The stunning numbers behind success of Tesla big battery

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Tesla big battery accounts for just 2% of capacity in South Australia’s ancillary services market, but in just four months it has grabbed a 55% market share and slashed prices by 90%.

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The Tesla big battery in South Australia has already taken a 55 per cent share in the state’s frequency and ancillary services market, and lowered prices in that market by 90 per cent, new data has shown.

The stunning numbers on the economics of the country’s first utility-scale battery were presented at the Australian Energy Week conference in Melbourne on Thursday by McKinsey and Co partner Godart van Gendt.

Speaking as part of a panel on the leading technologies and strategies that will help manage the transition to renewables in Australia, van Gendt said the data was more evidence that battery storage would “play a very big role.”

He said that a lot of discussion around the success of the big battery – the biggest of its kind in the world, and delivered at break-neck speed – had focused on the fact that “we did it,” and not on the economics.

“So, I thought I’d give you a few numbers from the market data,” van Gendt said.

“In the first four months of operations of the Hornsdale Power Reserve (the official name of the Tesla big battery, owned and operated by Neoen), the frequency ancillary services prices went down by 90 per cent, so that’s 9-0 per cent.

“And the 100MW battery has achieved over 55 per cent of the FCAS revenues in South Australia. So it’s 2 per cent of the capacity in South Australia achieving 55 per cent of the revenues in South Australia.

“So that’s great for the first battery in the market,” he added, “but if you’ve already had 55 per cent of the FCAS that are now gone, right… and a 90 per cent drop in price, then the business case for the second battery, of course, is a bit less attractive.

“So I wish the second battery in South Australia a lot of luck!”

Van Gendt’s calculations are just the latest in a series of assessments that show how the Tesla battery – despite being mocked by detractors for its small size compared to the overall grid – is having an impact on the market.

Various estimates have put the cost savings to consumers from the FCAS market alone at around $35 million, just in the first four months of its operation.

That’s a pretty good bang for the buck for the estimated $50 million investment by the South Australia government. South Australia is the only state that has experienced a decline in FCAS prices over the past few months.

The fact that the Tesla big battery has been able to puncture the FCAS pricing bubbles created by the gas cartel illustrates how even small additions to capacity – and new dispatchable technologies – can change the equations and market dynamics.

Tesla is doing more than that: It is also changing the way the market operators and participants are thinking about the grid, and underlying the case for new rules to be developed to ensure that their assets are properly recognised by the market.

The Australian Energy Market Operator has praised its performance, noting how it can respond to faster than any conventional generator, and with more accuracy.

AEMO has also supported the push for new rules that would recognise very fast response, which it is now using as a front-line defence against any further grid-scale blackouts.

As van Gendt suggests, the development of new rules, and markets that place a value on its speed and accuracy, is critical for the next wave of batteries that will join the main grid over the coming months and years.

This will starting with the new battery at the Wattle Point wind farm (now due in June), and then at the Lincoln Gap wind farm in South Australia, and three different projects in Victoria.

Tesla Energy’s regional manager of business development Lara Olsen also spoke to the conference about how the value of the battery’s contributions to the South Australian grid could also be seen in its impact on bidding practises across the market.

Tesla’s observations are that for a thermal generator, often what decides what and when it bids will depend on fuel costs and O&M (operation and maintenance costs).

Renewable energy doesn’t have that fuel cost, and very low O&M, and battery degradation occurs only over time, so bidding became a matter of an opportunity cost.

Would it get a higher price if it bid 10MW into this five minutes or not, and would it get a higher price if it held on and bid in an hour’s time?

The same goes with charging. Should the battery operator hold off and will there be a lower price at which it can charge, even when it can’t charge from a renewable energy generator?

Olsen presented a graph to the conference showing the amount of re-bids into the SA market for the first couple of months of the Hornsdale system. We can’t reproduce it, although energy wonks can find the data here.

Imagine, though, two very very big balloons (representing the Tesla battery bids from charging and discharging), and numerous smaller different coloured balloons, representing hydro, coal and gas generators. Something like this above.

One of the two big bubbles represented the Hornsdale Power Reserve load, and the other the Hornsdale Power Reserve generation (charge and discharge). Both activities – load and generation – need to be registered, rather than the single facility.

The smaller balloons represented the bidding of coal assets, gas generators, hydro plants, and even an  aluminium smelter. But it was the speed and versatility of the battery that enable it to provide so many more bids than its competitions.

Tesla says the fact that the fact that it is always looking at opportunity costs that you can respond in 200 milliseconds – so the battery is happy to discharge, charge, discharge, charge, as it doesn’t affect the battery degradation.

And because it can use its software and take this into account and change its bids, means that it’s starting to participate in the market in a different way. And that will start to impact how generators also start bidding into the market.

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141 Comments
  1. Pedro 6 months ago

    Will that price drop in the cost of energy translate directly into lower bills for residential customers?

    • DJR96 6 months ago

      In time yes. The retailers are getting the benefit of these lower wholesale prices now, but they don’t adjust their retail prices very often, once a year for many. With a bit more margin to play with they SHOULD be offering lower prices next time they adjust.

      • Pedro 6 months ago

        So I guess the new SA LNP will claim they were the ones to reduce power prices for SA.

        • John Saint-Smith 6 months ago

          Not if the redoubtable Turnbull has anything to do with it. He’ll claim that energy storage was his idea in the first place, only he was talking about pumped hydro.. well it’s kind of the same.

