The Energy Retailers Strike Back. Will Cheap Off Peak Rates Kill Battery Storage?

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The Energy Retailers Strike Back. Will Cheap Off Peak Rates Kill Battery Storage?

Post by E-STATION » Sun, 15 Apr 2018, 16:13

Battery storage is being presented as a panacea for domestic customers struggling with high cost electricity. Batteries charged from "free solar energy" during the day can discharge at peak periods in the evening and at night insulating customers from surge prices and peak tariffs. The best case scenario for home batteries is an electric vehicle owner with an existing 5 kW solar system who has just come off a generous feed-in tariff which paid for the panels. The panels are now generating electricity for free.

The cost of a Tesla Powerwall is $12,500 fully installed. The Powerwall has a usable storage capacity of 13.5 kWh. It will provide 49,275 kWh over 10 years assuming it is fully charged and discharged once per day. The cost of power is approximately $0.25 per kWh over ten years ($12500/(365*13.5*10)) in today's prices i.e. not taking into account discounted cash flows based on rising electricity prices and inflation.

The car owner is out all day and arrives home to a fully charged Powerwall courtesy of the 5 kW solar PV system which has the capacity to fully charge the Powerwall and power passive electrical devices in the house during the day. The owner drives 50 km per day and needs 10 kWh to recharge the car. The remaining 3.5 kWh in the battery pack is used by electrical devices in the house. The Powerwall is fully discharged by the following morning.

So far so good. The battery makes sense if the domestic tariff >= 25 cents. However, the energy retailers have started to introduce night time off-peak tariffs ranging from 12 cents per kWh to 19 cents per kWh. If the owner can charge between 10pm and 6am from the grid at say 15 cents per kWh then the Powerwall cannot compete. The cost of the Powerwall would need to fall to around $7391 fully installed to compete with the overnight rate.

What about discharging the Powerwall at other times? In this scenario the Powerwall could discharge during the afternoon but probably won't because the 5 kW solar PV system that charged up the Powerwall in the morning is sufficient to power the house. The Powerwall will start to discharge as the sun goes down and the load on the house exceeds the power generation capacity of the solar PV system. If the Powerwall starts discharging at 4pm at 25 cents per kWh and the cheap rate starts at 10pm then the Powerwall is only competitive for six hours. Will the house use 13.5 kWh in six hours? Probably not, unless the electric car is plugged in. But if the electric car owner can wait until 10pm then the car can charge at 15 cents per kWh.

What about smaller and cheaper batteries? The Powerwall stands out because it can discharge at 5 kW continuous and 7 kW peak. Other battery systems have slow discharge rates. For example a 1.2 kWh Enphase battery module has an output capacity of only 0.275 kW. A 5.8 kWh Enphase battery cluster has an output capacity of 1.375 kW. An Enphase battery cluster will not keep up with an electric car drawing 5kW + kW drawn by other electrical devices in the house. If the house draws 7.5 kW in total then the Enphase battery cluster will supply 1.375 kW for free and the grid will supply 5.625 kW at 25 cent per kWh. The Enphase will not save you from surge pricing.

I think we will see more and more energy retailers introduce cheap night time rates in order to deter battery ownership. The question will be; how low can they go as battery prices drop?

What do you think?

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Re: The Energy Retailers Strike Back. Will Cheap Off Peak Rates Kill Battery Storage?

Post by jonescg » Sun, 15 Apr 2018, 19:45

Hi Patrick,

I think the net result is ultimately good for the customer - if cheap rates at specific times of day undermine the economics of battery storage, then the customer saves money by charging their EV / doing their laundry / setting the hot water system etc accordingly and not buying the battery. But it will be something of a cold war - batteries will doubtless get cheaper (or at least better) but I can't see even 13c a kWh overnight preventing some customers from still buying the battery.

