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Battery storage and grid assessment must include cost of going off-grid

John Bradley
26
It was disappointing to see Bruce Mountain again making flawed comparisons about the cost of energy services, under the RenewEconomy masthead.
It should matter that the initial installed cost of a battery which might have a life of 5 to 15 years depending on its usage profile is not comparable to the net present value of a perpetual distribution network service.
Mr Mountain’s article includes no recognition of say, the replacement costs for a customer who decides to go off the grid. He does not mention the future maintenance costs or risks that a consumer going off-grid becomes responsible for. He includes no assessment of the premium expense involved to a customer investing in a standalone power system for the redundancy required to provide a level of reliability which is even close to being comparable to a network service.
No one doubts customers will increasingly assess alternative energy options including “going off the grid”. There are certainly opportunities for non-network solutions based on battery storage as an alternative to traditional poles and wires. This include in parts of geographically dispersed networks with low customer density like Ergon Energy.
That’s why these network businesses are already pursuing these options, as demonstrated by Ergon Energy’s investment in twenty 25 kW/100 kWh battery energy solutions to avoid expensive replacement of Single Wire Earth Return (SWER) lines in regional Queensland.
It would be a shame if these facts were ignored so that Mr Mountain can tell a good story.
John Bradley is CEO of the Energy Networks Association.

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26 responses to “Battery storage and grid assessment must include cost of going off-grid”

  1. Mike Dill Avatar
    Mike Dill

    Jon, Yes, Bruce’s article was flawed, but made the point that we are paying more than we should. On an infinite time horizon, it currently makes economic sense in some places to quit the grid. That is not the case where I am, as the connection fee or the base-rate would need to almost double. (Which I can foresee happening some time in the future.)

    Putting enough solar on my roof for the summer consumption (assume $1500 per KW, 1 kw for every 4 kwh of usage) with enough left over to charge a battery (50% more than the first figure) holding one day of storage (assume the battery costs $1000 per KWH including depreciated replacement costs) would get me through 95% to 98% of the year. Yes, I would need a backup of some type for the other 15-20 days (guess $1000 for the generator and $200 per year ($0.70 per kwh) for fuel), but the total cost is in the range where it is possible RIGHT NOW.

    Everyone here should be able to do their own math on this and determine their own personal time for breaking even assuming that nothing changes. Many people will argue that the numbers should be lower, but this is just a starting point for the discussion.

    This all assumes that you do no load control, and have no change in your lifestyle. Doing something will make the numbers lower. Adding an EV will change everything above, but again, this is a starting point for a discussion.

    Next year the numbers will come down some more, and they will continue to come down for the next ten to twenty years. I cannot say the same about my energy bill.

    Other people here will have other numbers, and for me, I currently on the grid and have a 26 year break even based on the numbers above, and I am waiting a bit longer for the battery prices to come down.

  2. Finn Peacock Avatar
    Finn Peacock

    Jon, I completely agree with you. I’ve been saying for years it makes absolutely no sense to go off grid if you already have a grid connection – unless you have a tiny, tiny electricity usage. The lay person does not appreciate the complexity, lifestyle changes, risks and ongoing costs of an off grid system.

  3. Ray Miller Avatar
    Ray Miller

    While you make some good points Jon and I’m fully aware of the nature of stand alone power systems, you are just as narrowly focused as Bruce.
    The problems are many but current thinking is very much last century, lacks flexibility, vision, is an “us and them mentality”, blames the “customer”, waits for technology and just full of excesses.

    The vision is a low carbon economy where the delivery of services needs to be both at the lowest cost and achieve a low carbon agenda. The solutions will most likely involve a very diverse range of solutions from building design, world class appliance efficiency, renewable energy, management and storage. Surely the roll of companies like Ergon needs to change to provide “services” not electricity which is the fundamental mental blockage at present. We need young, smart keen educated minds to unblock the stalled and circular thinking. By the way the solar resource in Ergon’s coverage area is world class with an annual average between 18-21 MJ (5-5.8kWh)per square metre per day! With so much energy falling from the sky one wonders why we need to ship it hundreds of km? Unless we use the grid in the reverse and use it to collect energy for remote locations to those not so fortunate, but then that requires a different mindset and economy. Up to the challenge?

