2015-06-09

According to investment services firm UBS, Tesla Powerwall can deliver a 6-year payback in Australia, writes Giles Parkinson of RenewEconomy.

“The UBS note on the economics of the Tesla Powerwall comes from their Australian analysts. That’s not surprising, given that Australia will be ground zero for battery storage around the world, thanks to its high electricity costs and massive solar penetration. But it’s also ironic given that the product won’t be available until next year, although some of Tesla’s competitors may try to steal a march beforehand with their own product releases.

“The headline conclusion of the UBS team is that the Tesla Powerwall – the 7kWh version – will deliver an economic return. They estimate at an IRR (internal rate of return) of 9 per cent. That represents a pay-back of about six years. If they are right, then that means that mass-market adoption ain’t so far away as some would believe, and incumbent utilities might wish.

“The price is the big ticket item in the equation. UBS notes that there has been a big debate about the  difference between the price of the battery – US$3,000 – and the installed price quoted, closer to US$7000” [the installed price is not expected to be as high in Australia].

“The analysis also assumes that the battery can be fully utilized 7KWh of gross energy every day and that the solar system is large enough to charge the battery and still provide the behind the meter power. It also assumes that the US$ online price can be directly converted to A$ and will be the price in Australia.

“It notes that the battery will more likely suit larger detached houses with higher than average consumption and larger than average solar systems.

“Now, some people may find the UBS price estimates as on the optimistic side. But even if labour costs and balance of system costs are higher, and push the total installed cost to around $6,300, then consumers with a solar system already installed will still get an IRR about equal to the home loan rate,” writes Parkinson.

http://reneweconomy.com.au/2015/ubs-tesla-powerwall-can-deliver-6-year-payback-in-australia-63386

RenewEconomy also published an analysis from another investment bank Morgan Stanley at the following link

http://reneweconomy.com.au/2015/morgan-stanley-sees-2-4m-australia-homes-with-battery-storage-20668

“Morgan Stanley says the preference for most Australian households suggests a pay-back period of 10 years or less is preferable, but doesn’t really matter when the product becomes ‘mainstream’ and the upfront cost drops to ‘appliance’ levels of around $A5,000, which is comparable to a large television.

“We think the ‘retrofit’ market, i.e. the ~1.1m households with solar panels already installed, will be among the first households to adopt the new battery products, potentially combined with the upsizing of older 1.5-2kW systems.”

Repower Shoalhaven analysis

Another analyst is Chris Cooper, president of community energy organisation Repower Shoalhaven.

His published analysis shows a drop of more than 50% from use of grid power once an average household with solar installation adds a battery like Tesla. Average is 12kWh daily consumption, with a 4kW solar system and 7kWh (Tesla) Powerwall.





Figure 1: Average day for 12kWh/day household, 4kW solar only, Sydney.

Figure 2. Average day for 12kWh household, 4kW Solar and 7kWh battery, Sydney

Summary

“The most notable impact is that the entire evening peak demand is covered by the battery. With solar and battery combination, the households source 92% of their energy from solar, versus just 36% with solar only. The day’s grid cost for this household is just 4c (excluding fixed costs) with solar and battery installed.

“With the 7kWh battery pack installed, the householder pays the equivalent of 30c/kWh (levelised cost) for their solar and power, which for many households is at grid parity.

“For many households, like the worked example above, installing ‘solar only’ is still the most economic option for household energy supply. At Tesla’s current pricing, ‘solar and battery’ is neck-and-neck with the grid in Australia. But it’s not a hard and fast rule – it depends on the discount rate, real-world variations in the household’s energy use and solar generation, plus a number of unknowns: such as the cost and terms of Tesla’s extended warranty, the efficiency degradation, and the maximum daily depth of discharge.

Taking only the economic equation without factoring consumer desire to stop supporting coal-fired electricity Cooper concludes “If future electricity prices rise and Tesla’s prices reduce, the economic equation could clearly shift in favour of solar and batteries.”

Australian Science Media Centre briefing: 3 academics on the Tesla promise

Some points that were made by Professor Anthony Vassallo, University of Sydney; Electrical engineer Iain McGill from the University of NSW  and researcher of sustainability policy Jemma Green of Curtin university.

The full discussion can be accessed on Youtube   https://youtu.be/KQcoPt2IwkM

The lithium ion battery technology is not a huge leap from what has been available before, but the packaging, marketing and price are the potential game changers.

Also Tesla has a lot of experience from its electric car vehicle batteries.

Australia’s 1.4 million households with solar PV power make this country a priority market for adding battery storage.

The battery will likely have the biggest initial attraction for those who cannot get on the grid rather than urban households going off grid. 10,000 households are off-grid now.

Electricity is a growing percentage of household expenditure and the high prices are a particular Australian phenomenon due largely to distribution costs (carbon tax was not a significant factor). It has been noted that as more homes use less from the grid the costs for those remaining will increase.  At the same time the cost of lithium batteries is falling while production is going up. [A similar trajectory to solar panels in the past 10 years].

The batteries will have widespread implications particularly for the night-time grid market according to Jemma Green who is conduction battery trials in Perth. They are likely to cause more headaches with fluctuating demand for the grid.

A question asked that may interest many was whether it’s likely that mid-range PV installation plus battery can charge both house and a car.  The answer was no.

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