I do believe that household battery storage need not be as much as people will consume in a 24-hour period - energy consumed during sunlight hours is zero cost. But in a 20 kWh household, barely 4 kWh would be used by day, particularly if the occupants work conventional hours. So the remaining 16 kWh needs to come from either a large and expensive battery or from the grid - which might end up being powered by a combination of gas, hydro (possibly pumped) and even grid-scale batteries. Obviously coal will continue to provide a lot of this power in the near term, but it's contribution is on a downward trend.

An outstanding deal on battery storage might soon be in the realm of $750/kWh, so the aforementioned household will still be committing to a $12,000 investment. Plus the $5000 PV array, you have a mighty expensive commitment to biting thy thumb at the retailers. About the only way batteries can be competitive with cheap overnight tariffs is through arbitrage, and that means being paid premium rates to export right when you need the power. Unless you're a shift worker, I can't see this being practical.

In the meantime, a grid-tied system which charges a modest (9 kWh) battery by day, exports to the grid when it's full, uses the battery from 4 pm to 10 pm to run the house, and uses the grid from 10 pm to 6 am for overnight needs (including EV charging) would seem to be the best use of resources, and the lowest cost to the consumer.
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Re: The Energy Retailers Strike Back. Will Cheap Off Peak Rates Kill Battery Storage?

Post by antiscab » Sun, 15 Apr 2018, 23:01

It won't be long until off peak is basically 10pm until 3pm. The battery only needs to be big enough to last until off peak starts for best economics.

Inevitably peak will be at night
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Re: The Energy Retailers Strike Back. Will Cheap Off Peak Rates Kill Battery Storage?

Post by HuffnPuff » Mon, 16 Apr 2018, 04:49

With all the PV being installed it is changing the market. Old times they needed to ramp up production at the power station in the morning and then slow it down at the end of the peak period. They offset this a little by offering off peak hot water to encourage overnight usage. Now we have more and more PV generating during the day the power stations don’t need to ramp up as much for when it is sunny.

The market is changing and we may end up with a situation where might time power is most expensive as that is when the power stations need to run to charge all our batteries.

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Re: The Energy Retailers Strike Back. Will Cheap Off Peak Rates Kill Battery Storage?

Post by Rusdy » Mon, 16 Apr 2018, 08:36

From what I observed in the eastern state grid, isn't the opposite happening? i.e. retailers are working with battery manufacturer to offer even cheaper electricity (i.e. Sonnen flat)? As their grid market allow to make battery pay-back much quicker (i.e. ability to sell and buy during off/on peak with different rates).

In the west, since we don't have such market mechanism, I can't see that happening yet in the near future. The only alternative is for home owners to install their own battery from their own pocket, which is not economical for most household.

I'm an outlier definitely. I just love batteries too much, hence the PW2 (I already knew that it's never going to be financially prudent). The old Tesla PW2 Australian site, sold PW2 as a 'Zombie Apocalypse' ready mode. That was very clever marketing, as back then, they also knew that people would buy that product not for financial reason.

Simon Hackett had a write up once (I lost the link), that he mentioned Tesla somehow managed sold their product as a 'desirable' thing. That was so true.

Aaaah, human psychology...

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Re: The Energy Retailers Strike Back. Will Cheap Off Peak Rates Kill Battery Storage?

Post by Richo » Mon, 16 Apr 2018, 12:29

To make matters worse add in the daily electricity supply fee and the lost $12,500 that was tied up in the powerwall.
For me the powerwall numbers don't add up for home energy storage.
Or really for any lithium battery for home storage.

The energy providers have a cost to produce energy.
If they make the unit price cheaper to you then there is a good chance they are getting the money off you some other way.
Like putting the service cost up.
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Re: The Energy Retailers Strike Back. Will Cheap Off Peak Rates Kill Battery Storage?

Post by 4Springs » Mon, 16 Apr 2018, 16:05

antiscab wrote:
Sun, 15 Apr 2018, 23:01
It won't be long until off peak is basically 10pm until 3pm. The battery only needs to be big enough to last until off peak starts for best economics.
Our electricity product has two off-peak times, one is 10:00-16:00, the other is 21:00-7:00. Peak price is 30c, off-peak 14c, feed-in is 10c. I wonder whether the feed-in will end up with a peak and off-peak time?

