The Economics of Load Defection
Recently the Rocky Mountain Institute released The Economics of Load Defection, a new report that analyzes how grid-connected solar-plus-battery systems will become cost competitive with traditional retail electric service; why it matters to financiers, regulators, utilities, and other electricity system stakeholders; and possible paths forward for the evolution of the electricity grid. A little over a year ago (February 2014), RMI published The Economics of Grid Defection detailing when and where off-grid solar-plus-battery systems would compete with traditional electric service. It was the first comprehensive and publicly available analysis on the subject, and in the months that followed, a number of financial institutions—including Barclays, Citigroup, Morgan Stanley, and Goldman Sachs, among others—came to similar conclusions. In the face of declining costs for solar PV and batteries, current utility business models will face serious challenges. By early this year, Greentech Media identified “grid defection” as one of the top industry buzzwords of the year 2014. In fact, the topic surfaced yet again just last week in a widely circulated Washington Post article. But we said then and we’ll say again now: just because grid defection may become an economic option doesn’t mean customers will actually choose to cut the cord with their utility, and there are plenty of reasons why doing so would be a suboptimal outcome. So in The Economics of Load Defection we focused our analysis on a much more likely scenario that could represent an even greater challenge: customer economics for grid-connected solar-plus-battery systems. Since such systems would benefit from grid resources, they could be more optimally sized, thus making them smaller, less expensive, economic for more customers sooner in more places, and adopted faster. INSIDE THE ANALYSIS One of the key questions the report addresses is how system configurations and economics would evolve over time when grid-connected customers have the option to source their entire load either from a) the grid, b) a solar-plus-battery system, or c) some combination of the grid, solar PV, and batteries. The report evaluates the economics through 2050 for a median commercial and residential customer in five representative U.S. locations. We found that: Solar-plus-battery systems rapidly become cost effective. The economically optimal system configuration from the customer’s perspective evolves over time, from grid only in the near term, to grid-plus-solar, to grid-plus-solar-plus-batteries in the longer term. New customers will find solar-plus-battery systems most economic in three of our five geographies within the next 10–15 years.
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NEWSFLASH The RET deal is looking unstable as the government finds new ways to frustrate and retard renewable energy. Instead of passing the legislation last night, the Abbott Government has thrown yet another land mine in the way of the renewables industry. In an effort to include native forest wood waste into the RET, (itself a cynical ploy) the Government has teamed up with anti-wind crossbench Senators to stifle the RET and impose a whole bunch of new conditions on the wind industry. You can find the news story here The Abbott Government has attacked renewables for 14 months. It's not going to stop now. We said this week was absolutely critical. We warned the Prime Minister would roll back the RET as far and as fast as he could. We urged people not to be complacent and it pains us to say we were right. The Abbott Government cannot be trusted on renewables. They take every compromise as a victory, and then push for the next compromise. The strategy of appeasement with this government on renewables is a mistake. The only thing they understand is political strength. The Solar Council will never play the appeasement game. We have stood up for solar and for all renewables. All political parties are on notice now. Do you stand for a renewable future or not? Are you going to facilitate the relentless roll back? Will you play into the Prime Minister's hands when next he says "see, I told you the target could never be reached"... One thing you can be sure of is that the Solar Council will hold all our political leaders to account. We need your support to maintain the Save Solar 2015 Campaign. Kind Regards,
John Grimes CEO, Australian Solar Council ceo@solar.org.au Not on our mailing list? Subscribe here. This article was emailed to Driftwind Electrical from the Australian Solar Council Dangerous Infinity cable - the ACCC finally takes action ACCC finally takes action After years of lobbying from Master Electricians Australia (MEA), the Australia Competition and Consumer Commission (ACCC) is finally taking some responsible steps to ensure Australians are aware of potentially dangerous cables installed in their home or business. The ACCC has today launched a national awareness campaign about the potentially deadly Infinity and Olsent cable recall. The campaign will target consumers and involve online and radio messaging, and is encouraging consumers to get their cables checked by a licenced electrician. With around 13,000 homes believed to be affected by the deadly cable, MEA encourages you to share the ACCC YouTube clip on your digital channels to ensure this recall message reaches as many people as possible. These dangerous cables have been shown to pose a serious danger of fire or electrical shock and potential death, due to the insulation becoming prematurely brittle. We know this risk will continue to grow over time, so it’s vital that all the faulty cables are check and replaced. The ACCC have also set up a landing page on their website with information on the recall, the risks involved, what consumers should do, FAQs, and where to go for more information. In most circumstances, the cable used will need to be removed and replaced. Members who have installed the product can contact the MEA Technical Hotline for assistance in dealing with the recall, simply call 1300 889 198 or email technical@masterelectricians.com.au. P: 1300 889 198 E: info@masterelectricians.com.au W: www.masterelectricians.com.au You are receiving this email as a valued member of Master Electricians Australia Swedish furniture giant IKEA has announced it will dedicate €600 million to investment in renewable energy, as part of a €1 billion climate change funding plan.
