv priced so low and a slight decrease in battery pricing (coming because of used lithium packs from evs)

    • Steve Grinwis

      Where are you finding batteries at $150 / kWh?

      Best I can find is Li-io for $400? Or is that speculation on what Musk can get them for?

      • vensonata

        That is lead acid. A house does not need lithium since weight is not a problem. most off grid (such as myself with a 75 kwh agm maintenance free lead battery bank) have been using either wet lead acid at $150 kw or agm at $200 kw. When you do the math with the cycles etc. Premium wet lead can be as low as 11cents kwh, agm 16cents kwh at todays prices. Lithium, ah sweet lithium, just today I found a site that sells an 18kw lithium ferrous pack with battery management built in for $6500… which is $361 kw. cycles up to 7000 with only 20% reduction at the 2100 cycle mark. They are Balqon electric.

      • Offgridman

        Get friendly with a battery wholesaler distributor and be willing to have a little patience. A few years ago I got a AGM 16 Kwh through one that was technically used because it had gone to a cell tower and set for a year without being hooked up for 800$. Their only option for selling it used other than myself would have been to ship it to South America (from US), so were happy to have me come get it. Of course we are talking about almost 3200 lbs of battery now and a lot of cross wiring for the individual cells in them to get voltage I needed. But even with snow on the panels for three days this past winter and kids home running the electronics all day we didn’t draw it under 62%.
        And the reason I mentioned being patient is I live way out in the sticks and the distributor is on the outskirts of a small city an hour away. They only get these 3-4 times a year, so I had to wait about six months for one to come through. Could be easier near a big city or with a bigger distributor.

  • Dar2162

    For large scale energy storage, batteries just don’t make sense. We need more CAES and novel forms of storage that rely on gravitational potential.

    • Steve Grinwis

      It’s not large scale. It’s home scale.

      And at $200 / kWh, it’s cheaper than buying peak power from the grid. As a consumer, how does that not make sense?

      • Dar2162

        At the home scale, and for distributed storage, batteries make perfect sense. I was referring to the quote: “Do we want, as a society, lots of 35kwh battery storage systems in the suburbs and lots of backup generators? Maybe a better solution is centralised storage – a big battery pack next to sub stations.”

        At the scale reference here, other technology makes more sense.

    • Bob_Wallace

      Don’t overlook flow batteries and liquid metal batteries. Two other promising technologies which could be price competitive with gravitational storage. And easier to site.

      CAES just can’t seem to get off the ground. Apparently the ideas about storing heat separately haven’t worked so well.

      • bink

        Bob_Wallace, I don’t know why people keep making these claims about storage not being feasible. Maybe because they have focused on certain dominating (for now) technology. Maybe they don’t understand that in a grid system with a mature and developed energy market that application range and functionality trump cost. Maybe they don’t understand that manufacturing scale drives down raw materials pricing resulting in system price drops for startups. Maybe they don’t understand recent improvements to the vanadium redox flow battery power side is disruptional. Maybe they don’t understand a disruption had already taken place back in early 2012 when PNNL developed a new electrolyte solving a lot of the temperature and gelling problems of conventional VRB.

        My point being there are attributes that must people are not aware of that make a system cost effective, cost effective does not necessarily mean cheapest, it means a quicker ROI. As you know I know vanadium redox flow and right now one manufacturer is at $375/kWh (installed). that is below DOE target for feasibility. It is funny to me because the installed capex on that system is below solar.

        • Bob_Wallace

          bink – you appear to be an ‘insider’. You talk of things that the general public simply does not know, such as “right now one manufacturer is at $375/kWh (installed)”.

          Now, I’ve read enough of your posts that I’m willing to assume you are accurately reporting but since I have no way to collaborate that I don’t feel comfortable using your statements as a statement of fact. If I start talking about flow batteries for $375/kWh and get challenged I can only reply that “someone with a pseudonym of ‘bink’ made that claim”. I can’t point to an EIA report, an industry report, a published interview with someone in the storage business, ….

          Now that’s kind of a long way of pointing out how little information the general public has about the cost of storage.

          We know about a lot of things that might work – liquid metal batteries, new versions of chemical batteries, hot rocks, CAES with thermal storage, etc., but we simply don’t have numbers. We know the current installed cost of wind and solar. But we don’t know the cost of storage.

          If people like the ones who write for this site and other media don’t know the numbers then they can’t pass that information on to the public.

          The storage market is very immature. Companies are playing their cards very close to their chests. Until numbers become public there’s no way to state that we have storage solutions in hand.

          • Bob_Wallace

            bink – how about doing some math for me?

            It looks like a new pump-up system is moving forward. Eagle Mountain is reported to be a 13,000 MW facility that is projected to cost $1.5 billion.

            Back of the envelope, how much would it cost to store a kWh from midday until after the Sun goes down?

            This is about as good as data gets for us mere mortals. Or maybe you know of a source that spells out current costs of various storage approaches.

          • vensonata

            Bob, I am in over my head here but these are the parameters of the question. How much per kwh 6 hours a day. Multiply production kwh by 130% to get pump up losses of efficiency. Guess that construction cost per kwh might be as low as 2cents per kilowatt hour. Add together.
            Lets say production is almost free as a by product maybe 1cent. Then 1.3 cents plus 2 cents = 3.2cents per kwh…add line losses etc, ballpark 4cents per kwh. Ta da!

        • http://zacharyshahan.com/ Zachary Shahan

          following up on what Bob said: if you feel like leaking some info or writing up a guest post, we’d be happy to have it!! zach@importantmedia.org :D

          • Bob_Wallace

            And I’ll follow up on that.

            A few weeks back you tore into me over how little I knew about storage. I didn’t push back because you were (while harsh) correct.

            I’ll bet you that my storage knowledge is in the top 10% of those outside the “business”. I’ve spent a lot of time looking for information. A lot of time.

            Looking at how little I know should give you an indication of how little the general public knows about storage. And it will stay that way until some people in the storage business start educating the public.

            Want to teach us something?

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