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Energy storage systems signal arrival of ‘baseload’ renewables

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It has been widely thought that the arrival of cost-competitive rooftop solar PV systems would be the biggest game changer in the electricity market. But it may be that the emergence of affordable energy storage systems will have an even more profound impact.

There are predictions that the energy storage market is going to boom. One survey suggested that $30 billion will be spent on energy storage in the next decade in Australia alone. In the US, where $1 trillion is expected to be spent on electricity network infrastructure in the next 10 years, at least one fifth of that – or $200 billion – will be spent on energy storage.

The big question is who is going to benefit most from that investment – the customer, or the utility that delivers or sells the electricity. Or maybe even both. Most people are still trying to figure that out.

There is little doubt that there is huge interest, and likely huge demand, for the product. Given that the arrival of solar PV has enabled homeowners and small businesses to produce their own energy, it is only natural that they would want to store it.

An analysis by Energeia this year said that as a result of cost reductions in the technology, it predicted there would be 421,000 residential energy storage systems in Australian homes by 2021 – nearly half the number that currently have solar on their rooftops. The new pricing mechanisms that are being introduced into Australia – high rates for peak consumption and low rates for overnight – make it particularly attractive to have both solar, which can draw down cheap energy from the sun during the day, and energy storage – which can store excess energy and draw from the grid at low overnight rates. It effectively doubles the attraction.

Richard Turner, the CEO of Adelaide-based Zen Energy Systems, last month unveiled a new product called Freedom Powerbank, an energy storage system that will allow households to store enough electricity to cater for their average daily usage. An email sent out to 4,000 of Zen’s solar PV customers generated an enormous response – one person a minute signing up for more details, according to Turner.  The response from utilities and international customers has been equally effusive, he says.

Who will benefit from an energy storage system in the home? The home-owner, the utility, or both?

Turner describes his product as a “world first,” because it uses proprietary software to capture the energy produced by solar, wind, or from the grid, and allows it to be used when the customer chooses. We have created the most functional energy storage system at one end and at the other end broke through major cost barriers. What we developed is the first battery operating system for renewable energy systems.”

Production of the Freedom Powerbank for households begins in Adelaide in January next year. Turner says the units will cost $29,500 – offering a payback of 7-8 years, but he says the cost will fall as manufacturing techniques improve and some of it is outsourced to cheaper facilities overseas. Larger units will be available for small businesses – who will be able to use the systems to ensure they retain their power sources through any outages – and are being tested by utilities.

Turner says the storage system is a game changer because it is clear that solar PV will be the power supply of the future, and this enables households to store that energy and utilise what is effectively “baseload” renewables.

“We have got a massive problem around peak demand,” Turner says. The proposed introduction of time-of-use pricing, along with smart meters, means that consumers will be paying as little as 7c/kWh at  time, but up to 52c/kWh in peak periods. That is already occurring in Victoria.

“We saw this coming and that is what we designed this for. It will enable consumers to load shift inside their own home – they can source cheap energy from solar during the day, or draw down from the grid at night, and save it for use later.”

Turner says focusing on the software component – with Zen’s joint venture partner, the US-based Greensmith Energy Systems – was a cheaper and more effective method than trying to deliver a better battery – a pursuit that has been the ruin of several aspiring battery manufacturers as they found their technology undercut by the latest developments elsewhere.

“We went the other way, we’ve talked to the people operating the grid and looked at the functionality and created a battery operating systems with three layers of software,” he tells RenewEconomy. This covers a utility control system that can address load shifting and frequency problems, and brings the individual units together to operate as one block if needed. The second layer has rich data analytics to optimise grid function, while the third layer is an “active balancing battery management system”, that ensures optimal performance from the battery cells.

Turner says utilities are also very interested in his product – even if they have yet to “get their head” around the issue, and how it fits in with their business models. Most accept, however, that the introduction of such systems is inevitable. “It will really challenge the retail business model,” Turner says. “But it’s going to be challenged anyway.”

He suspects some utilities will use storage systems to manage their grids, and some are already testing units in the 100kWh to 1.5MWh scale. And they will also offer such systems to their customers, but possibly not at the 20kWh scale – they will want a margin from providing as much electricity as they can, so they may offer systems with storage limits of 5kWh or 10kWh to their customers.

“People will put these systems into their home – and will be put on a contract where there is a heavy penalty to draw on power at peak times. And the utilities will have the right to pull power back into the grid when needed. Ultimately though, it is the consumer who will control the energy over the house.”

Turner says it does offer the opportunity to go off grid as well. This is particularly attractive to those dreaming of homes on rural blocks who want to look after their own energy systems. “We are going to see a trend toward modern off-grid living,” he says. His company has received 200 inquiries already for off-grid housing developments. And mining camps are also interested.