Last week, the sprawling 4 hectare Bakken Hale estate, a private residence on the island of Hawaii owned by the founder of the medical device giant Medtronics group, installed a big solar array and battery storage system that will make it the largest renewables-based off-grid system for a private home. The Bakken Hale installation includes a 170kW solar array and 1MWh of Aqueous Hybrid Ion batteries from US battery developer Aquion Energy. It will serve an average load of 23kW and peak load of 42kW (this is some house!). Just to compare, the average load for suburban homes is less than 2kW. The estate is currently powered entirely by generators fuelled with propane generators, more commonly used with stoves and blow-torches. That costs it around $US50c/kWh. The installers say that the estate will have around 3-days of full autonomy, and the back-up generators will only be needed around 3 per cent of the time. The estate is located on the environmentally sensitive Kona Coast, and owner Earl Bakken, 91, says he wanted to demonstrate that using a solar and battery-powered microgrid is the best solution now. “This installation will enable us to meet our around-the-clock power needs with solar generation and will reduce our fossil fuel usage by 97 percent,” Bakken says. Bakken knows something about battery technology because he is credited with developing the portable pace-maker and apparently wears one himself. He says he chose Aquion’s battery products because they are non-toxic, and long-lasting. Jonathan Matusky, the product manager for Aquion Energy, says demand for battery storage is growing, and Hawaii and Australia are the two leading markets, because of their high electricity prices, big solar resource, and the independent nature of consumers. “A lot of our batteries sold right now are for off grid residential solar space,” he told the Australian Energy Conference in Sydney. And Australia is one of its biggest market, accounting for around 1/6 of the 5MWh of storage it has delivered to date. A new delivery in Australia soon will take the local installation to around 1MWh. “Australia is going to be on leading edge of energy storage adoption. Hawaii is similar, and you see customers deciding to take their homes completely off the grid, because of how expensive the electricity is, how cheap the solar is, and how fed up they are with utility.” “This market is very much real and it makes sense for customers. And it will open up in next year or so.” For further details of the Bakken Hale installation: The system is designed to generate 350 MWh per year silently from the sun, with little maintenance for 20 years. Over that time, the system will reduce carbon dioxide emissions by more than 5,000 metric tons. The batteries will charge from the solar array during daylight hours, and discharge to provide nighttime power on a daily 8-hour charge/16-hour discharge cycle.