      • neroden 5 months ago

        So retailers will just take the lower wholesale prices as profit, until the first retailer decides to cut prices in order to *increase market share*. Whether this actually happens at all depends on how many retailers there are in the market.

        How many are there?

        • Mike Shurtleff 5 months ago

          …or they could force more honest regulation. Also, home solar + battery storage should help push them to lower their prices.

          • DJR96 5 months ago

            Yes, regulations need to loosen up to allow retailers to offer better deals and options instead of being stuck with the regulated market price structures we have now. To be truly competitive all customers need some exposure to the wholesale electricity price. Only the largest industrial customers have that at the moment.

        • Hettie 5 months ago

          It varies from place to place. Not just by state, but by region too.

      • Michael Murray 5 months ago

        Why ? Surely they have a responsibility to their shareholders to increase dividends ?

        • DJR96 5 months ago

          Indeed they do. Hence the ‘react as slow as we can get away with’ attitude. But they also have to remain competitive or else they suffer a mass exodus of customers to their competitors.

          • Michael Murray 5 months ago

            If there are competitors and the competitors compete. I don’t see a lot of that.

          • phillyc 5 months ago

            Fast up, slow down is the normal business model. Eg petrol.

    • Ray Miller 6 months ago

      As DJR has said yes, each state goes through a process of setting the basic rates using averages over the previous 12 months including all the other costs. So while one area, FCAS in one state has shown a reduction it is but one cog in the very much delayed and distorted customer price wheel.

      • MaxG 6 months ago

        And since SA is now a LNP state, they will pocket it before passing it on to consumers.

        • Joe 6 months ago

          …and I’m betting that the Marshall will take all the credit for lower power prices in SA.

          • Michael Murray 5 months ago

            Well that might be the only reason he pushes the retailers to drop the price.

    • Mark Potochnik 5 months ago

      Smart residential customers will install their own solar at batteries at home.

      • itdoesntaddup 5 months ago

        Is that really economic?

        • Hettie 5 months ago

          Solar, definitely.
          Batteries to go off grid, definitely not yet.
          Batteries to cover the dark hours, now maybe,
          Soon , for sure.

        • Mark Potochnik 5 months ago

          YES!

  2. DJR96 6 months ago

    Once Australia gets a few more of these big batteries in each state, synchronous generators will not be getting any auxiliary services income. Good thing that, they were never any good with it anyway.

    • remoteone 5 months ago

      The business plans for more batteries will not be as attractive as for the first battery. The Hornsdale battery has been able to pick the most profitable end of the energy supply market so it will be interesting to see how new batteries can find their place. I wish them luck in finding niches, leading up to a time when they become a majority energy resource.

      • Alastair Leith 5 months ago

        I think Hornsdale battery owners are quite keen to get that message out there don’t you 😉 No disputing the truth of it, but last thing they need are five more ‘batteries’* of equivalent specs hitting the SA market. Go to QLD or VIC or WA or NSW they seem to be shouting, and why not.

        * Hornsdale battery is actually two installations 30MW & 70 MW (IIRC) with different energy capacities as an article by Dylan McConnell at the time of opening detaile.

    • itdoesntaddup 5 months ago

      That would only be true if there were no round trip loses for batteries. The evidence on HPR suggests that their round trip losses are about 20%, so they need to sell for 25% more than they buy for just in order to break even. That applies to FCAS every bit as much as to other forms of arbitrage.

      • TheWay 5 months ago

        That seems a bit high. Lithium Ion in general has 97-99% round trip efficiency. If there is loss of 20%, then it would be on other things like conversion of voltage, and transmission losses and the like.

        Though the losses should be lower when it is DC to DC (wind to battery) than grid loss -> AC to DC -> battery.

        That said, keep in mind that cost is a factor of overall equation. Since it would also make electricity cheaper due to levelizing the distribution costs.

  3. Tim Forcey 6 months ago

    NAILED IT

    It’s sort of like a builder who always used a hammer. And then he/she finally got hold of a nail gun…

  4. Carl Raymond S 6 months ago

    Wow. Great news for Tesla and the battery industry. Every grid now has an open and shut case for at least one big battery. That gives battery makers the business case they need to fund rapid expansion. This means they will be close to ready by the time the auto industry is clamouring for batteries trying to keep up with Tesla.

    • Carl Raymond S 6 months ago

      …and as Leigh Sales might say: “Suck on that Josh Frydenberg”.

      • Nick 5 months ago

        Exactly

    • Hettie 6 months ago

      Hmm. And what will it all do to Tesla’s notorious inability to keep production up to its promises?
      How many Tesla 3s coming off the line this week?
      Anyone?
      5,000?
      No. I didn’t think so.
      No, I don’t have a link, but wouldn’t Elon be yelling it from the rooftops if they had hit the target?

      • Carl Raymond S 6 months ago

        Watch the yellow dots on the Bloomberg tracker. It’s the most exciting page on the internet. When the weekly rate hits 4000, Tesla have succeeded in becoming profitable. As it climbs higher, it’s jam and cream.
        https://www.bloomberg.com/graphics/2018-tesla-tracker/

        • Hettie 6 months ago

          Hmm very interesting, but nowhere near the target yet. Don’t hold your breath.
          I am aware that car lines and big battery lines are not quite the same, but it does not seem, shall say wise, to order a Tesla product if you want prompt delivery.
          The HPR was a one off, a vanity project. Great publicity, and it works brilliantly, but at the expense of every other Tesla customer.
          Once they are meeting production targets, I’ll give them loud applause.

