Why battery system costs may fall 3x faster than solar PV | RenewEconomy

Why battery system costs may fall 3x faster than solar PV

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The big question for global energy markets will be how quickly battery storage costs can fall. Will they match the cost reductions of solar PV? Australian-backed battery technology technology group Sunverge says they will, up to three times faster.

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Everyone, it seems, agrees that battery storage is the next big thing to affect global energy markets. What is not agreed upon is the timing. Some think this may happen in a few years, others in a decade or more. Some think it is happening now.

The big question for many is how quickly battery storage costs will fall in coming years. Will it be as dramatic as that of solar PV, which took everyone but a few solar savants off-guard and cut costs 80 per cent over a five-year period? Some – such as investment banking giants Deutsche Bank and UBS – say it will. Others say it is not possible.

Ken Munson, the founder and head of smart energy systems start-up Sunverge – which is backed by an Australian government-funded investor – is in no doubt that storage costs will fall. In fact, he thinks they could fall three times as fast as solar costs did.

In an interview in Australia during his latest visit, Munson said the key was not just in the cost of the actual battery, it was in the balance of systems and the smart technology that goes with it.

munson“We see the same trajectory, probably being accelerated one-to-three times faster for the balance of plant and battery than what we experienced with solar over that same time horizon,” Munson told RenewEconomy. “That is pretty exciting.”

Munson says the cost falls will be driven by the likes of Tesla, and its new giga-factory – and other electric vehicle manufacturers, as the penetration of EVs grows.

“That is simple supply economics. General trend on overall capacity that’s coming on line in market. But it is not just a question of improvements in chemistry, it is in the balance of system costs and the system controls.

“We are not a battery manufacturer, per se, our intellectual property is tied up in controls and balance of system controls. We are in a massive cost down move now that is both necessary and fundamental to achieving scale in the industry.”

The San Francisco-based Sunverge last year finished a major fund raising that was led by Australia’s Southern Cross Venture Partners ($A15 million sourced from the Australian Renewable Energy Agency), German industrial giant Siemens and France’s biggest oil company Total. Sunverge now has a partnership with SunPower, which is majority owned by Total, and its solar and storage pilot program with SunPower will include Australia.

Sunverge’s battery storage and energy management systems have been deployed in the groundbreaking solar-plus-storage leasing program from New Zealand energy utility Vector.

But Munson says the real innovation in storage will not be around chemistry or power electronics, or around the software. “It is around business model and innovation, rethinking and unpacking that problem.”

For this reason, Munson sees Australia as one of the most prospective markets in the world. That’s because of its high electricity costs, huge grid, expansive geography, excellent solar resources, and the penetration of rooftop solar PV.

But it’s also because the industry – from regulators down to networks and retailers, partly as a result from the boom in rooftop solar and the prospects for battery storage – are beginning to rethink their business.

“Australia is a key market, and one of the most interesting in world. It’s not going to change overnight … but this market is at the precipice of some really big change.”

As Munson mentioned in his interview with RenewEconomy last year, Sunverge is not looking to take consumers wholesale off the grid. What he is aiming to do is to hit the intersection of consumers – household and commercial and industrial, networks and retailers – and use the storage and power controls and algorithms delivered through “cloud” technology to create a “value stack” for all concerned.


“That way you don’t end up sacrificing one for the other. And it’s a win on the policy side because it delivers cost benefits to the market that make sense.”

The key is in the use of battery storage and power controls and algorithms delivered through “cloud” technology that simply didn’t exist five years ago in the electricity supply chain.

So, who or what is going to drive this change? Consumers, retailers, regulators, network operators, or policy makers?

“That’s a good question,” Munson says. “We are still trying to figure that out. Over the longer term, it will be a little of all that will drive real scale in industry.

“What we are seeing is … that there is a shift in demand from consumers. One day, a DNSP (network provider) or retailer will scale out, and that will create a chain effect where others join in.”

“Right now everyone is putting their foot in the water in different ways. It’s just a question of scale and speed.”

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  1. Finn Peacock 6 years ago

    I’m not convinced that better software can reduce battery costs very much. And as a control systems engineer I really don’t think you can build a big-ass company off the IP in a Battery Management System – even if it is “in the cloud”. Honestly the code is not that complicated.

