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Solar and battery storage already cheaper than grid power in Australia

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Australian consumers can already install significant amounts of rooftop solar and battery storage at a cost that is cheaper than electricity from the grid, and the uptake of these two technologies is likely to be “unstoppable.”

This forecast came from Kobad Bhavnagri, the head of Bloomberg New Energy Finance in Australia, while outlining the reasons for the groups bullish forecasts, which predict 33GWh of battery storage and 37GW of solar PV in Australia by 2040.

“Solar and battery storage is simply unstoppable,” Bhavnagri said. He used this graph below to illustrate why.

bnef storage prices

Retail prices will continue to grow, but even if they remain flat, rooftop solar PV can already provide power to consumers in homes at well below the price of electricity.

Adding one kilowatt-hour of battery storage raises that cost slightly, but is still well below the cost of the grid-sourced power. Even 5kWh of battery storage can be installed and still costs are below that of the grid.

(These examples are taken in Queensland, with a 4kW rooftop solar system. A different  version of this graph, showing the costs in payback terms, is included in this story on how battery storage prices are already falling in Australia).

“Storage technologies as well as PV will be able to provide costumers with electricity at a cheaper cost than the grid,” Bhavnagri says. “And as storage gets cheaper even larger amounts of storage will be able to supply consumers at a cheaper cost to the grid.

“On economic fundamentals this technology is unstoppable.”

Bhavnagri and many others, including Hazelwood coal generator owner Engie and a study by the CSIRO, believe that 50 per cent of all electricity demand will be supplied “behind the meter” by 2040.

Not that Bhavnagri is urging consumers to quit the grid altogether. He says this would not be rational. “We will still need the grid for different purposes,” he said, including for  back up capacity, support services, for the “Google operated” systems of appliances. “Grid and other companies have role in providing those services.”

But it will put huge pressure on networks to adapt their business models, and the way they operate the grid, and will almost inevitably result in a write-down of the grid’s value, which has been inflated by over-investment in recent years.

“The business model of the networks has to change. They have got to sell services instead of kilowatt-hours,” Bhavnagri said. “Much of what they built is redundant, resulting in excess capacity, and networks are overcharging and not delivering a commodity or service that is valuable to consumers.”

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  • dhw

    Enter a very tricky social and political problem. Even if going off grid is viable for an individual, the costs saved by utilities do not match the loss of revenue as the wires still run past the front door. Cross subsidies from those who are still on the grid will increase (above those already paid to PV owners) which will push more people off grid. What will happen? A tax hike to pay for buying back the networks or radical tariff reform to head off the trend? The former works out badly for everyone so the latter, however unpopular, MUST happen.

    • Neil Frost

      If the grid were to offer a 1 for 1 tariff (power exchange) there would be no need for private battery storage and a need to stay connected to the grid. This may be worth some thought to stop people from leaving the grid. I for one would happily forfeit any excess power donated to the grid on a month by month bases for such an arrangement.

      • dhw

        Correct! Missing element however is that energy prices would need to be reflective of wholesale, i.e. 5c/kWh, with larger standing charges to cover overheads. Otherwise the network ends up buying power from rooftop PV net exporters at 5-10 x wholesale. Peak demand based charges could still provide a market for storage and PV.

        • Neil Frost

          Then PV, battery banks, a backup generator and off grid it the way of the future.

          • Dave M

            The only reason we have a grid is because that was (by far) the most economical way to do it for years. This has now changed. New technology has changed the way we live in so many ways, and this is just another example. Any attempt to hold onto the old ways will eventually fail. Self generation is the way of the future, and it is good.

      • dhw

        Only problem there Neil is that with 1 for 1 tariff PV owners can still be connected with net zero bill with sufficient export, while providing that connection to export / import power has substantial cost, so the cross subsidies and escalating costs for non PV owners remains.

    • Jacob

      The grid has already been paid for.

      Especially in older suburbs.

      A great chunk of the rip off electricity prices is the profiteering.

      The regulator must stop the profiteering rather than buying back the grid.

      Fortunately the grid is still government owned in Queensland.

    • Jenny Sommer

      What does the gridcost matter to the utility?

  • 2ontrack

    The people that own their own homes will be okay but it will be the people that rent that will be disadvantaged