          • Michael Murray 5 months ago

            But he hits the target here

            Sorry wrong target.

          • Ren Stimpy 5 months ago

            RIGHT ON !

            DOCKING BONUS
            19 X 100 = 1900

        • Ian 5 months ago

          It’s Melbourne cup race, that’s for sure. The thing about Tesla is that the example it makes building pure EV

          • Carl Raymond S 5 months ago

            That’s why the yellow dots are exciting. They say that Tesla isn’t going to crash n burn. Profitable as soon as the weekly rate hits 4000. Just weeks away.

          • Ian 5 months ago

            Praying hands and/or fingers crossed.

          • Eric 5 months ago

            5k a week

          • Carl Raymond S 5 months ago

            Perhaps at current cap ex. But a large part of that is discretionary. At last earnings call they discussed aligning cap ex with staying in the green. At 4k/wk they are in the drivers seat, no longer *needing* cash injection.
            It’s academic. The gap between 4k and 5k just a month.

          • Eric 5 months ago

            Maybe, but I’m sticking to the 5k as the real turning point.
            That is what they have guided and that is the target.

          • Carl Raymond S 5 months ago

            Do what you like. I’ll pop them at 4k.

          • Eric 5 months ago

            Lol, each to their own. But I reckon you are going off too soon. There may be some hiccups between 4k and 5k yet.

          • Carl Raymond S 5 months ago

            Almost certainly there will be hiccups. Champagne effect. Cheers.

          • Calamity_Jean 5 months ago

            “The question is how self-sustaining is this movement if the most flamboyant proponent, Tesla, crashes and burns. Will the other car makers and regulators pack up their bags and go back to their ICE slumberland.”

            If Tesla’s Fremont factory was knocked down by an earthquake, and the Gigafactory was shredded by a tornado, I’m sure we’d hear a huge cheer of joy from all of the European and American ICE car companies. The American ones would instantly cancel all plans to make electric cars, and the European ones would slow to the pace of an arthritic snail. It would be an enormous benefit for China, which isn’t stopping electrification no matter what.

            Absent natural disasters, I don’t see how Tesla could crash and burn at this point. They are too far along.

          • Hettie 5 months ago

            Ah, but UK, Norway, big parts of Europe and China have already set end dates for new ICE sales. That can’t be ignored.

          • Calamity_Jean 5 months ago

            I did say that China will electrify no matter what. The European carmakers’ attitude I suspect would be something like “You can’t buy what we won’t sell”. Who would win a battle of wills, the governments or the hugely rich and influential car companies? Cynically, I fear it’s the car companies.

            OTOH, I’m an American. My outlook may be poisoned by the evil creep who occupies the White House.

          • Eric 5 months ago

            That will certainly drive the initial production of EVs. But once EV’s become cheaper then the uptake will be very rapid even without mandates. The running costs of EV’s are a fraction of ICEV’s and they are more fun to drive with no pollution. Everyone will want one.

            But the oil industry will do everything in its power to stop this. It will get ugly. Because, as we have seen, the oil industry deosn’t care who or what it destroys in the pursuit of more oil.

        • Eric 5 months ago

          I beleive it is 5000 per week before it becomes profitable. That is what Elon has said at least a couple of times.
          I will be popping champagne when they have sustained 5k per week for 3 weeks. That is the moment when everything changes for Tesla. I suggest every Tesla/Elon disciple should have a celebration to mark this particular moment in time. 🙂

      • neroden 5 months ago

        Well, as someone said, “Tesla promises the stars and delivers the moon”. Since nobody else is delivering the moon, who cares if Tesla misses its promise to deliver the stars?

        Think about it.

        The leaks say that they’re over 3000 per week now. There’s a shutdown planned in late May which is supposed to get them to 5000 per week (addressing known bottlenecks).

        • Hettie 5 months ago

          The thousands of people who paid deposits of $1000 for Tesla 3 over a year ago would care. Indeed it seems more than a few have become tired of waiting and cancelled their orders.
          I do agree it has been extraordinary, what he has done, and more extraordinary that somehow Tesla keeps going.
          Perhaps I’m just cranky today.
          It happens.

          • Mike Shurtleff 5 months ago

            You’re cranky today. Win or lose, Tesla has made a huge impact on pushing the EV and Battery storage markets forward. I believe those deposits are refundable. Not screwing anybody.

          • Hettie 5 months ago

            You are correct on all points, Mike.
            I still find that the adulation of Elon Musk raises my risk detection antennae. When something seems too good, too amazing to be true, it often is.
            If Tesla reaches profitability soon I will be relieved and delighted for everyone with skin in the game. The Powerwall offered a great white hope for escape from crazy power bills, then the delays…. Same with Tesla 3.
            So very many companies have gone bust through trying to expand too fast, it has seemed that Tesla might be one of them. Which would be a great pity.
            I am surprised at myself. Not usually one to wear the black hat.

          • Steve159 5 months ago

            They’re expanding fast, yes, because they need to. Jaguar is releasing later this year their ipace, a direct competitor to Tesla’s SUV.

            You might have missed Musk’s reference to the Gigafactory, as Gigafactory 1. You can bet they’re planning to build another soon.