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Re: The Energy Retailers Strike Back. Will Cheap Off Peak Rates Kill Battery Storage?

Post by Richo » Tue, 17 Apr 2018, 12:41

WA power is:

$0.949058 supply charge per day
$0.503471 Peak 3pm-9pm
$0.263681 Shoulder 7am-3pm
$0.138697 off-speak 9pm-7am

I see now they have an "EV home plan"
$0.184740 EV off-peak 11pm-4am
$0.264740 flat 4am-11pm (Standard charge)
$200.0000 Incentive per year
The EV has to be registered

Based on 10kW ev charge using off peak the standard smart plan is better $168/year.
With the incentive the EV plan is better $32/year - less if you do other things with the power off peak.
Hardly seems worth it.
I guess a stay at home retired couple with no solar but with an EV on the EV plan could work.
Assuming they travel like 50km per day!
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Re: The Energy Retailers Strike Back. Will Cheap Off Peak Rates Kill Battery Storage?

Post by jonescg » Tue, 17 Apr 2018, 14:05

I think the EV plan is more about setting a system up and tweaking it later. Right now, a general off-peak rate is better value than the EV rate, but the $200 incentive makes it worth considering. I would think that midday will soon become the cheapest (and most stable) time to charge an EV. Workplace PV for the win!
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Re: The Energy Retailers Strike Back. Will Cheap Off Peak Rates Kill Battery Storage?

Post by dgh853 » Tue, 17 Apr 2018, 19:24

On the topic of off-peak killing storage - as we have seen in Queensland we will likely see off-peak hot water controlled loads shifted by the networks to the middle of the day - the problem of excess solar in QLD being exacerbated by the 44 cent feed-in tariff that rewards people for not consuming their own solar. Moving of controlled loads will likely happen in SA in the next 12-24 months as well due to its "duck curve" of electricity demand on sunny days. Net result - cheap off-peak electricity will be available for EV owners overnight until the coal power stations are shutdown en masse - 2022 to 2040.

Storage still makes sense for avoiding peak electricity costs with the increasing introduction of mandatory Time Of Use tariffs for new homes and solar homes. But when off-peak electricity is only a few cents more than feed-in tariffs you're probably better turning off your battery inverter between 10pm to 7am and extend your battery life a few more years. You'll also be able to get away with a smaller battery to boot.

If anyone would like to check the off-peak electricity prices and solar feed-in tariffs by state - WATTever - the electricity comparison service I founded in 2017 lists these rates for every electricity retailer in Australia.

For usage rates including off-peak, see https://wattever.com.au/electricity-rates-comparison/.
For solar feed-in rates, see https://wattever.com.au/retailer-solar- ... territory/.

As an owner of a large solar PV system on a Time Of Use tariff, with an Outlander PHEV, Leaf and Zero SR to charge, I recognise how important it is to have options to charge your EV at the lowest cost. WATTever will be introducing information for current and future EV owners including the EV "deals" that are becoming available through AGL, Click Energy and other retailers (I presented on this to an AEVA Sydney meeting last year).

As @jonescg has pointed out, midday electricity prices are set to crash over the next 10 years. In 2018 alone, there is over 2GW of utility scale solar being added to the NEM in addition to the forecast 1.3GW of residential and commercial. This is already driving down wholesale prices in the NEM for the next three years. Expect feed-in tariffs to drop and the time-varying feed-in tariffs available in Victoria from July 1 becoming more widespread in coming years as we have more solar and coal power than we know what to do with around midday. Well, of course WE know what to do with that cheap, excess power! ;)

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Re: The Energy Retailers Strike Back. Will Cheap Off Peak Rates Kill Battery Storage?

