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Call it the Great Debate.A new technology could disrupt the century-old status quo of a trillion-dollar industry.The combination of battery storage and solar energy is expected to have the same effect on the energy industry as the internet did to media and mobile phones to telephone handsets.
There really isn’t much debate about this.It is endorsed by consumers, technology developers, retailers, network operators and power generators.Even politicians do it.The big debate is about when and how fast this will happen.Some say now and soon, others are less sure.
In an attempt to dissect this and highlight the different perspectives as much as possible, RenewEconomy will publish a series of articles examining various estimates.
We start today with investment bank UBS.One of the characteristics of this energy transition is the close involvement and observation of the financial investment community.They believe that this is not a fad.This is the basis on which they assess the risks of energy investments in the hundreds of billions, or even trillions or dollars, around the world.
UBS’ report on Tesla Powerwall economics comes from their Australian analysts.This is not surprising as Australia’s high electricity costs and massive solar penetration will enable zero battery storage globally.Ironically, the product won’t be available until next year, although some of Tesla’s competitors may try to get a head start with their own product launches.
The main conclusion of the UBS team is that the 7kWh version of the Tesla Powerwall will pay off financially.They estimate the IRR (internal rate of return) to be 9%.That means about six years of payback.If they’re right, it means mass-market adoption isn’t as far away as some think, and incumbent utilities might hope.
Price is an important item in the equation.UBS points out that there is considerable debate about the difference between battery prices ($3,000) and installation offers (closer to $7,000).
But it said that while that may be the case in the US, where rooftop PV is much more expensive to install than in Australia, it believes the difference between cell prices and installation prices will not be as high in Australia.
The analysis also assumes that the battery can fully utilize 7KWh of total energy per day, and that the solar system is large enough to charge the battery and still provide power behind the meter.It also assumes that online prices in US dollars are directly convertible to Australian dollars and will be Australian prices.
UBS analysts said they are confident they can get inverters for around $1,100.They used the ‘Powador’ model in the example, which sells for $1025.Installation cost is $5,175.
As for how it relates to the market, UBS cites a retail peak electricity price of $0.51 kWh in the Australian grid region and a price paid to sell electricity to the grid of $0.06/kWh.
It assumes that the system is 89% efficient and that the installation labor is 4 hours at $100 per hour.
“On this basis, we concluded that, ignoring taxes, the system could provide an internal rate of return of 11 percent, better than home loan interest rates and a payback period of about six years.” It noted that batteries are more likely to be suitable for consumption Large detached homes with above-average electricity and a larger-than-average solar system.
Now, some may find UBS’s price estimate optimistic.But even if the labor cost and system cost balance were higher and pushed the total installation cost up to around $6,300, consumers who already had a solar system installed would still receive an IRR roughly equal to their home loan rate.
(See also a later story where Morgan Stanley sees 2.4 million Australian households own battery storage, which also includes a 6-year payback forecast for some states).
Giles Parkinson is the founder and editor of Renew Economy, founder of One Step Off The Grid and founder/editor of EV-focused The Driven.Giles has been a journalist for 40 years and was previously business and associate editor of the Australian Financial Review.
Yes, definitely on the bright side and not the best research by UBS… If you’re in the Ausgrid area, Australian energy companies or other retailers have a flat rate of around 25c/kWh.While not revealing the full calculations, you shouldn’t be comparing the difference between 51c and 6c…because you’re taking the two most optimistic values, the energy cost in the contract is about half of the 51c quoted here and from The value of the solar system can more offset retail spending around 25c than the paltry 6c exports.That is, when retail prices are higher than feed-in tariffs, you’re better off spending it yourself, so adding storage at these times doesn’t add any value.Storage is a great idea, but the economics aren’t as attractive as these numbers initially suggest…
Warwick, those numbers may seem a bit resilient, but that’s because now that the Tesla Powerwall has been released, battery costs are falling faster, so the economy becomes more attractive.If anything UBS is conservative.http://theconversation.com/battery-costs-drop-even-faster-as-electric-car-sales-continue-to-rise-39780
Conservative?That is to stretch it.Assumptions are the problem.I found three or four assumptions to be much less conservative than conservative.
I am an ideal client.I am not sold.You know, if the size doesn’t match what you generate and use almost all the time, those numbers will fall apart very quickly.Even acknowledging that no system is ideal, the question becomes: why do I want a battery of capacity x + y when I only need x?
