Solar Batteries – changes in technology and the marketplace
We’ve read a very interesting article today, written by Nigel Morris, Director of SolarBusinessServices, that outlines the current state of play with battery pricing and the changing costs of effective energy storage. It’s a great read.
Solar Batteries – The secret to cost effective energy storage
“Battery costs to reach $230 kWh by 2017/18? the headline reads. Cue – phones running of their hooks with consumers wanting these cheap batteries that have just been announced.
Collective solar industry groan.
Now you all know I am as optimistic as anyone about energy storage and try as I may I can’t (in my own head) separate the growth in electric vehicle sales and the inevitable flood of lower cost energy storage for stationary applications. There are deep and close connections that will flow both ways. But there are also a few “secrets”, or realities that get lost in the simplistic cost decline per kW story.
Humour me for a second.
Inevitable lessons from history
Firstly, the release of a new paper tracking ev sales and battery cost declines is great news. It has a good collection of (hard to get) data points and looks logically at the probable cost trajectories. We know from history that in hyper growth, disruptive technology markets things inevitably happen faster than everyone predicts (ummmm solar pv??) – and this paper bears that out. So, in all probability we will see prices around this level around this time frame, if not sooner.
That’s good news.
Pure cost versus price
However, the “cost” of a battery is not necessarily reflective of what Mrs Jones will pay for it, obviously. In an ev for example, it vanishes into the cost of the vehicle. Tesla reportedly pays around $180 kWh for its batteries for example, which equates to around $15,300 in pure storage cost in a $100,000 plus car. I reckon Elon wants to make some money but I also reckon he’d happily sell Tesla’s at a more competitive price if he could, but the packaging and associated technology costs blow it out.
Likewise, in a home energy system, it vanishes into the cost of a package (housings, fuses, control gear, BMS, inverter, charger, installation etc). The typical home energy storage package in Australia is priced around $2000 kWh, although stationary LiPo battery costs are way below that. Once again, the “all in” cost changes the equation. There good news here is there’s a lot of room for savings to be made – in the same way BOS costs in solar systems have evolved rapidly.
The report suggests that the target price for ev-to-ICE vehicle parity (in the US) is around $150 kWh for the battery so we are clearly close. When it comes to home energy storage the all-in magic number is around $350 kWh in Australia, I reckon, with our electricity prices. But there are a host of variables that can substantially impact the magic number in different markets.
The reality is that current Australian home energy storage prices are virtually an economic proposition already in a small, discrete set of circumstances. But not a lot of people are in that situation. Yet.
It is also the case that despite the high purchase price of electric vehicles, I can already see that owning a Zero electric motorcycle is a sound economic proposition, once insurance, registration, fuel and maintenance costs are factored in. But not a lot of people buy performance motorcycles based on their economics.
The real world
But here’s the big crunch; the real world has a crap load of troublesome “expectations”. These expectations translate into things like availability, support, performance, wow factor, reliability and service and apply almost in equal doses across electric vehicles and home energy storage.
Performance is a crucial issue in electric vehicles and why everyone who drives a Tesla or a Zero gets all gooey-eyed, struggles for adequate expletives and harangues me to buy them (or desperately want to buy one), despite the front end economics. Their performance levels are absolutely undeniable at the all important seat of the pants level.
However, in home energy storage markets performance is about lifetime deliverable energy cost. Home owners really want (although they may not know it) reliable, trouble free, long life and that is not about $/kWh at the capital cost end. It’s a combination of package cost, lifespan, deliverable energy and the system’s intelligent ability to do what it should to realize savings. With minimal involvement. And probably, a nice app. Homeowners will only get all gooey and start raving on Facebook about their new investment when their energy bills are substantially reduced and their day to day involvement is hugely simplified.
Sound familiar? Yes indeedy, its the same learning curve we have seen for solar in Australia. A few years ago everyone thought cheap was the answer. Today consumers increasingly realize that an insanely cheap solar system, supplied by a liar, installed by a buffoon, made of the cheapest knock off components you can find is actually a huge pain in the backside that can end up costing you a lot of time and money.
Consequently, the price per kWh for a battery (even in a package) is hugely misleading in the home energy storage market. A higher priced battery with five times the cycle life and three times the depth of discharge level that works reliably (for example) will win every single time, hands down. However, trying to unravel, compare and sell these minute, technical details to Mrs Jones, in a way that allows her to simply compare offers, is extraordinarily complicated.
Sadly, news reports on battery costs will get Mrs Jones on the phone too early in the same way Dr Green used to when he announced his latest break through on PV at UNSW in years gone by. They’ll cost the industry time and money and that is frustrating.
So, the battery cost decline story is great news and history is already starting to repeat itself. That’s awesome and we should all be preparing ourselves.
However, don’t fall into the trap of looking at costs per kWh in isolation or underplaying the fundamental, crucial importance of the difference between an electric bike that goes so fast you have to have one and what Mrs Jones really wants and needs in her home energy storage system.
The perfect supplier in that case is some one who has an outstanding blend of price, cycle life, packaging, service and simplified intelligence.
Nigel is the Director of SolarBusinessServices . After almost 20 years working for other companies SbS Director Nigel Morris, established the company in 2009 with a view to providing other organisations with the benefits of his wide experience in the renewable energy industry.
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