rss
40

Tesla coming, but consumers may lose as networks, retailers fight over solar and storage

Print Friendly

The arrival of the Tesla battery storage unit, known as the Powerwall, in Australia over the next few months will herald the biggest challenge to Australia’s electricity industry for decades.

Tesla announced on Thursday that it is fast-tracking the roll-out of its battery storage product, and Australia will be its first market for the 7kWh household units. The first deliveries had not been expected until well into 2017.

The Tesla Powerwall is not the first, or even the cheapest battery storage maker to enter the Australian market. But it is the most ubiquitous brand, and it threatens to do to incumbent business models what Uber is doing to the taxi industry, and Facebook, Twitter and Amazon did to traditional publishing.

Tesla is targeting the Australian market first because it is ripe for change. It has high electricity prices, particularly the grid component; excellent sun, lots of rooftop solar (more than 4,400MW on more than 1.4 million homes), and its tariff structure should make it attractive for households and businesses to store their solar output in a box for use in the evening, rather than giving it away for next to nothing to the grid.

There are a range of predictions on how quickly battery storage will be adopted in Australia. Some suggest that the combination of a solar array and battery storage is already cheaper than grid power in some areas, others suggest it will be another 5 years before the combination is cheap enough to become a mass market.

But the promised benefits to consumers could be undermined because of a major turf war between the incumbent utilities, whose business models are being threatened by the new technology, and because regulators are being so slow to act.

Australia’s network operators and electricity retailers say they can see battery storage coming, yet they seem unprepared for the speed of that transition. To protect their outdated business models they are erecting barriers, changing tariff structures by jacking up fixed prices, and in some cases even banning storage and electrical vehicles from the grid.

Another barrier is the emerging turf war between network operators – the companies who run the poles and wires – and the electricity retailers – the companies who package up and send you the bill – over who can deal with customers.

Last week, the head of AGL’s new energy division, Marc England, argued that network operators that deliver the electrons from far-away power stations, should be ring-fenced from the new decentralised market. He told the Disruption and the Energy Industry conference in Sydney that network operators should only own assets that consumers could not touch (such as lines and transformers). That means hands off assets like rooftop solar and battery storage.

The reasoning is this: The retailers are going to have trouble enough adapting to a new business model and dealing with a host of new entrants offering home energy systems, from niche operators specialising in smart technology all the way up to the Googles and Apples of the world.

The retailers argue it would be unfair that networks, who operate the poles and wires as a monopoly and have a massive regulated asset base, should be allowed into the residential market.

They have a point. But many argue that the answer is further deregulation, not less: If the networks are allowed into the residential market, then other players should be allowed into the network market, such as those proposing micro-grids and other solutions that could make networks smaller and smarter, and hopefully less expensive.

The networks won’t like that because are worried about their ability to recoup revenues if more consumers supply and manage their own power – the so-called “death spiral”. To protect those revenues, they are even going so far as suggesting that households be billed for the network even if they go off-grid. If those barriers remain, the loser will be the consumer.

Tesla’s marketing strategy might suggest that the choice of battery storage comes down to colour – red or blue – but it is much more complex than that. Battery storage can deliver value to home owners and businesses, because it will allow them to store energy they generate for use later in the day, and protect against blackouts. But storage can also be valuable for the grid– addressing peak demand and providing “ancilliary services” that are important to keep the grid operating.

Because of this, some argue whether Australia has the best model to deliver that. Ergon Energy, for instance, is the only large network operator that also functions as a retailer, due to its unique location and size (it covers more than 97 per cent of Queensland). But the combination, says CEO Ian McLeod, makes it easier to find value in battery storage.

Ergon is already installing battery storage at network level, to cut the cost of grid upgrades and maintenance by one third. It is also trialling technology with US company SunPower and Sunverge that allows the solar output and storage from households to be pooled – and be used to respond to demand peaks.

That will deliver benefits to customers, and to network management. It won’t be so good for large scale generators who have come to rely on surges in peak prices to deliver profits.

In New Zealand, Auckland-based Vector has also been at the forefront of initiatives that have put solar and storage into households. “From a network perspective, we want to integrate technology into both the network and the customer’s home. This is a skillset that network operators have rather than retailers,” CEO Simon Mackenzie says. They are going to be one of the first networks to sell the Tesla product.