This article is sourced from http://reneweconomy.com.au/ Less than a month after the Abbott government committed billions of dollars in funding to prop up Australia’s coal industry, the world’s major G7 democracies have set a deadline for weaning their economies off carbon intensive fuel sources like coal, oil and gas – and to help developing countries do the same – offering one of the clearest signals yet that the age of fossil fuels is coming to an end. At the close of the weekend Summit in Germany, the leaders of the Group of Seven nations – Canada, France, Germany, Italy, Japan, the UK and the US – pledged in a communique to develop long-term strategies to combat climate change, including abandoning fossil fuels by the end of the century. “We commit to doing our part to achieve a low-carbon global economy in the long-term, including developing and deploying innovative technologies striving for a transformation of the energy sectors by 2050,” the communique said. Key parts of the pledge included a reaffirmation of the joint commitment to provide $US100 billion a year by 2020 towards climate mitigation, as well as commitments to accelerate access to renewable energy in developing countries and to incentivise low-carbon investments using effective policies and actions, including carbon market-based and regulatory instruments. The G7 commitments – although a bit vague in parts, and perhaps lacking somewhat in ambition and urgency – have been hailed by many as an important precursor to the UN climate meeting in Paris in December. They have also significantly increased pressure those developed-world leaders, like Tony Abbott, who have so far failed to commit to – or even outline – any serious policy measures to help limit global warming to 2°C above pre-industrial levels. Instead, Abbott’s Coalition government gives every impression of doing the exact opposite: dumping Australia’s carbon pricing mechanism, winding back its renewable energy target, systematically undermining and defunding the low-carbon economy, and tethering the economy even more firmly to coal. “The G7 has put a stark dividing line between countries taking climate change action and those few still bound to fossil fuel vested interests,” said Blair Palese, co-founder and CEO of 350.org Australia. “Make no mistake, this is a pivotal moment in history and right now, Australia is on the wrong side. “Abbott’s intractable commitment to developing more coal and gas can only leave us with a truly ‘stranded economy’ that also threatens the global climate. Our region is one of the most vulnerable to climate change and Australia is already suffering some of the worst impacts,” Palese said. “Australia is out of step with other major economies – both in the industrialised world and I should say and the developing world too,” the director of strategy and policy for the Union of Concerned Scientists, Alden Meyer, told ABC Radio program AM on Tuesday. “There’s a clear trend globally away from (emissions) intensive (fuel) sources like coal and that obviously has major implications for Australia’s economic future if it doesn’t make the appropriate adjustments,” he said. Oil and gas majors – both internationally and in Australia – have also launched a campaign against coal, promoting the better emissions profile of gas-fired generation, although Karel Beckman from Energy Post questions if there is a solid rationale for that approach in this analysis. But making these “appropriate adjustments” will not be easy for Australia, and will get harder and harder the longer we leave it, a new Climate Institute report has warned. “Australia’s historic failure to implement or sustain policies to accelerate emissions reductions means we have more to do to close the gap between us and other nations,” says the report, released on Tuesday. “The sooner we start to catch up with others the better off we will be (see table below). Further delay will just leave us further behind and needing to change faster to match others,” it said. China, for example – the world’s biggest polluter – could peak more than five years earlier than expected, according to a new report out of the UK.
The report, from the Grantham Research Institute on Climate Change and the Environment and the ESRC Centre for Climate Change Economics and Policy at the London School of Economics, says China’s greenhouse gas emissions are unlikely to peak as late as 2030, the upper limit set by President Xi Jinping in November 2014, but instead were much more likely to peak by 2025. “They could peak even earlier than that,” the report said, describing a transformation that had “profound implications for the global economy,” while also greatly increasing the prospects for keeping carbon emissions within relatively safe limits. The Grantham report findings coincide with the release of new data showing that China’s coal imports slumped 41 per cent in May, from a year earlier to 14.25 million tonnes and were down sharply on April despite industry expectations of a pick-up in seasonal demand. Total imports in the first five months of the year reached 83.26 million tonnes, down 38.2 per cent compared with the previous year, according to preliminary data from China’s General Administration of Customs. Australia, or course, is a major exporter of thermal coal to China. By Sophie Vorrath on 9 June 2015 This article sourced from http://reneweconomy.com.au/ Late Thursday night in Los Angeles, Tesla announced “Tesla Energy,” described by the company in a statement as “a suite of batteries for homes, businesses, and utilities fostering a clean energy ecosystem and helping wean the world off fossil fuels.” The statement continued: “Tesla is not just an automotive company, it’s an energy innovation company. Tesla Energy is a critical step in this mission to enable zero emission power generation.” Tesla CEO Elon Musk made the official announcement onstage at the company’s design studio in Hawthorne, CA, just south of LA. “We have this handy fusion reactor in the sky, called the Sun,” he said, stressing that solar power is the best way to end the world’s addiction to fossil fuels and head off a disastrous future in which we are overwhelmed by CO2 in the atmosphere. What’s the problem? The Sun doesn’t shine at night. So you need to store the power