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Last week RenewEconomy covered the Clean Energy Council’s Accelerating the Uptake of Battery Storage report, which makes a compelling case for why market reform is more important than subsidies in driving battery storage adoption.
People love incentives (and the solar industry has a love/hate relationship with incentive application deadlines). Alongside sorely needed market reforms, I’m sure that some of us would argue that a battery incentive program would help to kick the market into gear.
So just for a bit of wonky (if slightly unimaginative) fun, last week I decided to have a look at what form battery storage incentives could take – particularly if they were to be somehow shoehorned into the Renewable Energy Target’s Small-scale Renewable Energy Scheme. What if home battery storage systems could create STCs? This would surely help to push down battery storage system prices, which remain the main barrier to uptake at the moment.
The primary purpose of the RET is to support the deployment of new renewable energy generation capacity. The RET offers an indirect incentive for solar PV systems less than 100kW in the form of STCs under the SRES. This incentive has enabled Australia to achieve some of the lowest solar PV installation prices in the world. Since batteries don’t generate electricity themselves, it’s debatable whether they should actually fall under the SRES umbrella.
However, we could think of them as a way to augment the capacity a small-scale solar PV system so that solar energy can be put to more useful work (instead of being exported into the electricity grid, where it is less useful to all involved). Most batteries would be discharged most frequently after dark, in a way bringing daytime sunlight to households even after the sun has set. Although it may admittedly be a bit of a stretch, let’s assume this counts as extending generation capacity, thereby earning a solar+battery system a greater number of STCs than a solar only system.
(Thanks for reading! Please keep in mind that this article was written mainly as a thought experiment and a jumping-off point for a broader conversation about battery incentives.)
If we theoretically agree that home batteries should receive incentives under the RET, then there are two main questions to look into: Which battery storage systems should be eligible to create STCs, and how many STCs should they be allowed to create?
First off, there would need to be some rules to ensure that batteries are being used ‘for good’ (i.e. to extend renewable energy capacity) instead of ‘for evil’ (e.g. for retail tariff arbitrage using coal-fired energy from the grid). To this end, it’s clear that a battery bank should only be allowed to create STCs if it is attached to a new or preexisting solar PV system (or perhaps a small-scale hydro or wind generator). Additionally, we’d want to make sure that the battery bank is appropriately sized for the PV system at hand so that the battery capacity is actually being used in conjunction with the solar (and not being charged mainly with the grid).
To do so, there are a number of questions that would need to be addressed: How much energy does the solar system produce per day? Will the solar panels generate enough electricity to fill up the battery bank (from its lowest allowable depth of discharge) on a regular basis? Would the solar panels be able to completely charge the battery even when the solar resource is at its lowest, in the dead of winter? The answers to these questions would help policymakers to craft a framework for eligibility rules.
As an example, we might say that the total STC-eligible battery bank capacity for a Sydney home with a north-facing 5kW solar system should be no greater than about 17kWh – roughly the amount of energy that system would produce on the average day in July. Given the fact that at least some of the solar energy will undoubtedly be consumed directly by the home, there may be a case for limiting the STC-eligible battery capacity to half this amount (about 7 or 8kWh) to be conservative.
It also bears noting that there would of course be an overarching requirement that the system is installed by an accredited professional using accredited products – as is already the case with solar PV.
While the ability of batteries to make solar energy available during non-daylight hours arguably has value from a renewable generation capacity perspective, that value can be tricky to quantify. For solar PV, these maths are already done and are fairly straightforward (see the Clean Energy Regulator’s STC calculator). A 5kW solar system in Sydney, for example, creates 103 STCs when installed. Currently trading at about $39 apiece, these STCs translate into a ‘discount’ of about $4,000 – or about 30-40% off the up-front cost of a system.
When it comes to small-scale solar, the RET is conservative about how STCs are doled out – you only get 15 years’ worth of STCs when you install a system, even though the system should continue to produce energy for 25. Essentially, the federal government decided to err on the side of caution, hedging against the possibility that not all of these systems manage to generate as much energy as expected (because of shading or malfunction) across their lifetimes.
There would therefore need to be a standard way to calculate how much renewable energy a particular battery product can support. Not all batteries are created equal; they have varying lifepans and lifetime energy throughput figures. The City of Adelaide, as home to one of the only up-and-running battery incentive programs in Australia, is worth looking towards for ideas about dealing with this issue.
