Published on January 16th, 2014 | by Guest Contributor


Costs For Small Scale Battery Storage To Drop

January 16th, 2014 by  

Originally published on RenewEconomy
by Jonathan Gifford

Overcoming the challenge posed by the intermittent nature of renewable energy continues to be a major roadblock to high levels of renewable penetration and a stick with which doubters of clean energy can attempt to hit the sector. Battery and storage technologies are an obvious solution to this, but high prices have seen uptake and projects remain limited.


Battery image from ShutterStock

An increasing number of researchers and analysts, however, are making bullish predictions for cost reductions for storage solutions and in particular battery technologies that – like solar PV – can be implemented on a distributed basis and can mobilise the equity of homeowners.

With 3 GW of solar PV and 2 million small scale renewable energy systems, according to the latest figures from the Clean Energy Regulator, it is clear that Australian households and businesses are adopting clean technology in a big way. With these economies of scale, system price reductions have also been a major consequence, with PV panel and system prices reductions having a transformative effect on the economics of solar power.

Some are now predicting that a similar dynamic will emerge with small scale battery storage systems. “We will have a significant cost decrease,” predicts Dirk Uwe Sauer, from Aachen University’s Electrochemical Energy Storage Systems group. Sauer says that economies of scale for both lithium ion and lead acid batteries will cut battery costs by one-half to two-thirds.

“Four years ago it was predicted that the prices for battery cells, if you buy large quantities as car manufacturers do, would go below €200/kWh for cells by 2020,” said Sauer. “What you see today is that prices are well below this. Tesla is probably buying battery cells from Japanese manufacturers for US$150/kWh.”

For storage systems in homes, where weight and volume restrictions don’t apply as they do to cars, lead acid batteries can also be applied. Sauer says here too major cost reductions can be expected. “In home systems today, lead acid batteries are sold to the end user at €150 to €200/kWh, yet battery suppliers for car starter engines are sold to automotive manufacturers for €25/kWh.”

Sauer says the difference is that the automotive lead acid battery suppliers produce at “high quantity production sites,” producing in the order of 5 million starter batteries a year. With sufficient demand, a manufacturer of this size could supply 500,000 10kWh residential storage systems annually.

Large quantities of storage systems could have a transformative impact on electricity demand from the grid. Mike Sandiford, from the Melbourne Energy Institute, at Melbourne University, argues that NEM consumption data is already revealing falling demand, both in gross and peak terms.

Sandiford says that this is leading to lower utilisation rates of grid assets. Large numbers of batteries being hooked up to PV systems in Australian homes would presumably accelerate this trend – which would be extremely worrying for utilities.

In fact, a proliferation of storage systems could actually make electricity grids themselves more unstable. Theoretically, if large numbers of 3kWh to 5kWh batteries were installed in one section of suburban grid, when they all became full – potentially early in the day – the resultant surge of PV electricity could overload the grid.

However, distributed storage could also play a role in serving the grid – either through taking surges in PV-produced electricity off the low and medium voltage grids and even through frequency control. For “unloading”, control strategies can be implemented to adjust the time of day and rate when PV electricity is fed into the battery and limit the feed into the grid.

Researchers from Munich’s Technical University and the Centre for Solar Energy and Hydrogen Technologies (ZSW) in Stuttgart are currently developing such battery control strategies. At the recent IRES conference in Berlin, these researchers presented the latest data from these approaches which reveal that PV feed in can be managed to minimise grid load, without affecting the PV-electricity self consumption capacity of the household.

In short, by creating a dynamic strategy by which a battery charges itself from a PV array and at what time of day, surges of electricity flowing onto low and medium voltage grids can be minimised, with the battery still becoming fully charged to then be discharged in the evening and night. Weather prediction data, household demand predictions and the grid condition itself are the data required for the formulate these battery operation strategies.

What is currently lacking for these strategies to be employed is an incentive or market mechanism to do so. Aachen University’s Sauer is hopeful that in Germany at least, utilities and policy makers are waking up to the potential of large numbers of distributed storage systems to provide a service to the grid, along with to the homeowner. “The large utilities think a lot about decentralised storage systems because they understand that these systems most probably will come if they want them or not,” said Sauer. “Now they are looking very carefully at how they can be a part of the game and they are also thinking about if they can be one of the big suppliers of such systems. If they install them themselves, they can use them much easier for grid services.”

So it looks like it will pay for utilities and regulators to take a close look at distributed battery systems closely. Certainly, it’s clear that with the meagre tariffs being paid for solar power generated by households compared to high and rising electricity tariffs they’re paying, householders are bound to look at storage themselves. And if batteries get cheaper fast, distributed storage could be set to make a big impact on Australian electricity grids and markets.