And how will the system be integrated with electric cars, and the ability of those batteries to also provide storage? Turner sent us this emailed response:

Q. Do you empty the fuel from your car into your generator at home?

A. No. Then most likely you won’t flatten your car to power your home.

He says the Zen Freedom PowerBank will be provisioned in the future for DC to DC fast charging to draw and store off-peak grid power or solar power to charge EVs quickly whenever it’s required.

Here’s a graphic display of what Turner sees as the problem for electricity grids, and the solution that energy storage systems offer.

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  • http://store.quietrush.com.au Brian

    Finally! Someone is addressing the storage conundrum in a better way. The ability to store excess power production has been well proven in off-grid systems for years, but without using any great sophistication in the battery /energy storage management to yield sufficient ouput for any kind of drawdown (at scale) at night.

    It has relied on trimming back the power consumption profiles of every device in an off-grid house to match the output capacity of limited storage. This hopefully fills a gap in the market – I can see why it would have had a solid response rate. Well done Zen-Energy! (Be good to have a URL to them within the story)

  • suthnsun

    I’d like to see a good study on lifetime emissions and environmental damage before embracing this (fundamental) change in infrastructure resource loading (if it becomes widespread and in private hands).

    On the other hand, utilities should be entirely engaged with distributed energy storage, since they are in a position to optimise use, cycling, etc for aggregated demand and supply. In the hands of utilities it should completely obviate the need to ‘gold plate’ the transmission infrastructure and also allow deep penetration of renewables into the grid, fossil fuels could be dropped entirely eventually.

  • Paul

    I can’t see basics specs anywhere in this post? How many kWh is this bloke selling for $30k?

  • David

    I’m sorry but the economics of this make no sense. At $30000 and 8 years “payback” that is $3750 per year. Allow for some simple finance costs and it is over $5000 per year. Remember that this device does not generate any energy but is an additional load (via inefficiencies). You must still buy electricity. Buying at 7c instead of 52c (which is twice the price difference I see on my bill in Victoria) you would need to cycle through 11000 kWh in a year to save $5000 and that is all peak usage. Typically half of your usage is off peak (weekend is all off peak) so an indicative total usage of more than 20000 kWh. This is ten times as much electricity as a household should be using. Also 11000 kWh/year with cycling of 80% depth of discharge, 5 times a week indicates a storage of more than 60 kWh. I doubt very much that the storage is this big.

    Even if the economics did work, it does not reduce CO2 emissions.

  • Petra Liverani

    This looks good but I can’t see it obviating the need for utility-scale concentrated solar thermal power plus molten salt storage (CSP+).

    You can see a video about Gemasolar (the first 24/7 CSP+ plant near Seville, Spain), explaining the technology at http://tiny.cc/0jahy.

    Considering our insolation (http://solarpathusa.com/resources/world-insolation-map/), it is ridiculous how slow we are to adopt this technology.

    The wikipedia List of Solar Thermal Power stations (http://en.wikipedia.org/wiki/List_of_solar_thermal_power_stations) shows tables for CSP (only a few plants have storage and not all of them are pure solar) with the following totals:

    Operational:
    2,135 MW (2 MW Australia – Liddell)

    Under Construction:
    2,477 MW (0 MW Australia)

    Announced:
    10,134 MW (250 MW solar+gas Australia – Brisbane)

  • Benj

    First of all, this isn’t the first battery system “to capture the energy produced by solar, wind, or from the grid, and allow(..) it to be used when the customer chooses”. The buzz in the solar installation industry is that they are already installing such systems based on off-the-shelf products from SMA, Selectronic, Nedap and other manufacturers.

    Secondly, Zen’s utility control system also doesn’t seem to be unique. The SMA Sunny Backup, for example, has a “signal-controlled grid-feed” feature which seems to be equivalent to Zen’s. And Horizon Power in WA already requires some PV owners to install “storage devices that release energy back to the grid to prevent system instability”.

    Other features to be compared among different products would be the quality of the LiFePO4 battery management system (BMS), in case of lithium instead of lead batteries, and whether the input from PV panels can be used during grid-down situations. Unfortunately the technical information forthcoming from Zen so far has been rather sparse.

    As to the engagement of utilities in distributed storage, they currently seem totally unprepared. For example, here in the West, much to their credit, grid owner Western Power has tried to convince the Economic Regulation Authority (ERA) to allow grid feed-in from batteries and electric cars. Energy retailer Synergy, however, objected and ERA decided not to agree to a bi-directional tariff that would also apply to battery systems and electric cars.

    In a recent informal communication, Western Power repeated their interest in grid-connected battery systems, more particularly as a grid-management tool. But they see the future as installing such battery systems themselves rather than having to deal with a large number of smaller, customer-based systems.

    History could be repeating itself. First the utilities, governments and regulators underestimate the growth of distributed generation. Now they seem equally determined to underestimate the growth of distributed storage.