  4. Glenda Jones Avatar
    Glenda Jones

    It is simple – not rocket science like some would have you believe – If the Electrical generators exercised their market power with the aim to be the business of choice and manage their business efficiently and fairly – those “off Griders” would not be looking elsewhere – The service Fee will double, and double again – the Public Service mentality is to Up the Tax – not cut the costs !

  5. juxx0r Avatar
    juxx0r

    John,
    What do you say to those of us who pay up to 72 cents/kWh from the overpriced network?

    Is that good value?

    1. Rob S Avatar
      Rob S

      You don’t pay 72C/kWh.
      You pay a daily charge for the network (poles and wires) and you pay a rate per kWh.
      Averaging out like that is like taking the monthly repayments (plus rego insurance etc) on your car and adding it into the petrol cost and then telling people petrol is $X.xx a litre!

      1. Giles Avatar
        Giles

        Isn’t that how most people should budget? The total cost of something, not just the usage charges.

        1. Rob S Avatar
          Rob S

          Maybe, but the convention isn’t to do so. I would accept total cost and a breakdown as juxx0r has done below.
          But to average it out doesn’t give a true reflection of costs. It’s like per minute for Foxtel…Foxtel is a fixed charge $X.xx per month…if I don’t watch one minute then what is the cost per min…it’s undefined.
          Electricity has two charges (in the main) a fixed charge and a volumetric charge, mixing them together doesn’t give a true reflection/indication of what is going on…it muddies the water.
          I understand why it is done and I am not saying the network is good value or not, but I think it best to state it how it is rather than mudding up the real story.

          1. Giles Avatar
            Giles

            You must be a network owner. If i wasn’t watching Foxtel much, I’d be cancelling the subscription. I think that’s the point being made about battery storage, it’s going to enable people to cancel their subscription to the grid when they consider ALL the costs.

          2. Rob S Avatar
            Rob S

            Yes I am a network owner…well, I’m a Queenslander so indirectly I am!
            And that being the case then considering all costs what are the future costs as more people leave the network? The government would bear the extra costs in the end and therefore we all get to pay in any case.
            It is interesting stuff!

          3. Giles Avatar
            Giles

            Yep, and so the answer is not to keep on jacking up prices. The answer is to price the network so it can compete with new technologies. We don’t advocate people leaving the grid, we just make the observation that it may make economic sense for them to do so, so maybe the networks – and the regulators – should do something (other than jacking up fixed charges)

      2. juxx0r Avatar
        juxx0r

        OK, lets look at it another way.

        Wholesale 4c/kWh
        Delivery 22c/kWh
        Plus fixed costs

        Delivery is 5.5 times the price of the product. It’s also twice the price of generating it yourself. It’s twice the all in price of other developed countries.

        Is that good Value?
        Plus fixed costs.

  6. John P Avatar
    John P

    It is highly likely that a good few enthusiasts who do go “off grid” will find that it turns out to be more expensive than they had expected. Batteries have to be replaced at a regular rate, and the recycle rate could be quite short if the domestic load demand has not been minimised by the initial design structure of the home itself and the ongoing consumption profile.

    1. Wolfgang Loescher Avatar
      Wolfgang Loescher

      A lot of people have put a lot of research into improving batteries. These new batteries don’t seem to be to far away at an affordable price.
      I think like computers in the early day which were hard to operate batteries and the software application will make it easier in a short period of time and far more reliable.
      A new industry will emerge around it and yes there will problems but we do get them now from the grid as well and it is aging.

  7. phred01 Avatar
    phred01

    JP & JB have a self interest in pursuing a negative point of view. Despite having cheap coal we have the most expensive grid and unit electricity costs of the western world. That said, the distributors will keep increasing grid connection costs to a point where customers that can go off grid may find cost saving will outweigh off grid down side inconveniences. Off gridders will need a mixture of solar & wind as the main source for electricity. On few occasions a backup generator will be needed to cover the shortfall

  8. Engineer Malcolm Avatar
    Engineer Malcolm

    John – your angry ant responses to everyone who dare challenge anything about the networks – is another reason that everyone is just going to get their backs up to not only maybe go off grid, but to put up an even stronger and stronger pushback on increasing DUOS charges.