Post by Chuq » Wed, 18 Apr 2018, 11:35

From a grid point of view they absolutely love batteries! What does a residential connection do now? Go up and down, peaks and troughs all day long. What does a residential connection with a battery do? The peaks drop, the troughs rise, it gets closer and closer to a nice straight line. A network operators dream. It's like designing and operating a road network without having to worry about peak hour!

When they offer peak and and off-peak rates, they are effectively encouraging you to install battery storage.

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Re: The Energy Retailers Strike Back. Will Cheap Off Peak Rates Kill Battery Storage?

Post by Richo » Wed, 18 Apr 2018, 13:05

E-STATION wrote:
Sun, 15 Apr 2018, 16:13
The cost of a Tesla Powerwall is $12,500 fully installed. The Powerwall has a usable storage capacity of 13.5 kWh. It will provide 49,275 kWh over 10 years assuming it is fully charged and discharged once per day. The cost of power is approximately $0.25 per kWh over ten years
So to offset the daily service fee (in WA) with the REBS at $0.07135/kWh you need 3kW of PV Solar.
And to charge 13.5kWh you need another 3kW of PV solar.

So 6kW just to charge the battery and offset the grid fee.
Then you need more panels for your actual day usage.
So add another 2-5kW of PV panels.

So say roughly 10kW of PV panels...

The battery is only used in off peak where the power at $0.14/kWh.
Or $6,900 worth of electricity over the 10 years.

So a powerwall is an extra $5,600 over 10 years and 3kW of panels to charge it over someone who doesn't have it.
I don't get enough blackouts for me to pay $5,600 up front for 10 years of convenience.
And the disparity gets worse with the $12,500 powerwall and cost of 3kW PV tied up for 10 years.

To me cheap off peak rates won't kill battery storage as it never added up in the first place.
I'm sure there are reasons to get one but it wont be based on cost.

edit: the the...
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Re: The Energy Retailers Strike Back. Will Cheap Off Peak Rates Kill Battery Storage?

Post by MDK » Wed, 18 Apr 2018, 13:30

Richo wrote:
Wed, 18 Apr 2018, 13:05
The battery is only used in off peak where the power at $0.14/kWh.
Why would you do that?

Makes more sense to use it between sunset and 9pm (on weekdays) and save $0.50/kWh

And why take into account the supply charge? Not paying a power bill at all would be nice, but the supply charge bears no relevance to using the battery to arbitrage peak and offpeak pricing.

I'm not saying the numbers stack up (yet) but they're a lot closer than you make out.

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Re: The Energy Retailers Strike Back. Will Cheap Off Peak Rates Kill Battery Storage?

Post by Richo » Wed, 18 Apr 2018, 14:06

It's just an example - there are always variations and exceptions to everything.
You don't save $0.50 you only save $0.25.
And only on things that you can't move to off peak - like cook dinner etc.

True about the supply charge but it's 3kW to be on grid.
That same 3kW would charge the pack off grid.
The whole peak off-peak becomes moot.
Does the $12,500 power wall include PV to actually charge it?!?

IF you had $12,500 spare would you spend it on a powerwall or put in a bank at 3%.
The powerwall leaves you UPTO out of pocket $5,600 over 10 years than a person on regular electric supply.
And in the bank earns you $4,300 over 10 years.

So now we are talking $9,900 over 10 years for not spending you money on a power wall.
I'm sure there are savvy people that could do better than 3% return on their money.
And I'm sure that there are people that could get better usage out of the powerwall than my example.

So I'll say an average $1,000 per year better off NOT having a powerwall.
I would be surprised if someone had actual proof that they were economically better off having a powerwall.
Other than from losses due to power outages (one of the reasons not based on cost).
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Re: The Energy Retailers Strike Back. Will Cheap Off Peak Rates Kill Battery Storage?

Post by Richo » Wed, 18 Apr 2018, 14:25

Do you think that the powerwall will be like a new car so when you drive it out the parking lot half the cost will be gone?
Sell you house in 5 years will you get back $6,250?
I doubt it.
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