That poses a problems for electricity retailers, who need to find a role in a decentralised energy world where virtually every household and business has solar, and possibly storage, and more than half of all demand is generated by the consumer.


South Australia Power Networks boss Ron Stobbe said last year that the energy transition could be terminal for the so-called “gentailers”, the energy giants that operate both big generation fleets and package up the bills to their clients.

Stobbe suggested the push to battery storage and the move to micro-grids could make centralized generation virtually redundant, an observation repeated by the head of the UK national grid earlier this week.

Their retail business is also under threat, because they really only package up bills. What if someone else – such as a network provider or specialist home energy system manager – could do that too?

Hence the big push now by the big utilities into the solar and storage market. They are keen – in some cases to lock in customers for longer-term contracts – but also to have some “hardware” on rooftops to protect their business model. They just don’t want the networks to play in the same game.  

RenewEconomy Free Daily Newsletter

Share this:

  • ChrisEcoSouth

    I look forward to seeing the Tesla land here and be installed, so we have some real-world hands-on data for it, like we do for the other lithium-battery-on-wall systems we are providing at the moment.

    • phred01

      it will be interesting as how this unfolds

  • Jo

    A great chance for a community owned and solar-friendly energy retailer: Enova http://www.enovaenergy.com.au

    • ray k

      hi everyone just traveling in the US again we down under have been getting the raw end of the pineapple for years ,iuse to market electricity in victoria a couple of years ago and the big corporations i signed up to swap supplier were getting 1.3 to 3cents per KWH while the average schmuck like me was paying 24 to 33cents per hr ,we the people owned the grid the governments sold of and privatized without our consent against our Commonwealth constitutional rules and guidelines,whether it is our petroleum products natural gas which costs us 60 cents a liter and Indonesia is 3 to 7 cents AU PER LT , REGULAR UNLEADED in the US @1.95 PER GALLON it is time we stood up for ourselves and held these low live politicians with their snout in our trough accountable
      the current Tesla battery’s in the US sell for 3.5k usd for the 10kva unit ,they want to sell us the 7kva s for double that price , the suppliers rip us of with tariffs and supply charge even if you were to use no power the will still get you , so get smart and design the system that suits your capacity and needs and be self sufficient ,if they try to enforce any sort of tariff or charge for your independence you can use UCC legislation which applies globally to all corporations and hold them fully liable in all their private capacities and enforce leans on their assets .grow up Australians get of your buts and grow a set and reclaim your sovereign rights and use the grey matter god gave us .spend less time sitting in front of the idiot box educate youself and save your own freedom and independence because no one else cares about in any of our corrupt government corporations ,dont believe me look it up Australia was incorporated back in 1973 buy our politicians the commonwealth and every state is registered on the US Securities commision.
      They sold us out then and ever since we have been under commercial and sometimes Marshal law ever since and have been working hard to remove as many if not all our Common law rights since federation the good thing is the world got a lot smaller and more connected since pcs came in make use of the tools you have been given cheers

  • MaxG

    Tesla — a lot of hype… people should do the math to figure that 7kWh will not see them through the non-sunshine hours… time will tell.

    • juxx0r

      7kWh would do me overnight about 6 times over, unless i leave the coffee machine on, then it’d be only about 3 times over.

      • MaxG

        Read carefully: ‘non-sunshine hours’ is not equivalent to night time or over night.

        • juxx0r

          Must be pure coincidence that the sun is always down at night then.

          • MaxG

            Well, you got me 🙂 With non-sunshine hours I mean non-PV-generation hours. PV output at present stops around 17:30 (in QLD), while dark kicks in around 19:00.

        • Mike Dill

          Yes, there are times when your solar array will not generate enough. My plan was to run a small generator those days. With 24 hours of battery, the calculations say that with no demand management, you should need to run the gen set for about 50 to 100 hours a year.

          That still might be cheaper than the daily connection charge.

          • MaxG

            Depending on how you size the battery; it might be far less than that. For my assumed scenario of 18-20kWh total daily consumption, a 6kVA generator is sufficient; the silenced version costs 2.5k$ while the non-silenced version can be had for 1.1k$.

