Australian homeowners may be flocking to energy storage in droves. But one of the country’s biggest engineering consultancies doesn’t see the financial sense in it.
Victoria-based Aurecon, which has operations across Africa, Asia, Australasia and the Middle East, and which has been associated with major renewable energy projects such as the Kogan Creek Solar Boost plant, says the financial impact of adding batteries to residential PV is “negative."
“Aurecon has modeled multiple scenarios with a Tesla Powerwall lithium-ion battery coupled with a 4-kilowatt rooftop PV system,” said Victor Young, the company’s market director for energy, oil and gas. “Adding batteries increases the cost of power even in the most favorable circumstance of a zero feed-in tariff from the network provider.”
As it happens, the Powerwall might not be the best battery on the Australian market, on a cost per total warranted kilowatt-hours basis. That honor currently goes to the Redflow ZCell zinc-bromide residential flow battery, according to SolarQuotes.
However, said Young: “The advertised higher cost of current-generation flow batteries does not encourage us to expect that the return on investment for this type of battery would be better.”
Flow batteries can be deep-cycled with no harm to their life, so they can potentially be a better choice under circumstances where they need to be fully charged and discharged on a regular basis. This gives them a longer life compared to lithium-ion. However, according to Young, the return on investment for both lithium-ion and flow batteries "does not look attractive."
Aurecon is skeptical of whether current residential battery technologies will be viable in the long term, too. “Any future reduction in prices might only be short-lived,” Young cautioned. “Lithium-ion batteries use lithium, which is sourced from only a relatively few salt lake resources in the world."
He also warned about rising costs over time as high demand counteracts the learning curve in manufacturing.
Redflow’s approach faces similar problems, said Young. “Current-generation flow batteries use zinc and bromine in their electrolyte. While zinc is comparatively readily available, the current demand for bromine exceeds supply, which makes it an expensive element. It seems likely that flow batteries will have constraints in their ability to significantly reduce the cost of production.”
Based on its analysis, Aurecon recommends a “wait-and-see approach” regarding energy storage. “Alternative battery technologies such as zinc-air or salt batteries may be able to achieve lower costs due to their use of more readily available materials,” Young claimed.
Aquion even has a residential battery on sale in Australia, although according to SolarQuotes’ analysis, it currently works out to be about 24 percent more expensive than a Powerwall and 48 percent more expensive than a ZCell, on a cost per total warranted kilowatt-hours costs basis.
Despite this, Aurecon has not written batteries off altogether. “There are specific applications where battery storage is attractive,” Young noted.
These include off-grid storage and transport. “The battery business case considerations for transport, via plug-in electric vehicles, are fundamentally different given the inherent requirement for a mobile solution,” he said.
And in the future, Young observed: “Lithium batteries no longer suitable for the demanding role in electric vehicles could be recycled as a cheaper, lower-cost solution in residential grid-integrated storage, where the performance demands are not as severe.”
None of this, however, explains why residential storage is taking off in Australia right now.
A GTM Research report last year estimated that Australia’s energy storage market will hit 244 megawatts by 2020, and 90 percent of that installed base will be behind the meter.
Young believes that consumers are not being too picky about the financials. “We have to recognize that consumer decisions are not solely governed by economic rationale,” he said. “Early adopters will invest in storage solutions for multiple reasons, including a desire for perceived green outcomes and as a reaction against the perceived high cost of grid-connected power.”