            What they’ve achieved so far is quite extraordinary — over a thousand Tesla super-charging stations worldwide is quite a feat in itself (the real-estate, infrastructure …)

          • Mike Shurtleff 5 months ago

            Agree, but doesn’t really matter to cause of promoting EVs and Storage Batteries. I would also like to see Tesla succeed. Even if they do not, they have already made a huge impact. They have already greatly accelerated the acceptance of EVs and Storage Batteries.

            Maybe their solar shingles will also lower cost and accelerate installations of Solar PV on homes. I’ve long thought making Solar PV part of the roofing was the way to go for lowering residential installation costs. Looks like they’ve solved the durability problem I’ve seen in past efforts. Will be interesting to see how well they have handled the heat dissipation reducing efficiency problem. …or maybe it never was that big of a problem.

            Adulation? Not me. Admiration.

          • Alastair Leith 5 months ago

            It’s not just one man, Elon Musk. He has a big team of brilliant engineers and designers etc etc. He had the vision and audacity but I’m sure many of his employees come with just as much enthusiasm for their goals and almost as much brilliance to contribute.

      • Ian 5 months ago

        Sorry Hettie, but you get your news from Tesla detractors. Musk and his team have a real chance to pull off something special. A disruption to the ICE paradigm. We should all be hoping and praying that he succeeds and if you have a few dollars buy shares in Tesla. Even if this company goes bust and you lose your investment you would have still been a part of something extraordinary.

        • Hettie 5 months ago

          I get my news about Tesla from these pages.

      • Nick 5 months ago

        Deleted. Read your other posts further down

        • Hettie 5 months ago

          Thanks for that, Nick.

      • Bernard Finucane 5 months ago

        You remark is off topic since it is about cars, and it shows you don’t really understand the industry. Several points:

        These batteries were not all produced by Tesla. Tesla delivered the project with third party batteries.

        Battery manufacturing has a completely different set of challenges than car manufacturing, which is a logistic nightmare compared to battery production.

        Panasonic runs Tesla’s battery manufacturing operation, and Panasonic is probably the world’s premiere mass producer of key components like batteries.

        If Tesla’s car manufacturing issues continue, then that will free up more battery production for projects like this one.

        Considering Tesla’s cash flow issues, they are probably keen to sell batteries as quickly as possible.

        • Hettie 5 months ago

          I don’t think that you are an administrator of this newsletter.
          If you were a frequent contributer here, you would be aware that we frequently stray from the essence of the article. That’s what makes it so interesting.
          I make no pretense to understand the battery industry, or the car industry. I was merely voicing my thoughts about the well publicised shortfalls in Tesla production, and caution in accepting promises that have so seldom been fulfilled.
          If you have a problem with that, tough.

          • Bernard Finucane 5 months ago

            LOL, you don’t actually know anything, but you have strong opinions. Or maybe you don’t even have opinions, but you like (or are paid to) stir up controversy.

            Anyway thanks for confirming my initial observation that you don’t know what you are talking about.

          • Hettie 5 months ago

            Bernardino, a quick run through your comments history shows that you seldom say anything of substance.
            You alost exclusively accuse others of being trolls, in a variety of journals.
            A couple of sensible comments about bike lanes were the only positive items I saw.
            Remember that this is an Australian newsletter about the Australian Renewable Energy Market and associated issues.
            We are quite capable of calling out our own trolls, and I doubt that any of the regulars here would agree with your assessment of me.

          • Bernard Finucane 5 months ago

            So you are now claiming you do know what you are talking about, or are you sticking to your previous claim that you don’t?

          • Hettie 5 months ago

            Only one way to deal with sniping trolls.
            Blocking you now.

          • Eric 5 months ago

            It’s worth remembering before criticizing Tesla’s production problems that they are probably the fastest growing manufacturing company in history. Only a few years ago they were producing almost nothing.

            If they have a problem with delivery it is because the whole world wants their products. And those products don’t magically appear out of thin air.

            And Giles is correct. Even one of the oldest manufacturing companies on earth, Panasonic, can’t keep pace with the demand for Tesla battery packs. Tesla had to source the cells elsewhere for the big battery. Panasonic is also investing at a frenetic pace to keep up with battery demand. It is not just a Tesla problem.

        • Giles 5 months ago

          That’s not true. Panasonic provide the cells for the Tesla batteries, Tesla manufactures the batteries. My understanding is that Panasonic could not keep pace, so Tesla turned to other cell providers to meet the Hornsdale deadlines.

          • Bernard Finucane 5 months ago

            I’m not sure what part of my remark you are saying isn’t true.

            I can’t prove this, but I strongly suspect that Panasonic is providing a lot of the know-how for the manufacturing, up to the point of providing knockdown kits. In any event assembling a battery is a much less complex task than assembling a car.

            Panasonic may not have been able to deliver on the Australian deal due to the short notice Musk gave them. My thought is that if Tesla is having issues manufacturing cars, they will have a backlog of batteries (or cells), so they will push battery sales to improve cash flow.

