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Australians to install 55,000 battery systems a year by 2025: report

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Australia’s energy storage market could be worth hundreds of millions a year by 2025, a new report has predicted, with Australian households and businesses installing battery storage systems at a rate of 55,000 a year.

The report, Sound and Fury – Australia’s Distributed Energy Storage Market to 2025, by energy research group Energeia, predicts that demand for battery storage will be booming by 2025, as system prices fall, feed-in tariffs are wound back, network and retail tariffs become more cost reflective, and energy services business models gain traction.

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And while some of this demand will come from existing rooftop solar customers, Energeia senior analyst Richard Murray says the vast majority is expected to come from customers with the right kind of load profile, including late afternoon peaks, and access to a truly cost reflective retail and network tariff.

“By 2020, we expect most new customers will be installing solar PV-storage systems,” the report says. “Our modelling shows the most popular storage systems to be in the 3-4 kWh range and tightly coupled with solar PV systems, sharing a common inverter and monitoring and control system.

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“This will help minimise the cost of the overall system, which is likely to also include load control capabilities to optimise flexible loads such as hot water, slab heating, pool heating and pool pumping.”

Energeia notes that the range of available storage solutions has increased significantly since its last report on the technology in 2012, with the majority of new units designed to drop into an existing solar PV circuit to reduce system costs by sharing the inverter.Screen Shot 2015-09-18 at 12.31.41 pm

But it warns that battery developers have yet to fully grasp distributed storage (DS) economics, and Energeia’s assessment is that none of the units currently available provide a truly cost effective or complete “set and forget” solution – a gap it expects will be bridged by the emergence of bolt-on software programs.

According to Energeia’s modelling, the key drivers of demand for distributed energy storage over the next 10 years will be retail and network tariff levels, tariff structures, FiT levels and falling technology prices.

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The report, also suggests there will be little in the way of policy and regulatory support for storage in the medium term, and that successful players in the solar plus storage market will transition to services business model that leverages storage.

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“The latest research report dispels the sound and fury of the current crop of would-be storage players, solutions and strategies as ultimately signifying nothing with respect to the main $300 million opportunity,’’ said Murray.

“Instead, we see the ultimate winners as those whose strategic positioning best reflects the fundamental economics of storage.’’

The report notes that most activity in battery storage over the past two years has been driven by government and regulatory incentive programs.

“The market for solar PV management is driven by the level of the applicable Feed-in Tariff (FiT) relative to the customer’s main tariff, and the level of daily exports. As premium FiTs, which encouraged investment in oversized systems to maximise export levels, are wound down, they will increase the number of customers seeking to increase self-consumption of solar PV,” it says.

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“Based on our analysis, we have concluded that the most prospective customer segments, and the only segments we believe can cost effectively invest in distributed storage systems today, are residential or business customers on a cost reflective tariff in an area of network congestion in SA or QLD where a demand management price has been posted.”

The report also points to benefits of energy storage for retailers and networks, by reducign retailer wholesale market settlement costs by reducing consumption during the highest prices of the day, and using more during the lowest prices of the day, where the differential is high enough to cover the short-run battery costs.

Distribution networks, it said, could reduce investment costs by delaying network augmentation through network demand management.  

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  • Ian

    Assuming a 5 year pay back as being the most tolerable level of investment, a cost of finance of 5 % pa, an actual storage capacity of 80 % nominal to ensure prolonged life of lithium batteries and a cost of lithium battery system to be $1000/KWH in 2020. Cost of finance using Esanda’s financial calculator: $ 18. 87 a month. KWH storage per KWH system: 365 x0.8/ 12= 24KWHper month therefore cost of storage 78.6c/KWH. Current cost of network power 22c or thereabouts. Sorry but not a very good investment. I challenge anyone to check and refine these figures, as I so want them to be wrong! most people would baulk at this cost so I think the predictions will prove to be very wrong.

    • MaxG

      agree… 🙂 with the calculation; however, not everything is about a reasonable payback period. I am happy to have a 15 year period 🙂

    • Cooma Doug

      Ian
      There is hidden value in battery storage. Hidden by the fact that new things add value to systems that are not obvious in the status quo. Batteries will change the environment in many ways and have potential values that most folk have never considerred.
      For example, if we look at the power grid as a whole and consider all the aspects of system security, peaks and lows, batteries are three times as effective as the same power rated gas generator.
      A battery at home might be 4 kwh, but can be discharged at much more then this rating of 4 kw.
      Battery systems in the home, remaining on the grid and smart switched are hugely more valuable then the comparisons bieng made in todays discussions.
      A battery in your home is three times more valuable in Kw then the infrastructure existing on the grid today that provide the same back up.
      But lets look a little further into the future. There are potential team efforts between adjoining homes, high density complex dwellings. There are possibilities with the introduction of electric cars and arrangements with large scale renewable generators.

    • Mike Dill

      5 year payback is great if you can get it. The batteries should last for 20. While the average cost is $0.22, the peak cost is closer to $0.35. The math for 5 years still does not work, unless you cycle the batteries twice a day, or go for a ten year payback.

      • Cooma Doug

        You will be using batteries with over 10000 full cycle life. That changes it a loy

  • George Michaelson

    Lets stop pretending things like this have to have 5y ROI and get back to 15-20. Even if the cells have to be replaced there is a component which should have a longer life. And as the deployed base increases we get systematic drop in install/maint cost. The avoided cost aspect of the pits and poles is a community shared outcome. The regulator should be pasting this into a bucket called “give the bloody money back you bastards” not “oh joy: we made better profit”

  • Phil

    Wet cell traction batteries used in electric forklifts are $450 kw (aus) now ( assuming 5kw daily discharge on a 12kwh bank ) and have a life typically of 1800 cycles / 5 years at that discharge . There is some water topping up , although there are self watering kits , and they do need a vented and extreme weather protected battery box . But they work well . Certainly great bang for buck until the better stuff comes along