Will Tesla’s teaser start an avalanche? – Not likely

Having focused on residential storage for the last six years, and the ideal product to handle the future demands, one thing has weighed most on our storage story. The key is when will it become cost effective?

As with solar, early adopters are likely to be the first customers for this technology, these being the renewable tragics, who want to avoid fossil fuels at all costs, and then there are the ones who just want to “stick it to the man”.

The former are already fashioning hybrid and off-grid systems using 48VDC storage based primarily on Lead Acid technology, mostly as a derivation of off-grid systems from decades past. Those who want to go off-grid are pulling back once the limitations and restrictions that come with “cutting the cord” are realized.

Everyone is touting the Tesla Powerwall as a game changer because of price, but we can tell you pricing they offer won’t make it work as everyone thinks, our pricing has been at the same level for four years and we still don’t have the demand to take the final steps in deployment. Perhaps this will change sooner rather than later.

The way we see residential storage taking hold is through bulk deployment by energy retailers, those who stand to benefit from claiming not only the four-to-eight cent margin they currently enjoy, but the additional twenty cents per kilowatt in transmission and generation costs they currently collect on behalf of others.

Those who are on high time of use charges are the most likely to purchase but even if one elects to go on time of use the benefits improve only slightly.

Based on Telsa, and similarly our product, a ten year ownership model, which includes return on capital and maintenance costs, amounts to around twenty-four cents per kilowatt of electricity delivered. So for those on fixed tariffs, the current benefit is marginal at best.

Once you add in the ever increasing network access charges, which are unavoidable if you aren’t prepared to become a hippy, the storage case looks nigh on impossible to market.

You have to remember that the huge uptake in solar came about from massive federal and state government subsidies and payback periods of less than three years. Currently solar on it’s own returns anywhere from ten to fifteen percent on investment, couple that with storage and the ROI drops to between five and ten percent.

We have shifted our focus recently to using our Sun Sink product to tackle demand fluctuations in commercial and industrial situations, as we see this as an easier market to penetrate. Don’t get me wrong, solar plus storage will come but it will only be common once the networks embrace it as a demand management tool, and looking at their record, that won’t happen anytime soon.

Another key issue will be the inevitable explosion in electric car ownership, it doesn’t make economic or practical sense to charge and electric car battery off another battery, but currently this is the model being talked about.

This will never work in a domestic situation unless swappable batteries become the norm and that’s not likely for Mums and Dads.

We see Teslas being Supercharged by solar energy accumulated in subterranean and above ground flywheel “tanks”, fed from the rooftops of surrounding buildings with big fossil fuel generators on stand-by for rainy days – not defeatist by any means, it puts reliability into renewables.

So for now at least, as for electric cars, residential storage will remain in the boutique realm for residential customers, awaiting a revolution in cost and/or adoption by the networks.

Rob Campbell is the managing director of Vulcan Energy Pty Ltd