          • Eric 5 months ago

            Few points. 1) Of course Panasonic and Tesla collaborate on the batteries and packs at the Gigafactory. Panasonic has a factory inside the factory, it is a separate area. Panasonic makes the cells and that’s it. The cells go through a wall and everything that happens after that is Tesla’s problem. However, when Tesla had difficulties with the Model3 pack production line, Panasonic sent key employees to help them out.
            2) Most of the know how on the battery pack engineering side is all Tesla. In addition, Tesla has it’s own battery research division and has improved the cell chemistry in collaboration with Panasonic. Tesla has contributed to the improvement in batteries that they are using.
            3) Tesla bought Grohmann Engineering, a Germany company specializing in production line automation. Grohmann now works exclusively within Tesla to improve automation processes and design.
            In fact, they just designed and built a new model3 battery pack line for the GF which is being installed now.
            4) Tesla has an agreement with other battery companies to get access to batteries if Panasonic cannot meet demand. Tesla is now the biggest battery consumer in the world

  5. Chris Fraser 6 months ago

    Looking forward to development of super capacitors for use in FCAS, that charge and discharge quickly. That would leave more room in the Hornsdale Power Reserve for taking up more of the real energy load, for longer periods of time.

  6. Ad van der Meer 6 months ago

    As more renewables come online, there will be more room for other batteries to join on the grid, even in South Australia.

  7. Ian 6 months ago

    It’s a great story for the nightly news and other mainstream media.
    I wpuld hope the Labor party gets the credit it deserves though.

  8. Cooma Doug 6 months ago

    Bidding of batteries on load and supply side will be rapid, automated, dynamic and always active. Trader/ customer intervention will be rare and the process, a normal part of the battery inclusion on grid.
    It doesnt matter what you do at home the process will be absorbed in the constant bidding adjustments. I expect that a large number of load shifting products will imerge and function in the market in the same way.
    It is becoming obvious that synchronous base load gens will have a back seat in this product evolution.

    • Chris Fraser 6 months ago

      The technology is beyond reproach so it seems – so it’s goodnight to the synchronazis.

  9. Paul Surguy 6 months ago

    More batteries Please

  10. Tom 6 months ago

    This is great news for smashing the corrupt FCAS market. Well done Weatherill and well done Neoen and Tesla.

    Unfortunately, and absolutely predictably, the numbers will not stack up as well for new players as it will for the incumbents (and if a new player enters, it will bugger up the numbers for the incumbents equally as it will for themselves).

    One reason why the whole network should be government owned (and I don’t mean the Singapore government and the Chinese Communist Party, as the late John Clarke might have pointed out).

    • Ian 5 months ago

      That’s it, there is money to be made in the FCAS, initially a lot of money, considering that, apparently, this service was used to extract vast sums of money from consumers by holding the wider grid to ransom. How many Hornsdale type batteries will it take to make FCAS par for the course and attract very little money?

      Reading these articles and people’s comments my understanding is that the value in FCAS lies in the ability of generators to withhold support until the price suits them. ie, demand a huge ransom. If that’s the case then the size of the battery fleet may not be directly proportional to the earnings additional battery owners may expect. One or two more players may collapse this market.

      Batteries would play a large role in daily matching of generation and load , this is probably not as lucrative as the minute by minute or 1/2 hr by 1/2 hr FCAS jostle but would be a much larger ( and more honest )market available for many more players.

      • Ian 5 months ago

        Another thought to try understand this issue: if FF generators find gaming the FCAS market a necessity in order to be profitable. What would happen to their bottom-line if this income stream was no longer available? Would these sorts of generators still be able to compete or even survive commercially to provide any sort of backup service?

        Is it not a good thing to provide them with a few highly profitable rollies so that they don’t go completely off the edge when we may need to rely on them for slack renewables periods?

        • Rob Roy 5 months ago

          It would have to be well disguised, given the FF industry’s strong ethical stance against subsidies.

          • Ian 5 months ago

            Thank you, yes, but the disguise has worn pretty thin! The truth be out!

          • Hettie 5 months ago

            ROTFLMAO

        • Michael Murray 5 months ago

          If the network needs backup generators they should be paid for by other network users in a transparent way. Like the SRAS some people are paid to provide the network.

        • Giles 5 months ago

          The FF generators trebled their profits last year by gaming the system like this. I’m not sure we should be encouraging them to lock those ridiculously high margins in, any more than we should be encouraging regulators to lock in high network costs. the consumer gets screwed both ways – i can’t wait for a proper business model that finds a way to deliver electricity to consumers at something related to cost, with an adequate margin. The only people finding that so far are those choosing to go off grid,

          • Hettie 5 months ago

            Here’s a plan, Giles.
            Scrap all subsidies to FF mining, exploration, generation, and that includes making the owners pay full whack for site remediation and coal dust related health and building erosion damage.
            Use the money saved to buy back the coalers, at prices that will have dropped through the floor because the party’s over.
            Run them only long enough to give the affected workers and communities time to reskill and adjust, then start closing them down, dirtiest first, then oldest first, as soon as there are enough renewables on line to cover the withdrawn output.
            Work on retrieving the grid infrastructure too.
            Essential services should be owned by the nation.
            If grid access is costed per kWh, not per household, and the rapacious FF clowns are out of the way, there will be far less incentive to defect from the grid.
            How does that sound?

      • Tom 5 months ago

        I love the way you explain the underlying value of FCAS.

  11. George Michaelson 6 months ago

    And yet Wetherill lost political power. Shows how people can succeed in economics terms and lose in other ways.

    • Grpfast 6 months ago

      Jay was too far ahead of the voting population. And knew it was unsellable as most were to ignorant.

