Battery solutions that can rival electricity retail prices are arriving in the Australian market, with the potential to further disrupt incumbent utilities’ business models. SolarQuip’s Glen Morris said that batteries with “optimised equipment” can store electricity in homes for between $0.23/kWh to $0.28/kWh.
Morris is currently working with solar distributor Solar360 on rolling out a series of storage products and power electronics for storage solutions. Morris said that the time has arrived where battery storage can compete with retailers, under certain models. Morris’ is currently running a three-day training program for the Australian Solar Council at Swinburne University.
“If you can store energy that cheaply, it suddenly makes it viable to put in a battery system in because it saves you money.”
Solar360 is introducing a number of technologies to make cost competitive storage available to its installers. These include a storage-ready inverter from Chinese supplier SolaX, two sizes of inverter/chargers from Schneider Electric and two lithium-ion batteries from BYD.
“About a year ago I was quoting $1/kWh with storing electricity with a lead-acid battery,” said SolarQuip’s Morris. He described the pricing of the new solutions as being a “game changer”. Morris explained a number of scenarios where these storage solutions can be cost-effective for households.
“If you’re in New South Wales and you’re on a variable tariff, you can have off-peak, shoulder and peak (pricing). Off peak is around $0.16/kWh, peak is around $0.53/kWh – that’s from 2pm to 8pm. If you’ve got electricity at $0.16/kWh, even without any solar, with battery backup you can buy at that price during the day and then use it between 2pm and 8pm, then it’s costing you around $0.40/kWh for that energy, instead of $0.53kWh,” said Morris.
Morris, who is also the vice president of the Australian Solar Council, said that adding solar to battery systems makes the proposition even better. “You’d then be getting electricity for the low $0.30s/kWh, when you’d be paying the peak rate.”
Naturally, this scenario doesn’t apply right around Australia, and time-of-day pricing is currently not being offered to all households. In fact, some utilities are reported to being taking steps to actively discourage distributed storage.
In South Australia, the current generous FIT for PV is cancelled if a battery is added to a solar installation and on the Horizon Power grids outside of the SWIS in WA, technical requirements in some areas may make adding storage problematic. On top of that, utilities may take steps to discourage storage by increasing fixed charges to bills or by applying grid costs even if a residence goes off grid.
“Retailers are now in direct competition with their customers,” said Morris. “The utilities will be pushing hard at all levels, technical, regulatory and political – so it’s going to be a real battle.”
Despite these potential hurdles, some remain bullish as to the cost reduction path that battery manufacturers are on.
Former Sustainable Energy Association CEO Ray Wills said that battery technology, such as lead acid and lithium-ion, are mature technologies and that for lithium-ion, increases in production for industries such as e-mobility and consumer electronics driving major increases in production volumes.
“We’ve seen a 600% increase in production of solar panels over the last five years and the consequence was that solar panels came down in price more than 80% over the course of several years,” said Wills, “and we’ll see that sort of development with batteries as well.”
This will impact on battery payback periods, potentially leading to a boom in installations. “What we know at the moment is that batteries installed in the home have a payback of round and about nine to ten years, so when we see batteries drop behind a five-year repayment, we’re going to see a very rapid uptake.” Wills’ prediction is for batteries for family homes to reach that point some time in 2015.