          • Diego Matter

            Max, still using 18-20 kWh/day?

            If you do your homework you can halve that usage easily down to 9-10 kWh/day.

            It`s not just a suggestion from me but our own experience – we use 7 kWh/day for a three person household with solar, a pool and (still) an electric hot water heater. So there`s even more potential to lower our usage.

            The easiest way is to talk to an accredited energy auditor – see http://www.absa.net.au/find-an-assessor

            But there are also some very good online sites like:
            http://greenrenters.org
            http://yourhome.gov.au/energy
            http://energyfreedom.com.au
            http://switchon.vic.gov.au/more-ways-to-save/energy-saver-incentive

          • MaxG

            In my case, we have all the comfort we need/want; in fact you would not spot the difference to an on-grid home. We heat with electricity in winter; use some 12kWh in summer and 18 in winter. Nothing wrong with excess PV feeding the hot water system (cheaper than anything else).
            For those interested; see http://www.pvoutput.org/intraday.jsp?id=11239&sid=34144 and select the purple square under the date selector.
            However, while individual usage varies, the average 3-people-home uses ~16-20kWh/day. this can also be gathered from the electricity bill, most showing your compared to others’ consumption. Please understand, I am not arguing that households exist which use far less — e.g. like you do.

          • Diego Matter

            You`re off-grid, well done.

            The point I wanted to make is that if we consider 18kWh as normal, a lot of people will shy away from the necessary investment to cover these 18kWh a day with solar and storage.

            9kWh a day means halving that investment, and a much higher probability that people will jump on the solar/storage wagon. And the faster this happens the better for the hip pocket and climate change.

          • Paul Lemming

            Max , I think your circumstances are different to most , Point I notice at peak power produced your generating nearly 9kw , most residential homes will be lucky to have 5kw of solar producing 4.5kw if they’re lucky , plus they would not used to be so frugal with their energy. i.e still trying to use their 5kw Air conditioner(S) yes plural , and run a 60inch plasma Tv , with downlights on and kids charging phones and laptops etc. I also notice the biggest draw you ever place on your system is not even 2.4kw , thats not even a normal hot water system, as they are 3.6kw elements normally , and thats with nothing else running at all , so the comment your home is liking living on the grid , is purely from your perspective, I think your are far from the norm , which makes me totally agree with most being said here the Tesla product will fall short in application when it is truly tested against normal Australia on grid household energy demands , and the true cost of install , plus it won’t look as pretty as what the uninitiated think it will be once it’s 70+kg mass is mounted on the wall , with an AC & DC Isolator adjacent & cables running in conduit into it.

          • MaxG

            Thanks Paul; I surely get it that at the end of the day every consumption profile is different. Still looking at different sources, somewhat energy conscious, the avg 3 person household uses 15-20 kWh/day… and we will put in an AirCon system of sort (VRF) … HWS is running on 20 evacuated tubes which are almost too efficient (we have them on some 50 odd degrees C where the sun sits around the winter months). The place we currently live in is also well insulated.

            Also, we load the system with a normal wall oven and hot plates (175A welder, lots of 2kW motors) — depending on which day you’re looking it you can see up to 6kW peaks 🙂

            In essence I am with you; people will (eventually) wake up to a realistic impact the Tesla wall will actually have on their lives.

          • Paul Lemming

            Yes Absolutely Max, my point being that alot of this new product is targeted to those that least understand it. I have spoken to people that truely believe a 7kw weekly cycle Telsa powerwall unit will give them complete independance from the grid , for $3500 fully installed, because thats what they read on the internet. They don’t even own the Solar system yet. yes I’m in the industry , and can see some benefit from the all the hype around this type of product launch , but I also deal personally on the backlash , when I tell people that going Off-grid will more likely cost them $35,000 to $60,000 to do it right. I see systems with 4 x 12 volt car batteries being sold as a 48v battery bank and told it will run the whole house with 2 days autonomy , and everybody thinks that batteries only cost $200 each , so why is the battery bank in our system $15,000+. I do hope the likes of Tesla also try to educate the retail market as to what this type of product actually provides in real terms , what is a weekly cycle rate compared to a daily cycle rate , i.e C10 vs C100 , i get so many blank stares. Bring it on I say , but lets not dilute the experince with substandards and ignorance , that sadly accompanies alot of new technology adoption , plus not all technology has the safety implications that Lithium or just batteries have for that matter.