      • Hettie 5 months ago

        It’s not kill Bill we should be baying, but Kill Rupert.
        Doesn’t have the same ring to it, but would do the whole world a mighty favour.
        A free and diverse press, that keeps the public apprised of the truth of current affairs, would be the greatest support of real democracy.
        As the Washington Post motto states,
        “Democracy Dies in the Dark.”

  12. Harry 5 months ago

    So when can we expect to see a reduction in our power bills

    • Hettie 5 months ago

      Possibly July 1. First bill after that.

      • Harry 5 months ago

        And what will the price be

        • Hettie 5 months ago

          Lower than now.

      • Michael Murray 5 months ago

        Why would you expect the price for Adelaide consumers to go down as a result of these FCAS savings ?

        • Hettie 5 months ago

          Why not?

          • RobertO 5 months ago

            Hi Hettie, I suspect that the answer lies in our retailers of electricity. There is so much competition (none) between the three big players that there will be a price increase on 1 July 2018. Wholesale prices for some have gone up( coal is lifting the wholesale prices to cover solar issues coming), some parts of the market (FCAS) may have gone down, then there is the Transmission people whom want there increase, and then the retailers (would a big company decrease prices if they think they can hide behind contracts with little information about the PPA that they have agreed to). I am of the opinion that more profits for the next few years will drive prices up before they become lower for most small residential consumers. One big reduction will occure when the poles and wire get written down and another will occure when block chain retail selling becomes common to the market place.

          • Hettie 5 months ago

            And yet IPART is using a drop in the wholesale price to justify lower NSW FiTs.
            That won’t wash with consumers if the retail price does not go down.

          • RobertO 5 months ago

            Hi Hettie, Check out the Victorian IPART ruling FITs are going up. The answer is that we must all live in self-contained spheres on space ship earth. I suspect that one of the lies told is that we need to keep paying more for the poles and wires in NSW (and nothing said about grid defections) and as such I believe they will put power prices up. Remember NSW only sold the Grid last year (or the year before) so sovereign risk will not allow a write down yet.

          • Hettie 5 months ago

            It’s a 99 year lease, not an outright sale, not that that makes much difference to consumers alive now.
            Interesting, to me is that Ausgrid, which provides grid service to me, is reducing it’s daily charge. Don’t know by how much, and in any case even if it’s 7c per day , it will be only a few $ a month.
            I do know that there are many, many solar rooftops in the Ausgrid area, so it may be an attempt to keep customers from defecting.
            NSW of course has a Coalition Gov’t, at least until 23 March 19, and a very unloved lot they are. A new Labor Gov’t may change IPART’s ideas about the FiTs. Hope so.

          • Michael Murray 5 months ago

            Because large companies exist to make profits for their shareholders. The only lower prices if they are made to compete. I don’t see much of that in the Adelaide electricity market.

  13. Harry 5 months ago

    With power prices of 52ckwh South Australians must be absolutely beside themselves

    • rob 5 months ago

      If you are paying 52c in S.A. you are mad……. my rates are 41c and 45 cents and then receive a 24% discount if I pay my bill on time!

    • Bob Halifax 5 months ago

      Not sure where the $0.52 per kWh comes in.

      In my SA power Bill, I pay $0.29 per kWh including a residential discount by having an online account with direct debit plus a $.082 Daily Supply Charge. Both ex- GST.

      My kWh rate is slightly less than last year and as I was informed by my supplier, they review their rates once a year, which has now occurred and that revised rate which will be lower again – expected to be passed on to consumers in FY’19.

      However I am not sure what the new rate will be, only that it is will be reduced again.

      One of the problems in SA is the average person has been so brainwashed by the Murdoch newspapers, local Radio & TV, the State Liberal Party and the Federal LNP, into believing that their residential power prices are the highest in the world, this is not true.

      If residential customers spent more time looking at their power bill options with an open mind they will find a reasonable deal – relatively speaking. Each consumer has a different demand requirement, there is no ‘one size fits all’.

      One of the issues not being addressed is the owner of SA Power gouging significantly more profit from the poles & wires business than compared its operations in the UK, for example. The fear being, as wholesale generation prices come down even further in SA as more renewables come into play, this cash cow will try and extract more, they already had one recent application to increase fees knocked back by the authorities.

      • Hettie 5 months ago

        When did your rate last change, Bob?

  14. Michael Murray 5 months ago

    So that must be why The Royal Society made Elon a Fellow this week!

  15. Michael Murray 5 months ago

    Various estimates have put the cost savings to consumers from the FCAS market alone at around $35 million, just in the first four months of its operation.

    Is this really a saving to consumers though ? My brief hunt through AEMO’s website says that FCAS payments are recovered from, i.e. charged to, market participants. As my AGL bills haven’t dropped I guess the obvious suspects are pocketing the savings. I’m shocked, shocked to discover I’m being ripped off again.

    • itdoesntaddup 5 months ago

      Seems like a dodgy statistic anyway. See Figure 9

      https://www.aemo.com.au/-/media/Files/PDF/Guide-to-Ancillary-Services-in-the-National-Electricity-Market.ashx

      The annual total for FCAS was about $30m in 2010, $38m in 2011, $25m in 2012, $23m in 2013 and $30m in 2014.

