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How battery storage will change household energy market

The plunging cost of solar PV means that it may now be half the cost of grid-based electricity, according to some industry estimates. But the economics of buying solar PV systems is still not clear for those who cannot consume most of the energy produced on their rooftops, because owners of rooftop solar systems are now getting paid little or nothing for the electricity they export.

So perhaps the time is approaching when the question should be asked: is it worth considering energy storage? Is it cost effective? Should householders go it along, or in a community group? And what are the implications for other network users? Already, network operators and generators are bleeding because every solar panel that is added reduces demand and eats away at their centralised generation model. Batteries would only accelerate that change.

These were a series of questions that were posed by Gordon Weiss, an energy expert from the consultancy and advisory firm Energetics at the recent 2nd Summer Study into Energy Efficiency and Decentralised Energy in Sydney.

The first question is a bit of a no-brainer. As we wrote last Tuesday, the cost of solar PV has fallen to the extent that it has achieved “socket parity” in many places in Australia. Weiss thinks it’s even better than that. His estimates of the levellised cost of solar PV is between 12c/kWh and 14c/kWh, meaning that it is half the cost of electricity bought from the grid.

See the graph below for an illustration of these costs. For the energy and technology wonks, Weiss bases his assumptions on two different system sizes, assuming 14 per cent capacity factor, a 7 per cent discount rate, and a 30-year economic life.

weiss lcoe solar

weiss exportsThis leads to the next problems. Generating electricity at this price is a no brainer when most of it can be consumed on the premises.

However, failing some clever and precise orientation of solar panels to the east, north and west, that is not possible for most households, who find that they have to export much of their electricity back to the grid. At best, they are getting the wholesale prices paid to coal-fired generation, mostly around 6c/kWh. They lose money on this transaction.

This graph (above right) illustrates the problem. Even on a 1.5kW system, a lot of electricity can be consumed at a 40c/kWh discount to Origin Energy’s peak rate, but much of the electricity produced by the rooftop system has to be exported.

So what to do? Either achieve a further reduction in solar PV costs per kW, or shift the output of the panels so that less solar output is exported, and less grid power is imported. To shift the output means either to move the timing of household use – in the same way the time of use tariffs are designed to do – re-orient the panels, or consider battery storage.


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