gathered by solar panels. But existing batteries, as Musk quipped, “suck.” The “missing piece,” according to him, is Tesla’s suite of batteries. And they will not suck. The home battery, called the “Powerwall,” is intended to store solar energy and enable customers to bank grid electricity from non-peak periods and use it during peak times, saving money. It looks “like a beautiful piece of sculpture,” Musk said. You can order it now, it’s wall-mounted, and it comes in different colours. “The Tesla Powerwall is a rechargeable lithium-ion battery designed to store energy at a residential level for load shifting, backup power and self-consumption of solar power generation,” Tesla said. “The Powerwall consists of Tesla’s lithium-ion battery pack, liquid thermal control system and software that receives dispatch commands from a solar inverter. The unit mounts seamlessly on a wall and is integrated with the local grid to harness excess power and give customers the flexibility to draw energy from their own reserve.” There will be two versions, according to Tesla: The Powerwall is available in 10kWh, optimised for backup applications or 7kWh optimised for daily use applications. Both can be connected with solar or grid and both can provide backup power. The 10kWh Powerwall is optimised to provide backup when the grid goes down, providing power for your home when you need it most. When paired with solar power, the 7kWh Powerwall can be used in daily cycling to extend the environmental and cost benefits of solar into the night when sunlight is unavailable. There will also be a battery application for businesses; and one for utilities, both operating on a larger scale than the “Powerwall” home battery. They will be called “Powerpacks.” Partnering with Tesla on this technology are Amazon, Target, and Southern California Edison, among others. Musk said that with 160 million Powerpacks, the entire United States could be transitioned to renewable energy. To demonstrate his point, he revealed that Tesla’s entire event was being powered by solar energy stored in Tesla batteries. Musk said that initially the Powerwall and Powerpack will be made in Tesla’s Fremont factory, but as the product line scales, it will be made in the massive $US5 -billion Gigafactory that the company is building Nevada. And there will be many more Gigafactories, Musk said. The presentation was relatively short, and Musk left the stage after thanking everyone for coming. From the looks of social media activity prior to the event, the party will continue into the Southern California night. Meanwhile, a Sydney-based fund manager in Australia whose company is responsible for $180 billion globally said today: “Every once in a while, something comes along that changes the world. This could be one of those things. “When you think about it, you get to the point where a house doesn’t need to be connected to the grid, it’s self-sufficient. If your solar panels can run your house 24/7, you can sever from the grid. I’d do it – hook my house up with a $3500 battery charged by solar panels and not pay any more power bills.” This article is sourced from http://www.businessinsider.com.au/ Favourable economics for solar and storage in Australia are defying the odds that the Abbott-led administration appears determined to stack against them. Australian prime minister Tony Abbott is like King Canute, standing on the shore commanding the tide of renewable energy and energy storage not to come in. But no matter how much he rails against the future, this prime minister is way too late to stop the tide of progress. A range of factors are coming together at the same time that will see distributed solar PV combined with energy storage move into the early mainstream in the coming years – and sooner than later. The primary driver is economics. The customer’s choice The cost of solar PV has been slashed and energy storage costs are reducing quicker than most experts have forecast. Together this means solar PV plus energy storage for domestic and small business customers in Australia is closer than most commentators predict. Australians pay some of the highest electricity prices in the world. Amortised over its lifetime, solar PV is already much cheaper than grid electricity, coming in at around AUS$0.12 (US$0.09) per kilowatt-hour versus an average grid electricity charge of AUS$0.25 per kilowatt-hour, (and some customers pay up to AUS$0.45 per kilowatt-hour). With a fantastic solar resource, and higher electricity prices, ‘solar PV grid parity’ came and went in Australia years ago. State-based solar PV feed in tariffs fuelled a solar boom. However, successive State governments have now stopped those schemes. The current export prices being offered are a backlash to the overly generous tariffs and are being used to discourage people from installing solar PV. The average export price paid for excess solar energy fed into the grid is now AUS$0.08 per kilowatt-hour. Some states don’t require any payment at all for this solar electricity. So, for example, a customer who invested in a solar system in New South Wales in 2011 under a generous feed in tariff payment will see those payments stop in the next 18 months. Because New South Wales has no mandated minimum export price, hundreds of thousands of customers will go from a AUS$0.60 per kilowatt-hour tariff to nothing at all. So the choice the customer faces is this; should I donate that excess energy to the bottom line of my power company, or install energy storage to capture and use that energy myself? When considering energy storage there are two major costs. The first is the cost of the battery and the second is the cost of the energy that feeds the battery. If your power company will not pay you anything (or a very small amount) for your exported solar energy, the marginal cost to feed the battery is very low. So, for a customer in this position, the only cost they need to consider is the cost of the battery. If they are paying average energy rates- the daily fixed charge and the energy charge- any battery solution cheaper than the energy charge puts them ahead financially. Already there are domestic scale lithium ion batteries available with an effective life time cost of less than AUS$0.30 per kilowatt-hour. Just a starting point?