      • Giles 5 months ago

        Oh, you think you’re clever, but you’re not that clever.
        Why go to the trouble of finding a graph in a report that stops in 2014.
        Oh, maybe because it doesn’t fit your version of events. Readers can go to this report, and page 11 to see that FCAS costs were up to $70 million a quarter in 2017.
        http://www.aemo.com.au/-/media/Files/Media_Centre/2018/QED-Q4-2017.pdf
        https://uploads.disquscdn.com/images/212023286fbbaa0e7b671c607f3cf338996e015ddc0ea7a9d307ca31ea905ccc.png.

        • Giles 5 months ago

          Just to clarify, FCAS payments were more than $200 million in 2017, according to that same AEMO document.

        • itdoesntaddup 5 months ago

          The interesting question is why should FCAS have become so much more expensive in recent years? The smoking gun is rising renewables on the grid (and off it), and falling availability of plant that provides inertia. So, thank you for providing the data that I didn’t immediately find. Can we complete the picture with data for 2015 as well? (I note your carefully selected chart avoids earlier years – touché). The key point is that back before batteries and windmills, FCAS was a limited revenue source, averaging less than $10m a quarter.

          • Hettie 5 months ago

            Oh please!
            Back before windmills and batteries, the generation and distribution of electricity were publicly owned, and operated for the benefit of the public, not shareholders.
            Peaks in demand were not used as an opportunity to send prices sky high, as they are now, because the aim of the game was to supply the essential service pretty much at cost.
            Again, you display your ignorance.

          • itdoesntaddup 5 months ago

            Hettie, I am not Australian, nor do I live there, so thank you for your explanation.

          • Hettie 5 months ago

            Sorry, IDAU, I was not aware of that. Your unfamiliarity with local conditions makes your comments far more comprehensible and reasonable.
            The market here is totally skewed and screwed by the AEMC, the body which sets the rules, and still lives in the 1950s, is beholden to the fossil fools, and hates renewables.

          • Giles 5 months ago

            The issue here is not renewables, but the rorting of the markets by the fossil fuel industry. As the regulator has pointed out, there is some 400MW of FCAS capacity in s.a. for instance, but the gas cartel only made 35MW available to low prices, deliberately pushing prices high.
            Because they could and they don’t give a toss about consumers. The tesla battery has put an end to that cartel behaviour. And that is good.
            The test for the clean energy industry is if – as more storage comes online and more renewables become dispatchable – will they continue to puncture the gas cartel’s outrageous pricing moves, or join them.

          • itdoesntaddup 5 months ago

            So why did that not happen before?

          • RobertO 5 months ago

            Hi Giles, and also Wind Farms can provide FCAS as well if the AMEC will allow it. WindFlow Technologies in NZ (now in recivership) were trying to sell the concept into any wind farms long before Australia decided to test the idea at Hornsdale and now down at Woolnorth. It was software that could be retro fitted to any WTG.

          • Giles 5 months ago

            Yes, we reported on Hornsdale tests, which were very successful, and the planned ones in Tasmania. Most new turbines now coming with designs that allow them to do FCAS. again, waiting for the rule-maker to catch up.

    • Giles 5 months ago

      My understanding is that FCAS payments are also recovered from energy users.

  16. Earl 5 months ago

    Would two batteries produce a new capability, the ability to have one battery charging while the other discharges? Would that be useful? Does switching quickly between charging and discharging increase the wear on the battery?

    • Ian 5 months ago

      Looking at the proposed batteries in South Australia, you may be right. But these new ones are distributed, various facilities like the lake Bonney wind farm are wanting to put in their own ones, this way they can make their output more dispatchable. These would be in-front-of-the-grid storage. The synergies are obvious: in-house electricity: free to charge the battery ;and in-house battery to manipulate the output.

      Batteries = arbitrage ! Only, with the in-front-of-the-grid type, the cost of charging does not include grid fees. I love the flip side of this idea that the Port Augusta SolarReserve project wish to add to their proposal: their case is essentually this: a self-charging battery facility to which they want to add further in-front-of-the-grid solar PV.

      Households with behind-the-meter storage can do some reverse-arbitrage. They can take their zero-cost home-grown electricity and store it to use later when they would otherwise need to import expensive grid-juice.

      Why is everyone trying to hide as much energy manipulation as they can from the grid?

      • Hettie 5 months ago

        Because of the vast sums of money involved.

        • Ian 5 months ago

          Yes, if the storage trends continue then commercial generators will sell to the grid their electricity when prices are highest and consumers will buy their electricity from the grid when prices are lowest!

    • Chris Fraser 5 months ago

      Batteries that create and store chemical energy like to “cycle”. That is become fully charged and discharge to a relatively high State of Charge (say 50%), but only slowly. And they like to charge or discharge in only one direction until this is achieved. So yes changing between charging and discharging shortens the life of a chemical battery. It’s not a problem for batteries that store their charge as static electricity (ie capacitors).

  17. Ken Fabian 5 months ago

    Seems that unlike some other new energy technologies, the highest value opportunities are going to be with the early adopters; FCAS alone is not going to support growth of a lot of storage. What comes next is storage sufficient to carry a solar rich grid overnight after every sunny day, allowing idling plant to fully shut down. A real step in emissions reductions should become apparent when that happens.

  18. David 5 months ago

    Really tell that to those at the retail end
    State Average Electricity Usage Rates April 2018 (per kWh)
    VIC 27.5597c/kWh
    QLD 29.0135c/kWh
    NSW 33.3283c/kWh
    All the above have no Musk Type Battery yet
    South Australia has & its residents pay highest retail price
    SA 43.6706c/kWh
    Way to go SA residents paying through the nose!!