Adelaide’s formula for calculating the battery subsidy value is as follows
Adelaide City Council Battery Storage Rebate =
kWh discharge per cycle (at manufacturer’s depth of discharge)
x lifetime discharge cycles (end of life 80%)
x $0.15/kWh
This formula is a good starting point because it includes all the relevant specifications that (at least hypothetically) determine a battery’s lifetime energy throughput. It also standardises some of the figures that are often be bandied about (e.g. a definition of end of life at 80% original capacity).
Much like the calculation of STCs, it doesn’t take into account actual operating conditions (heat? humidity?) or possible future downtime (e.g. due to failure), and as such should probably be given the same conservative ‘derating’ of about 60% that solar systems get on their STCs. A RET-based program for supporting batteries might even take into account the respective performance of different types of batteries in different climates.
Now, let’s take Adelaide City’s formula and apply a 60% derating. Then let’s fit the specs for Tesla’s Powerwall into the formula. We’ll have to fudge the numbers a bit, as no Powerwall spec sheet that I’ve seen gives DoD or cycle life to 80% end of life (EOL for the Powerwall has been given to me as 60%).
7kWh x 85% DoD x 3650 cycles = 22MWh
22MWh x 60% = 13MWh, or about 13 STCs
If 1 STC = $39, total incentive value = $507
This final number is a bit of an anticlimax given the preceding 1,000-word buildup: You’d be hard pressed to argue that $500 is a generous incentive for a battery storage bank ($10,000 is a reasonable figure for a fully installed 7kWh lithium-ion battery bank). But it is arguably a fair one in terms of the degree to which it supports additional renewable energy generation – modestly boosting the case for the hypothetical argument above. Were the federal government to implement battery-friendly segment to the RET (quite unlikely under current conditions), they might even consider introducing a temporary STC multiplier only for batteries to offer greater support in the early days, much as was once the case for small-scale solar.
All of the above begs the question of whether the government should approach battery storage incentives through the RET at all. There are quite a few downsides to this avenue – the complexity of the above speculation, combined with the the rather paltry total incentive value that results might convince you that it’s more work than it’s worth. Instead, if any incentive is introduced it all, it might come more in a form more along the lines of the one offered by the City of Adelaide: a straightforward rebate on the cost of a fully installed solar system. In any case, whatever incentives do come into play in the end (if any), the hope would be that market reforms such as those suggested by the CEC will help to bridge the gap from the other end.
This post was published on March 8, 2016 2:14 pm
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As soon as you give STC's to battery storage, every fly by night rip offs will swoop in for the kill. I've seen it in the 8yrs I've been in the solar coaster industry. Governments pulling the rug early causing good businesses go to the wall, and the bad guys just disappear into the night leaving a mess. So no.
A powerwall costing $10000 for 22MWH is 45c/KWH, not a great investment at this time. The price of storage per KWH has got to come down to the grid cost per KWH. Batteries like lithium and lead have finite lives that are well known. They are not like solar panels that last and last. If government wants to support distributed renewables, more specifically solar, then the tariff structure needs to reflect that support. There is no point subsidising expensive storage and penalising grid connected solar. It's too schizophrenic a policy.
Batteries like the Redflow flow battery do show promise. These are produced by an Australian company. They are a better fit for solar storage, having fixed maximum power output in KW and a variable maximum storage in KWH. Upgrading the variable storage component is cheap,it involves larger chemical storage tanks with relatively cheap reagents. Most of the cost in a flow battery is the controllers, pumps, and reactor chamber. Most homes would need 3 or 4 KW at any one time, but may need 30 or 40 KWH of storage for cloudy winter periods. Lithium batteries and deep cycle lead batteries have huge cranking power but little storage. One pays for the cranking power but needs the storage. About as useless as a titted bull. why not subsidise Redflow directly?
Well if only you could fit bigger storage tanks to the Redflow. They haven't modelled that yet, but it's a no brainer. On Li-Ion and deep cycle Lead Acid, your not quite correct, sorry to say
Tantalising answer. Which part am I not correct on? Cranking power, cost or storage in KWH vs peak amperage. I have a 12V deep cycle lead battery that stores 100 AH, and can crank out 730 A. It costs $200. It's DOD is 20% to get a decent life. 12 x 100 x 20 % =0.24KWH 730A x 12 V =8.7KW. The cost per KW peak is $200/8.7= $22.80/KW, the cost for storage is $200/.24= $830/KWH installed. This battery will last 2000 cycles at a DOD of 20 % ie $830/2000KWH lifespan= 41.5c/KWH. These calculations are fairly representative of deepcycle batteries and to some extent lithium batteries. The point is that home storage does not need a high power rating ( KW) but it does need plenty of storage( KWH) . The ratio of storage to peak cranking power should be high. You may be right that the flow battery may disappoint on its cost per KWH compared with lithium and lead, and the situation may be parity on storage cost but vastly inferior peak power production by the flow battery, that would be a real shame.