    • Horst 6 years ago

      Sure anybody who uses the word cloud in a self evidentiary way should be punched in the face simply out of caution, but underestimating its power is a form of dangerous thinking. As the taxi and accommodation industries now know, if your service industry is not frugal as f…, they are going to come and get you in ways you can’t even imagine right now.

    • Motorshack 6 years ago

      I’m a retired software designer with a fair bit of industrial automation experience, and I agree that battery management software alone might not be much of a hook on which to hang a whole company, much less a big one.

      However, I also have a fair bit of network management experience as well, and I got wondering what might happen if you had distributed generation and storage, combined with remote, centralized management. That is very cost-effective in the telecommunications industry, and – dare I say it – even in the existing electric power industry, at least to some extent.

      Individual customers could have the best of all worlds, local generation and storage and independence in case of grid failure, minimal dependence on the grid in normal times, and a small group of well-paid professionals (whose costs are distributed over thousands of customers) to manage it all efficiently for everyone.

      After all, the whole Internet works just this way, so the business model might be easy to sell, since it is now familiar to nearly everyone.

      Just saying.

      • riley222 6 years ago

        As an interested observer there does seem to be a general consensus forming on the way forward. Of the technical aspects I have no knowledge, but as a concept I can grasp the idea of a balanced grid.
        In OZ the current regime is wedded to coal as its energy supplier of choice, so nothing will change here until the next election, or maybe change of leader, although thats a long shot.
        Would be nice to see a committment from Labor to explore the possibilities RenewEconomy has highlighted.

    • Alastair Leith 6 years ago

      I don’t think he is saying battery costs will come down because of IT I think he is saying there may be significant savings if entire networks of batteries and energy users are having their energy usage harmonised in smart ways. That’s not so much control logistics as algorithm design and behavioural modelling.

      Yes there’s an Energy Monitoring company that got a $1 grant from the Government to redo their software “in the cloud” and now they make a very big thing of how it’s “in the cloud” and their services are not vastly different other companies in that space. It does provide their software some benefits to the engineers and users though.

    • Geoff James 6 years ago

      Hi Finn, the code is complicated if you want it to interact with households, networks, and markets, and be reliable enough to compete with traditional network technology. Plus as Munson says there needs to be a lot of innovation in the business model, which pairs with the software not to reduce costs so much as to generate good returns. Check out http://www.repositpower.com these guys are doing it with full industrial strength.

  2. Jim 6 years ago

    If we are talking about using lithium ion batteries – the same as in EV cars – for home storage, then we need to see a 3 fold drop in battery prices for good uptake.

    • Alistair Spong 6 years ago

      I dont think hes talking about singular houses going off grid , it would seem the most cost effective way would be supplying energy at the high cost and high supply demand times – if solar has killed the middle of the day peaks , batteries that service neighbourhoods could surely kill the peak evening supply demand and be far more cost effective than singular houses

  3. Glenn Albrecht 6 years ago

    I have just installed a BYD Lithium 8kwh, 3kw Distributed Energy Storage System (DESS) at my rural property in NSW. It is teamed with a Solar Australia 5.2 kw PV system. Yes, it was expensive, but it has the capacity to pay for itself in approximately 10-15 years (its warranty time is 10 years). So far, it has demonstrated that it can reduce my grid supplied power by 80-90% and the bulk of grid supplied power that I use is delivered in the form of cheap off-peak electricity for re-charging the battery at night (we are on Green Power as well). I have solar plus battery power during the day, battery power alone from 2.00pm until midnight and then if needed, off-peak to recharge the battery. The battery power is also available for blackouts as there is a built in emergency power and lighting circuit. The economic case for this technology is already strong, but economics is not the only reason for the investment. The emotional burden of being an ongoing part of the problem of global warming is great, and to invest in technology now that makes our house and property carbon negative is one way to reduce that ethical burden. The more people commit to this new technology, the sooner prices will come down. But if you only do things for crude economic reasons, most likely you are part of the problem. The future is solar and it is already here.

    • jeffthewalker 6 years ago

      Very, very interesting. You say expensive but can you post the cost of ownership (of the storage system) pliz? And, out of interest, what part of NSW?