  • Petra Liverani

    What was I thinking? The solar gas hybrid in Brisbane has been canned so we have no CSP in the pipeline at all except the 1.5 MW plant in Morawa, WA with a new type of storage, graphite – http://reneweconomy.com.au/2012/wa-awards-grant-to-solar-thermal-storage-plant-42186

  • colin

    So, assuming we need a motor car in the equation, we should have enough home storage to charge the car in 30 minutes for those occasions that we can’t wait for a 12 hour charge over night

    I can only agree that the utilities are not going to take the whole idea of the punters time shifting demand lying down

  • Malcolm Scott

    “GM and ABB demonstrate Chevrolet Volt Battery Reuse – world’s first use of electric vehicle batteries for homes”

    Let the solutions roll in. With production rates even now of near to 50,000 Volts per year will produce a great source for energy storage in years to come.

    http://www.abbaustralia.com.au/cawp/seitp202/8cb38a9d23816174c1257ab500497848.aspx

  • BC

    Without any solid numbers to back up the claims made in this article (storage capacities, initial investment cost, etc) it seems to be just a nice advert for Zen. Home battery storage is not news. Cheap home battery storage that realy takes a residentual customer off-grid with a real < half lifetime payback period is. Zens website provides no more info….

  • Oliver

    I don’t think we should use the level of public response to a marketing push to gauge the appropriateness of a new technology. While there is a lot of public interest around distributed energy storage, a lot of this is inspired by attempts to stem the increases in power bills. These people are trying to save dollars, so may well be put off by the price tag, and actual payback periods of these PowerBanks. My little calculations says they are about the same cost as wet lead acid, and potentially less reliable.
    I also would like to know a little more about them. As far as I can tell they are Lithium Ion cells, with custom software to control charge and discharge cycles, presented in a very pretty box. The load shifting features may be the most useful development.
    I can understand Zen’s position of not wanting to invest heavily in risky new battery technology, so they have taken the cheaper option of spending on software, and very clever marketing. But without real fundamental advances in energy storage technology, I don’t think these systems will be an answer to distributed energy load leveling.

  • http://bit.ly/djT522 Nick Sharp

    $30k/house? If every house (~10M?) did that, there goes $300B which could, according to BZE, nearly equip the entire country with wind and CSP with storage, whereas these house storage systems just use up energy, surely having an efficiency well below 100%.

    And isn’t the idea of storing cheap night-time electricity only applicable when there IS such a thing, which is a creature of coal power stations, since their ramp down/up times are so long.

    If the country switches to widely distributed wind, and CSP with storage, then no longer is there any especially cheaper night time supply.

  • William

    Petra, there is also the 3MW concentrated solar power plant with graphite back up at Lake Cargelligo, NSW. It’s been generated since 2011 apparently. See
    http://www.solastor.com.au/index.php/projects/lakecargelligo#loadlocation
    and report at
    http://www.ret.gov.au/energy/Documents/clean-energy-program/acre/studies/AEST-Final-Report-Lloyd.pdf

  • Scott

    $30K is too expensive.

    The EV manufacturers are well under this price range:

    “In developing a “should cost” model that estimates how the price of a “complete automotive lithium-ion battery pack” could evolve through to 2025, the McKinsey researchers found that the price could fall from $US500 to $US600 per kilowatt hour (kWh) today to about $200 per kWh by 2020 and around $160 per kWh by 2025.”

    http://www.goauto.com.au/mellor/mellor.nsf/story2/4F19AAD50D662C2ACA257A5D0020138E

  • http://www.remotenergy.com Barrie Harrop

    wondering how many households are spending over $4K per year in energy? to meet this payback period.

  • Ken Fabian

    The concept looks right but the cost looks prohibitive. Sol-Ion in Europe and Toshiba in Japan are producing similar in-home storage systems, Sol-Ion aiming simply to cover a single evening’s energy usage in PV fitted homes and helping to level the regular grid fluctuation from energy producers becoming energy consumers, Toshiba’s looks more aimed at utilising off-peak during peak periods in a grid that’s been struggling since Fukushima. How soon before the cheaper Chinese made version hits and penetrates the market? At $10K rather than $30K there really could be lots of uptake.

    • http://www.remotenergy.com Barrie Harrop

      Yes Ken you are on the money the sweet spot i expect is in the $8K-$10K range and China has the scalable market its not in Aust right now at $30K per system.

  • Ken Fabian

    At larger scale – whether that’s the proliferation of systems like this or utility scale facilities – the limitations of Lithium supply are going to end up a serious concern if that’s what the preferred storage technology is. For transport as well. Something other than Li-ion is required.

    I still like the characteristics of Vanadium flow batteries for stationary storage and remain surprised that the off-grid market has not been high priority. The mainstay, lead acid, doesn’t even allow the use of all it’s rated capacity because doing so shortens the life, especially if recharge is delayed – that being an absolute no-no. So they have back up generators as an essential requirement. Vanadium redox at least allows expansion of storage capacity just by adding bigger tanks of electrolytes and ditch the gennie. And in theory users could get a home delivery of fully charged electrolytes in a pinch. Yet as far as I know no VR battery system is marketed for off-grid solar homes.