“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. The Australian
market is already full of complete and utter bullshit in this regard,
and tragically, some consumers will be disappointed in the real world.
The upshot
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.
But here’s a tip – Mrs Jones
early adopting cousin doesn’t give too hoots about the economics. She
wants in. Now. And she is ready to pay what it costs, so pick a great
package and have a standard, efficient offer ready, because some people
are buying these things today. Oh, and perhaps get a good answering
machine.
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.
Can’t wait.
http://theenergycollective.com/solarbusiness/2209901/secret-cost-effective-energy-storage
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