  9. hugh spencer Avatar
    hugh spencer

    As one who has lived for over 20 years with stand-alone solar (and am an active researcher in the field) – the big issue with stand alone – is the owner understanding the limitations of such a system. Education is everything – and sadly not all solar installers take the time to educate their customers. Plus a modicum of understanding of physics (final year high school, helps a lot). Despite the seductive promises of Telstra LI batteries .. the reality is that most will use ‘gel’ lead acid cells (also called adsorbed glass mat – AGM). These can be very robust and thankfully are maintenance free and don’t gas. (Never buy flooded cell batteries!) However – you may have 1000 AH installed capacity (at say 24V) – but in reality you only have 330 AH – as discharging lead acid batteries below 30% starts to do them in rather quickly (through a process called sulphation) Users often don’t appreciate this – and garbage dumps are full of batteries that ought to have lasted 10 years – and didn’t make 3. Critical to battery longevity is watching the number of amp hours going in and leaving the battery bank (and throttling useage (or turning on the generator) when it get below 30%). Luckily there are fairly simple devices available that do this very visibly (such as the Trimetric 2020) . As part of our research, we are developing desulphation technology that really works on AGM batteries . which in our experience can double the life of AGM systems (conditions apply…as ever). I suspect that, Telstra not withstanding, AGM lead acid batteries will be the workhorses for a while yet. Ours have lasted 8 years so far with no evident serious diminuition in capacity (by just sticking to the 30% rule). Oh, and you get what you pay for .. ours are Sonnenschien, arguably the best brand in AGM.
    ( If you are interested:- http://www.austrop.org.au/blog.html

    Renewable Energy RAPS Systems in the Daintree Lowlands ( bit dismal – but reality 12 years ago – and describes basic solar configurations as well..)

    1. Mike Dill Avatar
      Mike Dill

      My guess is that AGM will be the go-to for the remainder of the decade, with Li-metal in constrained situations (high temp, low temp, weight issues, volumetric energy density, etc.) Once the cost of Li batteries matches that of Pb (per KWH), we will see a massive change.

    2. Wolfgang Loescher Avatar
      Wolfgang Loescher

      The good news is that new battery technology is coming rather quickly and becoming cheaper. Also some of the work i have seen cycling down to zero and up without damage is on the way. Add new smart application technology to it and it will look after it self in the not to distant future.
      Just look back to how phone and computers have evolved

  10. Chris Fraser Avatar
    Chris Fraser

    Bruce Mountain has taken a rational approach. Network costs have gone to their asymptote. The shape of the cost curve for storage is the inverse of this, and yet has room for 80% improvement. Does ENA reckon there’s no application for this technology in dense urban areas ? We’ll combine the correct DoD and discount rate, stay energised in blackout, and the volume from big generators will spiral down.

  11. nakedChimp Avatar
    nakedChimp

    The ball is in the court of the retailers/distributors and if they think that biz as usual (*) is possible with competition turning up and overtaking them pricewise they are wound the wrong way.
    Every man and his dog these days is carrying a mobile computer with him that has got a navigation device, a radio, a content player a camera for stills and movies, a … you name it. Imagine a device 10-20 years ago that would had been able to do that and the manpower needed to maintain it and keep it useable.
    Exactly the same thing will happen with distributed energy harvesting/storage.
    There are more people on this planet who are not connected to a grid than there are connected.. this means the market for such devices is HUGE and the power of innovation and cost reduction by scale are on the side of that technology.
    We won’t be talking about this any more in 30 years for anyone who is not in an urban area and/or who has the means to harvest enough energy to make it through the day/month/year.

    *) increasing costs for customers all the time, even if customers conserve energy as this is a sellers market with no alternatives

  12. Ian Avatar
    Ian

    John, for what it’s worth, I concur with you regarding Bruce Mountain’s article and have tried to expand on your analysis. At first I thought, like other commentators here, that you were talking sour grapes. Here are my sums:

    Ergon’s cost to provide 1KW capacity per year is quoted as $189. now they can provide 1KW continuously that is 365 x 24 KWH in the year = 8760KWH. This would give a cost of 2c/KWH. A battery pack from AGL $2200/KW is quoted in the article, presumably what is ment is per KWH of storage. We need some assumptions here. Life of 3000 cycles at DOD 50 % would be very generous. The battery would be charged in the day using solar and discharged in the night, that is one cycle a day. Life of battery 8.2 years. Cost of finance for 5 % interest is roughly the same as for no interest 2200/8=$275 a year. cost per KWH useful storage is thus: 275x 2/365 = $1.50 per KWH.