    • Chris Fraser 5 months ago

      The source of your drama goes back to 1999 when the then Liberal government sold ETSA , and created a power network monopoly. How clever were they ?

      • itdoesntaddup 5 months ago

        So ETSA wasn’t a monopoly?

    • rob 5 months ago

      I’m happily paying 30 cents here in S.A. AND WE DON’T BURN (oops cap lock) that vile brown or black shit. We may import some on days but export more frequently! So David sorry but soon we will be at 70%-75% renewables and require no imports at all with all the projects slated……..STOP being a Fried N Burnt and congratulate S.A. on our Stella work and progress!

    • Hettie 5 months ago

      Now you’re being silly.
      Prices in SA have been high since long before the HPR was even thought of. With no suitable coal, SA has been heavily dependant on gas for its power, and we all know how gas has gone from being very cheap to very expensive in just a few years.
      You should also know, from reading RE, that retail power prices include several layers of costs that the retailers incur and pass on to customers. And that they all change their prices together, once a year. July 1 in NSW. Dunno about SA, but I guses the same. Financial year.
      HPR was swiched on after testing in early January. The first retail price change after that date will come in about 7 weeks.
      If the retail price does not come down then, feel free to start screaming when you get your first power bill of the new FY.

  19. Dave Burton 5 months ago

    It is being used for “frequency regulation” and to help smooth over the intermittency problem caused by unreliable wind and solar, not for significant energy storage. Let’s do some arithmetic:

    Australia uses about 10 MWh electricity / capita / year.
    population = 24,130,000
    So total energy consumption = a bit over 240,000,000 MWh/yr
    This battery stores 129 MWh (actually they probably avoid full discharge, to increase longevity, but let’s use that number).
    (129/240,000,000) × 60×60×24×365 = 17 seconds.

    So it stores enough energy to keep the lights on for about 17 seconds.

    • Hettie 5 months ago

      I see that you are in USA, not Australia, so your sketchy awareness of the way HPR works is understandable.
      The time this battery really comes into its own is when a coal fired unit fails, as they have done 3 or 4 times a week this year. Each such failure drops hundreds of Megawatts from the grid, totally without warning.
      In milliseconds, HPR detects the failure, and replaces the shortfall for long enough that the designated gas unit can fire up and take over. Probably less than 10 megawatts from HPR, but no real crisis for the grid.
      It does not need to cover the intermittency of wind and solar, because those are almost entirely predictable with good weather forecasting, and can be allowed for a day or more in advance.
      HPR was never intended to keep the lights on for the whole of Australia. It does perform very well to stabilise the grid when coalers fail.
      It soaks up excess power from the adjacent wind farm when that is surplus to grid requirements, and releases it as required.
      Perhaps you might consider posting this in the other journal where you posted your comment.

      • Chris Adams 5 months ago

        Please tell us how the coalers failed? I am seriously interested.

        • Hettie 5 months ago

          The detail is way above my pay grade, but in essence I believe that most failures occurred on very hot days, and the units’ tripped, sized, just could not cope.
          At least no boilers burst.
          The coalers are aging, and since being bought by private enterprise a few years ago (all were originally government owned and operated) are thought to have had less maintenance than perhaps they should.
          Probably another, technically qualified commenter will give you more detail.
          Me, I’m just a curious old woman who is interested in climate change and has enough time on her hands to read this newsletter and the comments each day.
          Somebody here will correct any errors I have made, and give you the facts. They always do.

        • Ren Stimpy 5 months ago

          They just got old and decrepit then privatised and maintenance-starved, and there is zero business case to replace them with expensive new ones.

    • Ren Stimpy 5 months ago

      You assume the remainder of the storage would cost the same per unit as that which has already been installed. Big mistake to ignore the cost curve.

      https://uploads.disquscdn.com/images/f9f62d5ece1204a4c22b5ec6128607932ce8451761290b0bc722fac461a362ac.png

  20. Ray 5 months ago

    Kindly proof read your work before publishing Several grammatical errors detract from this important topic.

    • Hettie 5 months ago

      Ray, *kindly* have a thought for how much writing Giles produces *every day,* and cut him some slack.
      None of us is perfect. I am a grammar fiend myself, and have also urged proof reading. Giles writing has improved greatly of late, for whatever reason, and if you are going to be picky, you will have a much harder time reading the comments than the newsletter.
      Learn to deal with it. It is well worth the effort.

      • Hettie 5 months ago

        Rereading the article, carefully, I could find only two lapes. One was a missing word. The other, use of “amount” when “number” would be more correct, is now in such common usage that although the purist cringes, the realist accepts that language is dynamic.
        Could you produce the volume of work that Giles does every day, and be completely correct?

  21. Kevin Brown 5 months ago

    Matt Canavan’s silence is deafening It looks like the Tesla big battery isn’t just famous for being famous like Kim Kardashian as Canavan recently and very embarrassingly claimed! It is smashing the exorbitant monopoly gas has had on the FCAS market.

  22. Dave Britt 5 months ago

    I disagree that the business case for a second battery isn’t there. Another ~50MW arrangement would comfortably soak up a good 25% of the remaining 45% of the market without dragging the price down that far. Not to mention if the government didn’t step in to reserve power in the battery for it’s own use the economics would be better again.

    In short I think the business case is there

Comments are closed.