The technology is already there, and the market will emerge quickly. I am aware of three companies who will launch domestic solar storage this year at or below that cost over the life of the battery. And this is just a starting point. Domestic scale battery companies understand the opportunity. Every week we are contacted by companies wanting to enter this part of the market. Competition, innovation and scale will drive reduced prices for consumers. Investment bank UBS recently reported that households that use all the electricity produced by their solar array plus storage were already getting a return of capital of 10% a year or more compared to buying power from the grid. With economies of scale in battery manufacturing, prices are forecast to fall further still in the years ahead. Some analysts are even forecasting that the payback on solar plus storage systems will halve between now and 2020. Some quick examples
Of course in Australia solar plus storage is already a no-brainer in remote and fringe of grid areas. With a huge geography and small population, maintaining extensive energy infrastructure for very few people is not economically sustainable. Solar plus storage, (plus a backup diesel generators for freak weather events) is already much more economical then maintaining hundreds of kilometres of electricity lines for small populations in many places across the country. The key question is this; will the power utilities embrace this disruptive technology, or fight it? The ironic thing is that if they chose to fight it, they will only speed up its adoption by a hostile public that wants greater energy freedom. This article is sourced from http://solar.org.au/ by Steve Blume If Tesla can deliver at the price of battery storage they announced on Friday, and founder and chairman Elon Musk is likely to based on his past record, then this is a massively disruptive initiative. At around ⅓ to ½ of the prices from existing market players, the storage unit price alone will force all others to compete rapidly on both price and features or struggle – Chinese and other storage manufacturers. As a package, with solar with the management smarts they have talked about, the economics add up for a wide number of applications. But . . . the Tesla storage solution, or other storage systems, will not allow a home owner to go off-grid really (at any sensible price), but will simply offer blackout-resilience for a few hours if designed and installed to do so.
What it does do is put a bomb under the need to transform our unidirectional dumb grids into multi-directional multi-generation type smart grids ASAP. For two reasons – the existing network players will simply be unable to manage the commodification of solar & storage at this level – the customer demand will fly far ahead of the cumbersome and glacial pace of change that we have seen so far. That is so in the US and more so in Australia. I had one senior network person from a utility tell me in the last month, when I raised the question of EVs and said that time to adapt is short, “Oh, we won’t be allowing residential charging stations for EVs”. After I lifted my jaw off the table, he listened with some increasing anxiety as I explained why that car had already left the garage! That attitude that they have time on their side, and allowing that to be reflected by using various ‘technical’ barriers in front of solar and storage, is still widespread. If the networks get well advised on the implications this could be the trigger needed to move from an attitude of trying to tell all and sundry why we can’t do things to working out how they can inject themselves into the middle as thefacilitators on how we can do things – as that’s how they will stay in the energy game. I love secure and reliable energy supplies – that means I love grids, of all shapes and sizes. But the grid we have is not even close to the grid we need – one that is the backbone for the services we want not the electrons (or gas for that matter) they want to sell us. Of course storage at residential, commercial & grid scale, and Tesla had larger systems in its launch, has a huge part to play in building that smart grid we need at lowest cost and highest reliability as storage (and solar PV too if the inverters are used to their intelligent capacity) in a managed network offers frequency control, demand management, voltage control, peak management, supply variability management and numerous other advantages. As Amory Lovins once said – consumers don’t want a refrigerator, they want a cold beer and fresh food. They don’t want oil or gas, they want to move from one place to another easily and cheaply. And they sure don’t want electricity or gas, they want to light, shower, heat, cool, cook, watch TV, compute, use their telecoms gear, clean etc. This should be a massive driver to have the utilities, retailers, generators and distributors recognise their business model must change to be that used by telecommunications – services , services, services. If they don’t Tesla and its partners show there are plenty of others who will occupy their vacuum. Steve Blume is president of the Australian Storage Council. This article sourced from http://solar.org.au/ |
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