      • Gordon 6 years ago

        If you are willing to go the DIY route, storage is much less expensive than the batteries in a box systems currently available. I’ve been running a LiFePO4 battery (CALB 400AH cells, 21kWh total, ~17kWh usable) since late 2012 off-grid, with 4.19kW of PV and zero generator use. Cost of the battery + BMS was under $11000.

        • jeffthewalker 6 years ago

          I am off grid and, counting 10 years living on board several boats, have been for 20 years. Currently, with 1.5kW solar and 20kWh storage (2nd hand donated), I run all electric (no LPG) and even pump bore water to storage tanks with “excess” solar. Mind you, I have a low energy requirement lifestyle. I designed my own system to pump when the solar controller is topping out.

          My price inquiry is for city friends and rellies who are wanting to jump onto storage as soon as it shows a reasonable payback period. Hence the interest in “off the shelf” solutions.

          For my off grid neighbour I combined solar and storage with occasional (DIY) automated use of a diesel 20A DC supply to supplement the solar panels on overcast days. The ICE does not charge the batteries, but just keeps the system
          topped up till the sun shines. On a “bad” sunshine day, it will cut in and out several times. February saw it run for about 4 hours. I found this combination of solar, storage and ICE worked out to be the lowest capital cost for our (pensioner) budgets.

    • Alastair Leith 6 years ago

      Great to hear a story of commitment to positive change, Glenn. If only rural landholders involved in livestock industries could remove the emotional burden of enteric fermentation and other sources of GHGs. Livestock industries being the source of half Australia’s entire GHG emissions in real terms*. Oh hang on they can with herd reduction and reforestation offset their emissions entirely.

      * bze.org.au/landuse

      • michael 6 years ago

        “Herd reduction” probably going to be a problem as we would restrict the supply of meat for the population…
        We could just all stop using electricity or driving cars and that would also ‘solve’ the problem, good one.

        • Alastair Leith 6 years ago

          Meat is not required like electrical energy is, it’s a cultural demand. Vegans are statistically healthier than meat eaters in broad longitudinal studies done in USA, so our lives are not dependant on growing meat. In fact only our healthcare and insurance industries have large livestock dependancies seeing as most of the Western disease epidemics come back to meat consumption (leading cause of heart disease, type II diabetes, many cancers, osteo, macular degeneration,…)*

          Also much of the production associated with emissions is the extensive range northern product which is mostly export. Obviously they grain feed them for a couple of years prior to sale so that impacts intensive ag cropping zones also.

          * The China Study by T Colin Campbell documents it well.

          • Sim 5 years ago

            Hitler was a vegetarian. Loved his dogs.

          • Alastair Leith 5 years ago

            That’s your best?

        • Steve Fuller 6 years ago

          If we are going to reduce GHG emissions either herd reduction, its replacement with burpless beasts or offsetting with a carbon sink (eg forestry) seem to the only alternatives.
          Emission free electricity and cars are on the horizon and no-one is suggesting reducing the supply of protein.
          These are solutions. What’s the problem?

          • Social responsibility is dead. 6 years ago

            Most Australian adults eat way more protein than is needed.
            The excess is excreted in urine, as urea.
            We have all been brain washed about “needing” to eat meat daily.

          • Alastair Leith 6 years ago

            Plant protein is more easily digested than animal protein too, requires less energy to create and less for humans to consume — and seeing as physiologically we most closely resemble the great ape frugivores that should come as no surprise to anybody. But it’s interesting what fifty years of saturation advertising on “Protein” and “Calcium” can convince populations of.

            In fact animal protein is associated with most of the disease epidemics that have for the first time in centuries shortened the life expectance of Northern Americans. Heart disease, type two diabetes, at least ten of most likely cancers, osteo, macular degeneration,… the list goes on and on for dairy and meat correlations with “western” lifestyle diseases.

        • Ian 6 years ago

          Interesting posts. The average 10 minute shower uses 25 gallons of water and 4kwh to heat apparently, most of the time showering is taken with washing hair. If everyone in Australia shaved their heads 3 X 20 000 000 kWh ie 60 GWH could be saved a day!