          • MaxG

            Thank you for your reply AND I do not envy you having to deal with customers… I made the choice to give up educating; it is like the game of “whack-a-mole”. Best of luck to keep your sanity.

    • Paul Tierney

      Mmmm, my calculator and my last bill tells me I use 6.8kWh a day, I think the Tesla battery will work.

      • MaxG

        I did not say, but refer to the avg household consumption… which is between 16-20kWh per day.

        • Mike Dill

          You can string them, and 14KWH for two will get most people through the night. Eventually I would add a third, for the days when there is no sun.

        • suthnsun

          Absent heating, 4kwh /d is very regular 2 pax, year round, variability of seasonal heating/ cooling demand is the problem that needs a solution.Various elements could feed into that solution over time, it does not seem intractable to me.

      • Mikael Andersson

        Hi Paul, please include the cost of photovoltaic panels, inverter and installation costs in your calculations. You seem to have your daily demand figured. Should you also think about your peak demand? If you have an electric oven or HWS you might investigate closely. It’s a combo of the total power per day and the peak power at any moment. Regards

    • Alen T

      The 7 kWh Powerwall is grid-connected, therefore even if there’s no sunshine for some days you will still be able to draw power from the grid.

      Is the Powerpack being introduced here too? Linking these to the large-market sites to purely reduce peak demand charges should be extremely attractive and economical. With some Energex network charge of ~ $22 /kW it should yield a good payback…assuming you have a BMS to go with this demand management.

      Interesting times.

    • Miles Harding

      I think that this is missing the point. The Tesla power wall is not an off-grid product, so its best utilisation and value will be achieved if it runs over its full depth of discharge each day. This, in all likelihood, means that some import energy will be used at some times of the day and more at some times of the year. The point is that the amount of import energy can be greatly reduced by installing even a single power wall unit.

      One big factor is the consumer; one must become energy aware for any of these systems to work effectively. Less battery storage will be needed if overall energy needs are reduced and more of necessary energy consumption that can be moved to the daylight generating hours.

      Modelling of the annual cycle demonstrates that a huge additional cost is incurred in the satisfaction of those few periods in the year when generation capacity is severely reduced. Alternate mitigation strategies will be very beneficial here.

      (Max, I’m not picking on your post, but this seems to be a general issue in comments)

      • MaxG

        Well said, and I agree — on both accounts 🙂 … Tesla is not an off-grid product!
        And I am sure, the electricity people will find ways to kill the benefit for the consumer, as hey have done in the past.

  • tony coz

    Finally power to the people. These multinational companies who have enslaved and creamed us of our money are loosing their monopoly.

    • Rob Adams

      Losing 🙂

  • Mikael Andersson

    Giles, such systems (in fact superior systems) have been available in Australia for many years. The Tesla hype overlooks the small size of the system, its limited 7 KWh capacity, the fact that you must purchase your own PV array and an inverter to meet your needs (3-4 KW perhaps), the expense at around AUD 4,500 plus fitting costs, plus PV panel array, plus inverter, plus rewiring your present solar / grid setup. It’s a significant price tag with a long payback period. A sudden burst of demand for a big-name brand battery probably won’t result. The arrival of the Powerwall Tesla battery storage unit in Australia will NOT cause the biggest challenge to Australia’s electricity industry for decades. It’s a notable event, but not a game changer. Best Regards

    • Jacob

      People already have solar panels on their roof.

      • Mikael Andersson

        Disappointingly Jacob, most of the houses in the country don’t. We all look forward to the large majority having solar (PV) panels. But Tesla isn’t bundling PV cells. It’s just selling a battery, charger, controller package. No inverter either. Australian houses don’t run on DC (yet). Regards.

        • Jacob

          The inverters are already in houses that have solar panels.

          I know there are a lot of old people in double storey houses that do not have solar panels for some reason or another.