Comparing battery costs , PHES( pumped hydro) construction costs vary but on average one can expect $2000/KW and $500/KWH stored. The life of hydro is Methuselain , say 50 plus years 50 x 365= 18 thousand cycles cost per cycle 3c/KWH. Makes one think, dunnit.
Some more figures to look at: Wivenhoe pumped storage 500 MW, 5000MWH. A house generously may need 5KW peak and 50 KWH storage. Wivenhoe could supply storage facilities to 100 000 luxury homes. We probably need 10 to 20 Wivenhoe PHES's
Molten salt storage can be built for $30/kwh so I've been told. Many possibilities.
What your talking about is AGM batteries, their not proper deep cycle, but better than car batteries for storage. However, I wouldn't consider them for hybrid or off grid, lucky to get 500 cycles at 50% DOD.
True deep cycle like good quality BAE gels can achieve over 3000 cycles at 50% DOD and can on the odd occasion be discharged to 80% without any real harm to their life.
Some Li-Ion chemistries can achieve 80-90% DOD and achieve 5000- 6000 cycles.
Okay then ELMOFO AMR 24V 120AH from solar online, an example of a lithium solar storage battery : 3108WH, 4000cycles @80% DOD total storage over its life= 9945KWH cost of just the battery $5730 therefore cost per KWH = 57.6c/KWH. That's the battery cost even before you consider connecting this thing to the mains power. Simple calculation, disappointing result.
Perhaps, Solarguy, you have a much better spec'd battery than this. What we need is voltage (V), capacity in AH ( A), cycle life (c), at a DOD, and battery cost($)
the formula is $/ (V x A x c x DOD)
You can calculate the price per KWH for any electricity storage device you like with this formula, you can fine tune the formula with interest accrued over the life of the battery or add the costs of the Chargers and controllers,wiring and housing of the battery but the basic formula helps you to compare different storage options.
Clearly, the name solarguy hasn't given you the hint, that I design PV power systems. So your teaching me nothing. Plus $5,730 for the battery you mentioned is way and above what it's worth, in fact over twice.
Whoa there sun dude, not trying to shirt front you on battery storage nor trying to teach you your job. Just presenting a way of calculating the cost of the storage options. I'm not inviting you to primarily criticise the specs or cost of batteries that I have shown in the examples, they are just ones that I have lifted from local sites. Genuine offerings I might add. I was hoping you could critique the formula and give the spec of one of your own battery packs. I would love to see a fully grid connected battery system cost the same or less than grid electricity in cents/KWH.
Mate it had nothing to about cost, it was about facts, about cycle life of different batteries. You were going on a false assumption because you thought you knew about deep cycle, when in fact you were talking about inferior AGM lead acid. Need to do more research dude. The truth is what matters.
Look you are being a bit cagey in your replies but as you say ' the truth is what matters'
When evaluating a turnkey battery storage system there are specifications that can be used to derive a KWH cost. These are them:
1. Purchase price call this $ for want of a better symbol
2. Storage capacity . A battery bank has a working voltage and an Amp hour rating. Actual batteries have slight variances in AH ratings depending on whether they are discharged rapidly or slowly, but for a home solar installation the slow discharge AH rating will do fine. Multiplying volts by amp hours gives watt hours. Often the KWH storage rating is given. Call storage capacity. K.
3. Cycle life, every battery has one, just like people die so do batteries, reputable manufactures quote cycle life. The number of cycles a battery can give depends on how hard you work the battery this is measured in DOD. Lightly discharged batteries last longer than heavily discharged batteries. Even lithium batteries suffer this phenomenon, although their life cycles are a lot better than lead acid batteries. So, number of cycles is c, depth of discharge is DOD. Manufactures often quote different combinations of c x DOD. For example 2000 cycles @ DOD of 80 % or 15000 cycles @ 10 % or some other combination. To arrive at a cycle life and DOD combination, choose how long you want the battery system to last. Any figure will do. Say 7 years daily cycling. Well, that is 7 x 365 days = 2555 cycles. Next check the specs to see how deep a discharge will give you that life. You can obviously repeat the calculations for different c x DOD to get the most economical result.