Thanks Warwick.I’m telling you, even in Japan, I can’t get the numbers to work, so I’ve been walking around the internet to see what people are doing.Thanks to the people on this site who took the time to do math.This is very rare.
I expect a surplus in a few years after Japan’s FIT ends, but I don’t know what other costs and conditions will be by then.Even so, if the storage is not guaranteed to always be used close to its capacity (it’s expensive), the spending will never get the expected return.
Remember another situation.If you generate 15 kW during the day, and have a bunch left over, and you consume most of the grid power after the sun goes down, a battery system might be useful even if the retail price is higher than FIT.Also keep in mind that many people design their systems to maximize power generation, not to match their own consumption.Therefore, they are likely to generate excess.The huge price difference between the cost of your electricity generation and the amount you pay is what drives the return on storage.So unless you have completely free solar (no FIT) and very high grid rates, this won’t pay off.
Rockne, it’s great to see you recognize that my critique of this post is about getting the numbers right and not against technology (which I think has a lot of potential).Perhaps the easiest way to explain stored value is the two opportunities it offers: 1) Shift energy consumption from the grid’s peak charging times to off-peak times when prices differ significantly 2) store excess PV energy if consumed from the grid, Then the value of later consumption is higher than the feed-in tariff provided by the export.
I’m not sure if the UBS report was done by some interns or maybe the extreme values ​​were deliberately chosen to make the economy more attractive as it looks like they opted for a controlled load scenario (i.e. usually for off-peak hot water) PM Prices are around 51c from 2pm to 8am and around 11c off peak (10pm to 7am).It makes sense that PV alone might generate during peak and offset the consumption of peak charging, but why would you bother storing excess PV energy during the day (ie you can offset 11c at about 20c/kWh or off-peak) with FiT 6c, so The gain after loss is only 5 to 15c/kWh.If they wish to opt for a controlled tariff load, the best possible scenario is to ignore PV entirely (if you use a lot of peak power) and charge at 10c/kWh during off-peak hours instead of 51c/kWh of peak power kWh, thus losing Save 41c/kWh before…
They need to clean up their analysis and detail their assumptions so people can assess their value.Storage is coming, but not as fast as this study suggests…
I’m also an “icon buster”.I’m totally open to buying or not buying based on the numbers, not the gee whiz factor.
Just the whole first paragraph.And I also have off-peak rates, so of course I’ll consider both proposals.I’ve been thinking about this “problem” for years.
As a point of interest to you, many of the analyses on the internet are glowing, but they are being done by Morgan Stanley, a major Tesla client and lender.I think they also have equity.This sucks.No disclaimer.You are right to be wary of estimates.
Regarding your second paragraph, you seem to notice that the people at UBS don’t differentiate between the two value propositions.They should 1. For people with FIT from “some high number” to “virtually zero”, store all the “extra” solar energy to offset electricity demand until 10pm.To me this is important because 10 kWh should be enough to cover it.Under absolutely ideal conditions, 10 kWh would give me $3 a day.In the real world, it’s more like 2.2. For those with a large difference between peak and off-peak, there is also the benefit of multiplying the difference between the rate by the battery capacity.Under ideal conditions, a 10 kWh battery would run me about $2 a day.In the real world, it might be 1.5.Maybe much less, because just like during the day, I can’t discharge the battery nor recharge it during the day!Ha ha.
If you can use both 1 and 2 above, you have to be careful that you cycle twice a day and you will run out of battery in 6 years!
So we came to the same conclusion.Such batteries may seem like a good idea to some, but to whom?Elon Musk obviously, but otherwise?
Additionally, the system “should” discharge the battery temporarily during the day to offset import spikes, both short- and long-term.Once the export starts again, after a few minutes or hours, the battery will recover by charging.I don’t know how much this “light cycling” affects battery life.
Ah! More canned worms!So isn’t this something that someone controls with timers and switches?Oops.I smell severe inefficiency and unintended consequences.
I found the comments very interesting.No one, but no one would bother to really think about the bikes, costs and contracts involved.
Finding “profit” on the other side of the maze is not easy.I believe most people just throw money on the table and trust God.I’m concerned that this is likely to produce the expected result.