    • Ken Dyer

      Mikael, for example, Samsung have a plug and play storage solution which includes inverter, so all you need are the panels. If you were installing a solar system now, you would be better off installing a total system plus storage. Storage costs are reducing by about 7% per annum, and solar panels similarly. Payback time is getting shorter and shorter.
      The economic argument is a no brainer for the home owner. If the cost of a solar PV system was invested in a term deposit for example, with low and decreasing interest rates, the return on investment is significantly less than the reduction in ever increasing electricity costs, even with the scungy feed in tariff.. Added to that is the capital appreciation of your house value when solar panels are installed.
      There are over a 1,000,000 solar installations already and climbing. The amount of power that is being generated already is astounding, and is not yet being harnessed effectively. http://pv-map.apvi.org.au/historical#4/-26.67/134.12
      Is it any wonder the electricity retailers are scrambling? They face annihilation of their monopolistic coal fired fossil fuel business.

  • Craig Griessen

    The electrical suppliers have been pricing themselves out of the market, with unsustainable increases of 10 to 20% pa, my wages certainly don’t go up that much.

    Their theory of an inelastic supply is coming to an end, and in the same manner as the Private Health Industry the tables are going to be turned on them with the death spiral. I certainly would love to retrofit my grid connect system and give Ergon the flick, and bull dust to paying them when disconnected that is unjustified enrichment!

  • George Michaelson

    I would argue for both more regulation, and re-nationalization of the assets as profit seekers move out of the industry. No need to wind up in court for siezure, if the return on investment is put back in the gilt box at under 5% then we can all sleep better at night because they won’t want to park their money there for the next 50 years. We, on the other hand, want to spend electricity dollars for the next 50 years as cheaply as possible. Seems like a marriage made in heaven.

    It worked in Railways: the gov buyback of the failed east coast line rights in the UK went into profit. Its silly tory reductionism which is putting it back out to market, when it should be kept. Corbyn is right on the money here.

    • Jacob

      Are the bloody Tories trying to re-privatize a railway?

      • George Michaelson

        they did in February. East Coast Mainline

  • John Roderts

    But have you ever tried a coal dust and onion sandwich abbot is selling em cheap.

  • Miles Harding

    With batteries, we also desperately need a retailer that properly embraces the ‘prosumer’ that comes with battery storage. The domestic retailers are dismal and leave a big opportunity for a savvy competitor to enter the market.

    I would not hesitate ditch synergy, demonstrably one of the worst offenders, if there was an alternative that I consider to be in the interests of both the consumer and community.

    Without a credible alternative retailer, I can see myself exiting the grid within the next two years.

  • Glen McMillian

    I am not very sympathetic to the needs and wants of large monopoly industries because they are not even real living creatures, they are just corporations the only purpose of which is to make money.

    But NEVERTHELESS I cannot see any country getting by without a grid for quite some time and the grid may turn out to be necessary essentially forever. That might be the way things work out, having lots of localized independently owned generation and storage capacity PLUS a grid with some centralized production is the most likely future.

    IF the owners of the grid lose ENOUGH customers, or ENOUGH sales to remaining customers, then the cost of grid supplied electricity MUST rise substantially in order to keep it operating.

    It is obvious for NOW at least that it is impossible to build and pay for enough battery storage and pv and or wind capacity to just abandon the grid. It will be many years before most people can get by without a grid- even in places like remote Australian homesteads, the people who live there still depend on products and services provided by grid connected companies in other places.

    The TESLA factory that produces the Powerwall battery will be getting most of its juice from the grid!!

    What all this boils down to is a political dogfight. In the end the grid is necessary for the easily foreseeable future. Renewable power is necessary because fossil fuels are not going to last forever.

    In the long run, the people will most likely succeed in getting a fair deal but it is going to take a hell of a fight to get it. That deal will most likely involve paying enough for a grid connection to keep the grid functional. Maybe people out at the very ragged edges, on the last ten or twenty miles of wire, will get their grid juice at a lot less than the cost of providing that last ten miles. Maybe they just won’t get it anymore at all if the owner of the grid goes broke- unless the government steps in and pays for their money losing connection out of the pockets of other people.