    This analysis is based on the figures provided in the article and the figures may well be BS just like the comparison made of KW continuous with KWH storage.

    I wonder if anyone else has spotted Bruce’s mistake in this article, quite fundamental, I would say.

    His figures do highlight at least two things :1. Ergon is making a huge profit at my expense charging $1.5 a day connection fee and 22c/KWH. When they can produce this power at 2cKWH. 2. Battery storage will have to become cheaper by an of order of magnitude before it becomes worthwhile installing. Frustrating as this seems, this appears to be the truth.

    The ultimate goal is to stop using fossil fuels and to use renewables instead. This of course means switching off coal and gas generation. A proper understanding of the difficulty in achieving cheap battery storage may offer other technologies a chance to provide a renewable, reliable and robust energy system, namely wind, pumped hydro ,etc. In Australia we have a small consumption base and there is a real concern that large scale facilities could become stranded before they even get a chance to play or see the light of day. For example pumped hydro could cheaply provide storage for distributed or utility scale solar but take a few years to construct. We are lead to believe that batteries will be disruptive in a similar way that solar has been. But, is that true? Are we barking up the wrong tree with the promise of batteries and missing out on real world pumped hydro and wind?

    1. Mark Roest Avatar
      Mark Roest

      No, not barking up the wrong tree. $2200 per kW is nuts when automobile companies are paying under $500 by now. Within 3 years the cost will be under $250 per kWh; maybe another $500 per kWh for balance of system and soft costs; not counting the ‘unexpected’, like panel replacements or upgrades.
      Tesla wrote that they’ll be disappointed if their cost does not go below $100 per kWh by the end of 2020.

      If you do rigorous, thorough energy efficiency and conservation (and passive solar design), you can take the requirement for a family of 4 from 4 to 5 kW to 1.2 to 2 kW of solar. This is per an energy efficiency engineer I met on a solar open house 15 years ago.

  13. Neil Frost Avatar
    Neil Frost

    I will be going off grid
    I will say there won’t be many on grid.
    I didn’t give a time frame.

    Look at it this way. Many years ago I had a new remote control car. It had a wire running from the controller to the car.
    As technology changes over time the wire disappeared.
    What makes anyone think this won’t happen with the grid ?
    Sure it will.
    It’s a matter of time.

    1. Phil Avatar
      Phil

      Yes so true , look at the old PSTN telephone copper lines . Pretty much a stranded asset these days in many areas. Why ? Cost and performance , they charged the earth for crackling or dead phones and dropouts with ADSL. I got 51 mbps down and 22mbps up from Wollomombi using optus 4G just a few weeks ago .ADSL or even the wireless NBN cant match this except for total data download cost. Electricity grids will be underutilised or stranded assets unless they drop the access fees and Kwh cost. Most will simply go off grid

  14. Phil Avatar
    Phil

    The easiest formula for off grid costings is this. And this totally excludes the poles and wires cost which for many in regional areas is tens of thousands for as little as 50 meters from the grid.

    So add up the cost of the complete solar install including the backup genset , then add the returns you have lost on that money at 2-3% in a secure term deposit , or say 5% if it’s off your home loan.

    Then add the replacement costs , or part of per annum , ie panels every 25 years , batteries say 7-9 years , genset fuel and consumables say 30 hours run per year (typical) and dont forget the life of the MPPT solar chargers and INVERTERS perhaps 7 -10 years for each if good quality.

    I did exactly this and by buying “scratch and dent” but perfect working Trina 250w panels plus DIY on the install as the strings are under 120v DC this is legal. My running costs are $2.30 per day , so for 10kwh per day average use it’s 23 cents per kwh with no gst and no access fee. It worked out at $1 per day for the missed return at 5% and $1 day fo replacement costs including batteries and 30 cents a day for genset fuel (30 litres per annum) and consumables such as spark plugs , oil , air filter etc .

    Obviously a commercial installed system such as mine which is 4.5kw of panels and 1000ah of batteries could be double or treble that. But when you look at some spending $35k to get power to their home in the first place it may make more sense.

    Also my system has triple redundancy with dual solar array / mppt charger and inverters and battery chargers . So the uptime is 99.9999 % . This is far more reliable than any grid i’ve ever been connected to . And in Brisbane the uptime was low as 97% due floods and storms

    This 10kwh per day is the worst case in the depths of winter , in summer i get 20-30 kwh per day but simply rarely use it

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