Here then is the formula
$/ (K x c x DOD) ( Obviously making sure units match ) cents per KWH
It's that simple.
Oh, one last thing, Mr Solarguy, do me a solid and give me a real battery spec. please, I promise not to bug you any more. This is what I need. Battery type, battery cost, storage capacity in KWH , total cycles @ a DOD. You choose the c x DOD combo. No names no pack drill.
In reply to the above and below comments. 1. I'm not disagreeing with your formula, if you want to find out what a battery's life cycle costs are then do your research. 2. Your not one of my customers. 3. I get your point, but what you don't get is that you were wrong on what a deep cycle lead acid battery truly is e.g. AGM's aren't true deep cycle but either you don't get that or your ignoring that fact, ditto Lithium chemistries, they are far better than you think. That's my POINT! 4. In relation to current draw from batteries in the home depends on what appliances your using, some will have a high current draw some won't. You have some false assumptions, i.e. low discharge being all that's needed is BS.
Lastly, you can't be told and I don't like your demanding smart arse attitude, I don't suffer fools easily!
Thank you for your latest reply, you do get me wrong, I don't really care for lead acid batteries, and I don't takes sides on lithium either, they're just batteries. I think our wires are crossed on the cycle life vs DOD concept, and your comments have made me think about the actual usage of a battery bank. The patterns of battery storage use can be analysed and defined. 1. Power shifting. This occurs on a day to day basis. Charging of the batteries during the sunny hours and then discharging during the evening. The storage requirements for this are not huge. 2 . Standby function. This is for the more unusual swings in supply like prolonged cloudy weather. A lot more storage is needed for that eventuality. Real world experience will tell us how this DOD averages out over a battery's life. Short of having that usage data one can take a stab at a figure for DOD. Frequent light cycles plus occasional prolonged heavily drained episodes. So on the one hand the battery suffers the drudgery of the daily grind and on the other it gets occasionally flattened. A DOD of 30 % would favour the power shifting function and a DOD of 70 % would favour the standby function.
The second point you make is about a battery's storage capacity. This varies as to the rate of discharge. At rapid discharge the KWH is less than at a slow gradual rate of discharge . Generally you can extract more energy from a battery by discharging it slowly than if you discharge it very rapidly. That has to do with the internal resistance of the battery. P=I squared x R. As you say, lithium batteries tend to tolerate different rates of discharge better than lead.
Anyway have enjoyed your ( not so friendly) banter and look forward seeing you around the traps. Good luck with the lithium, personally I think it's only useful for psychiatric medications. Only joking, it IS the future of battery-kind, no doubt.
Ok it looks like your starting do more study from what you are saying here. Your starting to get there, but still a long way to go. Your thing is that lead acid is shit but, there are a few different versions of the chemistry and has been around for over 100 yrs and is still the best bang for the buck, although the weight is an issue, but the good quality true deep cycle have a lot of reserve after 50% DOD.
Meaning that if you size a Li- Ion, say 10kwh @ 80% it can't be discharged any further or it will die quickly. But a LA can go to 80% and get you out of the shit in an emergency if design for a good life is only 30-50% DOD normally.
On not so friendly banter please read over your comments. I rest my case.
Your method (or stated total aggregate discharge over the warranty period) produces a reasonably accurate $/kwh storage cost - they will be high.
The battery you linked, claims to use
Kokam Lithium Polymers cells, and may do so. They are good cells, but not so cheap. Beware of fakes, claiming the same cells. For example, some LiFePo4 batteries claim Kokam cells, but Kokam's cells are NMC.
If there is no evidence for cycle life or definite warranty, find another battery.
There are many selling and promoting dubious batteries.
Rolls AGM deep cycle
1250 cycles to 50% DOD
850 cycles to 80% DOD
5 year warranty
Rolls make very good batteries and indeed the series 5 AGM do have better than average DOD because they use thicker lead plates, but at a cost. Compare the series 2 Rolls specs.
You will also notice the 5000 series are not AGM and have far better cycle life to 50% DOD.
Most AGM's aren't as good as Rolls, but their a hell of a lot cheaper too.
In Australia, for some reason, PV is cheap and batteries are expensive. In Canada, where I am (Rolls is Canadian made) Batteries are cheap and PV is expensive. It must be because we are in different hemispheres!