The other night, myself and some of my family attended an information evening on a community renewable energy bulk buy initiative, run by Suncrowd with local group BMRenew. I was pleased (and just a little excited) to hear peer energy trading mentioned by Chris, Suncrowd’s CEO, as he painted a picture of the distributed energy future that’s rapidly kicking into gear.
An emphasis of the evening was battery technology and how it can be of value to households seeking energy independence. I was impressed to see that Suncrowd were offering the new Tesla Powerwall 2, given that it was only announced the week prior. For those that missed it, Tesla’s announcement has been making waves, in part due to the Powerwall 2 having double the capacity of its predecessor for (roughly) the same price. So you can now order (with an anticipated delivery date of Feb 2017 here in Australia) a 14 kWh unit for the same price as the previous 7 kWh device which was launched less than a year ago!
To date, the economics of battery storage have not really stacked up. The payback period for batteries — the time it takes for accrued savings to reach the cost of the device + installation — has usually been longer than the warranty period (typically around 10 years). The general industry-wide consensus was that it would take about 2–3 years before the price:capacity ratio would make them an economically sound choice.
Just a few weeks back James Martin over at One Step Off The Grid published a (somewhat technical) article that argued battery storage prices would need to drop to between $300–500 per kWh before they’d be a “no brainer” option—where the payback was sufficiently quick. At the time the article was written, street prices were estimated to be around $900–$1,000/kWh.
The article highlighted, however, that if energy trading options like those offered by Reposit could achieve a sustained 30% benefit (over conventional feed-in tariffs), a cost per kWh of $750 would make batteries financially viable. I made a mental note of that at the time, since academic research has shown that a local energy trading platform of the sort that Nexergy, my company, is building can achieve upwards of 20% savings — so definitely in the ballpark.
Tesla’s announcement has shifted the needle significantly. Based on the published estimated prices (incl. install), the Tesla Powerwall 2 achieves around $675–$735 per kWh price point. This has resulted in some commentators seriously suggesting the Powerwall 2 may have reached “grid parity.” And suffice to say, this is a lot earlier than many had anticipated…
Further, to date battery systems have typically been considered as a companion for solar—a means of reducing the amount of exports of excess solar hitting the grid (which is desirable given the low return of just a few cents per kWh). The significantly lower cost for batteries, coupled with energy trading mechanisms, means it won’t be long before people will see benefit in over-sizing their systems to take advantage of exporting, rather than the current practice of sizing systems to avoid exports.
In general terms, an increased amount of distributed energy assets, like batteries and solar, will result in better environmental outcomes. And with local energy trading, we posit that better community outcomes are also achieved (as highlighted in some of our previous posts, so I won’t repeat the arguments here). So-called “behind the meter” storage has the potential to provide significant benefits for grid managers (especially in microgrids), making it easier to handle higher proportions of intermittent energy sources on a network. The result is a more resilient grid, one that is more economical to manage, which provides even further benefits in relation to energy equity and community value—one of the key reasons why Nexergy exists.
So we’re very excited about the implications and ramifications of the Powerwall 2, and we’re super keen to see how local energy trading will further increase the viability of battery storage options like the Powerwall in the near future.
^GY
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