    • strez2Dmax 6 years ago

      Great stuff.
      You mention 10 years of warranty (?)
      Does that include warranty for 10 years on your batteries ?
      If so, what system is used to protect them from overcharge/discharge ?
      Something independent & ‘foolproof’ ?
      Many tks.

  4. Michael Tournier 6 years ago

    It would be fantastic if battery prices would fall quickly.
    I have developed a battery storage system with 28kwh of usable storage @50% DOD
    57kwh in total.
    it can handle 8kw of panels and can prvide a continuos load of 8000w at any given time.
    We have been able to produce and store electricity for a LCOE of $0;17 AUD per KWH at todays prices.
    this is cost of system and battery replacements and incidentals cost over a 25 year life.
    this is using the best quality Swiss electronics and good quaity batteries in a vitually plug and play set up.
    it has been a very big challenge getting a high quality sytem to the market at an affordable price.
    i would love for battery pricing to come down to half than we could offer the systems at a much lower price.
    anyone looking for info. http://www.powernational.com.au
    or email Michael [email protected]

  5. Mike Haydon 6 years ago

    We installed Nickel Iron Batteries in the middle of Sydney, and to me the numbers worked and from my research I have purchased my power for the next 30 to 50 years. This technology has been around for ever, what is the reason people dont consider Nife Cells?

    • nakedChimp 6 years ago

      “Due to its low specific energy, poor charge retention, and high cost of
      manufacture, other types of rechargeable batteries have displaced the
      nickel–iron battery in most applications.”

      >> http://en.wikipedia.org/wiki/Nickel%E2%80%93iron_battery

      If you got the space and the numbers work for you, all fine, but if not, even Lead Acid Batteries are superior to this..

      • Mike Haydon 6 years ago

        Hi Naked Chimp, Thanks for the response, Could you please explain how a lead acid battery is superior to a Nickel Iron Battery? I dont understand?

        • Calamity_Jean 6 years ago

          I am also interested in the answer. Poor charge retention?

          • nakedChimp 6 years ago

            poor energy & power density compared with other technologies.. the high self discharge isn’t cool either.
            For stationary, off-grid with ample of space this should be ok though if the price is right.

            Personally I wouldn’t want the hassle with the H2 gassing and pampering to make them last for the 20+ years and I also wouldn’t want to waste so much space.

          • Calamity_Jean 6 years ago

            Lead acid batteries also emit H2, so that doesn’t give Pb an advantage, but I can see that a high self-discharge rate would be a serious problem for nickel-iron.

      • Mike Haydon 6 years ago

        Hi Naked Chimp, I am jus following up to see if you had found any more information you can share with us in this?

        • nakedChimp 6 years ago

          Hm.. I can show you this link from Battery University: http://batteryuniversity.com/learn/article/alternate_battery_systems which talks about them and why they are not being widely used.

          Again, if you got the space (power density and energy density for NiFe is pretty bad in comparison to other technologies) and the price is right, it’s all good.
          They seem to last a very long time if you treat them right and are not toxic.

          • Mike Haydon 6 years ago

            Thanks Naked Chimp, that just not justify your statement about Lead Acid batteries being supurior to Nife cells? I have lived on both and used both systems not read some info that was published 4 years ago on info that is from the early 1900’s? I am not having a go it’s just you have read some information online and stated one technology is superior to another. Have you ever lived on batteries with solar?

          • nakedChimp 6 years ago

            I design, build and supervise systems that run on batteries that depend on solar which are in the ballpark of off-grid-weekenders, but personally I live on-grid still.

            As for why I, nakedChimp find at least LAB superior to NiFe:
            1) energy density
            2) power density
            Again, if you got the space and the numbers work for you ($/kWh or $/kW) it’s fine. I’m happy for you.

            Personally I’m going for LiFePO4 or something similar with an even higher energy and power density than LAB (of course they need way more management and safety to last the distance).
            It’s the same reason I wouldn’t privately get involved with redox-flow-batteries.. the energy density is just too low for me.

  6. Alan S 6 years ago

    This isn’t as pedantic as it first appears: Instead of saying that panel prices have reduced 80 per cent over a five-year period, it’s easier to remember that over five years panels have dropped to one fifth of their initial price. A handy fact to quote when dealing with deniers.

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