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  • Matt

    If you think of the electric system as 4 parts generators, long transmission, local distribution, pro-consumers then there is use for storage for all 4 parts, if if is efficient and cheap enough.
    – generator: For a wind farm west Texas it could be better to store the power then sell it at night when the price is ~0. Or to store when strong is producing more than can be sold. Even a coal plant could benefit, since it could rule at it’s most efficient level and store extra, pushing it to grid when needed. Then ramp up before peak and then push to grid during peak, those not having to start expensive gas peaking plant.
    – LD transmission: New lines cost a lot, and losses a higher as lines carry close to max capacity. Storage at both ends lets them get the lines running well and even delay additions.
    – Local distribution: Distributed store around distribution area allows smoothing break area into micro grid for stability. Plus benefits that LDT sees.

  • JamesWimberley

    Garages supply and maintain car batteries worldwide. They are obvious candidates for distributing and servicing home batteries – far more than solar installers, for whom it’s a novelty.

    • Ross

      They’ll need to diversify their business model since they’re likely to have less work maintaining EVs than the ICEs they’re used to.

  • shecky vegas

    Forget home battery systems that pay into the grid. Go off-grid and tell the utilities to go suck eggs.

    • Matt

      The equation for most people or biz for going off grid will be the same equation used to decide on PV. Does it save me money? How much cash do I need to get started? Like it or not that is a fact for 90%-98% of the people. Most people ave trouble seeing long term cost, look at people who still fight clear air standards. So small steps where people save/make money by shifting grid power from off peak to peak is a beginning. Or where they use storage because their power/grid operator will not pay them enough to put it back on the grid. It builds the market and belief and brings down prices. In some spots utilities/grid operators will try to drive up cost of PV/storage for customers to protect their coal investments and in the process drive people off grid. Other will credit their customers for the benefit they provide and it will be better (save you more) to stay on grid. Think if the power split were split into three groups. Generators, long distance transmission, local distribution. If I’m the local service/distribution comp, then you having storage helps me provide better service. To get full benefit to grid it takes some smart updates. First steps are thing like time of day (TOD) pricing. What to send event to costumers for when, they should delay use, increase use, export, etc. There will be a grid for a bit longer, there are user for who it would be hard to produce the energy they need (factories) or large apartment buildings (without deep NRG rebuild, which will take time). Now IMHO it is far that if at this TOD I charge 15c/kwh then when your PV produces to much, and whole sellers are getting 5c at that time, then you get a little less than 15c (13c?) which helps pay to maintain the wires that move you power next door. The goal is not to drive the grid operator out of business, but to close the fossil fuel generation plants. Note I know the number above are random, and are only intended to convey the idea.

  • SirSparks

    my Alternative Energy lead acid batteries cost me $100 per KwHr and at my typical DOD (depth of discharge) should be good for 8 years of daily charge/discharge regime. I only typically discharge by 30 – 35% though. Discharging further would quickly lead to short or catastophiclally short life times.

    • Matt

      If you buy at $100 Kwh but only discharge to 33% then it is really about $300 kWh used. If you could get auto manuf $34 kwh (1/3 your current cost) then it would drop to $102 kwh used; which would make you a much happier camper.

      • SirSparks

        Unfortunately Matt the thin plate technology of an auto battery means they will be useless after less than 6 months. I know because I went that route and with 50% daily discharge they had lost 80% capacity in 3 months.

  • Ross

    Denmark just generated from wind 54.8% of all electricity consumed there during the month of December.

    So can we stop repeating that the variable nature of renewable power sources is a major road block when the evidence is that it isn’t

    • Russell

      It may or may not be a major one, but its certainly an issue, definitely if you are a home owner and pay 20+c for electricity but get 5c for your solar. This makes all the difference. In New Zealand where I live we have mostly hydro and as a consequence govts see no reason to subsidize or encourage rooftop solar. We also pay high electricity prices but solar isn’t worthwhile in many cases because of the vast difference between getting paid the wholesale price for solar you don’t use and paying the retail price for electricity.

      I would even buy a cheap battery before solar panels as it would be easier and pay for itself quickly because of the ~15c difference between off/on peak electricity rates.

      At 10c/25c difference between day/night electricity, a 1KWh battery at 90% RTE that charged up at night, and discharged during the day would cost 11.1c at night, save 25c during day, 13.9c per day, or $50 per year, I sure would pay $150 for that. Not sure how many cycles LiIon can handle, would need to be >1000 for it to work. Wonder when we can get some?

      • Matt

        365*3=1095 so you need >1100 cycles to even break even at $150 kWh. And that is assuming no time value to money. But at 25 euros ($34) you would make money back the 1st year, and then $50 year until the cycles ran out. Last summer Texas was seeing a 40c-60c spread so would have made it back faster. Germany is headed to twin peaks, so you could replace gas peaking with shift power twice a day. Some pumped hydro is already doing two-a-day. So getting a higher cycle count 5k-10k is gold; then even the $150/kwk can make money for grid. With benefit of freq and fast load balance on top.

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