Just to clarify a few things about this post.I’m 100% behind on battery storage, the Tesla model is a great little product because people want to save a few bucks on their electricity bills.Essentially, there are some flaws in the design, and when it comes to the OFFGRID Faith, the price is only $3500.From the specs I’ve read, the system has a max load capacity of 2000w, in real life that’s the power used to cover 1 air conditioner or 1 electric kettle, your night house lighting with refrigerator running, but other Anything will need to come from the grid.Oven, hot plate will grid.This article also mentions the Powador inverter, which is a grid-tied inverter, not a hybrid inverter, so it doesn’t have the ability to charge the battery, and I’ve found that most hybrid inverters sell for about $2500.I’ve also been told that Australian utilities are not allowed to charge the system on off-peak rates, they have to charge from solar or peak rates, if anyone can correct that, I’d be happy to hear it.This usually means that if the battery’s 4kwh of power is used due to efficiency losses, it will take 5kwh of grid power to fully charge it again.$$$ Save $1:20, but charge $1:50.Ideally, it becomes feasible if you can charge from solar and buy the necessary power from the grid that the system can’t cover.Most systems require a load capacity of at least 4000w, which is still too low in real life.Utilities need AS 4777 compliant inverters to convert grids of less than 6000w in any given transmission.In real life suburbs, most households will hit this load at any given meal time, these are peak demand times.To be realistic, even close to “off grid”, you will need: 3 x tesla 7kw @ $4850AUD to provide the required 6000w load capacity 1 x Solar Edge @ $2500AUD solar panel @ $5000 installation @ $2000 Total price $24,000 This is with No local material cost % markup.Don’t get me wrong, I love Tesla and I’d buy myself a car and Powerwall and carport car charger because “wouldn’t you be the coolest kid on the block” like owning an Apple TV, Iphone, Computers are like tablets, they just work seamlessly and let’s face it, they’re cool!Thank you Tesla, you bought the new iPhone for the power station and you bought energy storage for the world.
It has a built-in charger, called a DC/DC converter.It cannot be charged from the grid, only from DC and solar.It peaks at 3.3kW, so the 3 is 9.9kW.This article is about On Grid, not Off Grid.
Can someone connect a DC bridge/transformer to charge the battery from the grid?Just getting a little nighttime energy from a nearby wind source to recharge the battery?
Thank you, this is by far the most accessible comment, at least for us “math for dummies” readers
These are a lot of assumptions.I thought $3500 was supposed to be wholesale?I haven’t heard confirmation that the Powerwall actually has the necessary internal charger/inverter?If so, then why reference an external inverter?If it doesn’t have a charger inverter inside (like other brands do/will do), then I guess Kaco’s price is a “replacement” price for an external charger/inverter, since Kaco itself won’t fully fulfill this Role.In this case, the price is likely to be an underestimate.Also, the installation cost increases with the number of external components to be “connected” as they all have to meet stringent (Australian) standards such as low voltage enclosures.$400 for installation, cable routing, etc. is definitely on the low side, IMHO.
The Tesla Powerwall has an internal DC/DC converter; this is the charger.The powador is used to invert to 240V.
As for the connection, solar to powerwall, powerwall to inverter, job done.It only has 1 connection.
Why buy another grid-tied inverter if the customer already has a PV system?The Pwall must be placed in a location protected from the weather – this may add 10 meters of conduit cable, as well as associated isolators and enclosures.
An integrated charger/inverter is certainly the way to go, but the Pwall still lacks details, as well as the costing discussed here.I’m acutely aware of costs and want to reduce them because we’re selling these kinds of systems right now.That’s why I say the details of Pwall are missing or unclear.
Chris’ tendency to integrate other power products into the inverter is a mistake.Of course, this is a “value-added” option for grid-tied inverter manufacturers, but this strategy is counterproductive, and only if grid-tied technology has a silent partner responsible for guaranteeing the customer’s supply continuity [grid] feasible at all risks.
The best inverter/converter designs ensure that they perform only one function [conversion] and do so efficiently and robustly.Durability and long-term functionality are the primary roles of converters.It should not be overburdened with peripheral functions.
For example, imagine a scenario when a component in an inverter auxiliary module [charge controller or monitoring unit] fails; the inverter is paralyzed and shut down due to the failure of an inconsequential component.
Auxiliary power product modules are best left to 3rd party technology developers, who can then be integrated into the system at the request of the system designer.In addition, competition among 3rd party developers brings technological improvements; increased competitiveness and lower costs.
I used these key points first in our design to make an off grid inverter and the results tell the story.Grid manufacturers should apply the same logic.