Crikey has published my reaction to the Grattan Institute’s Report on solar PV (over the fold). My summary
the headline finding of the Grattan Report is totally wrong, even ignoring all the criticisms that have been made of the analytical framework. The report should be retracted and rewritten.
The Grattan Institute’s Report on solar PV , written by Tony Wood and David Blowers, has received plenty of adverse reactions . That’s not surprising, considering its sensationalist presentation, tendentious arguments and dubious analysis; in all these respects it’s well below the standard I’d expect from Grattan.
I’m a little reluctant to pile on further, but I don’t think the criticisms I’ve seen have really focused on the fundamental problem in the Grattan analysis. Although the summary suggests the report is about subsidy schemes designed to promote renewable energy and particularly solar PV, this is highly misleading. The core of the Grattan analysis relates to the electricity distribution network. The analysis is both conceptually unsound and empirically weak.
The approach used in the Grattan report is to compare the cost of rooftop solar PV with that of (mainly) coal-fired electricity, adjusted for a carbon cost of $30/tonne. No allowance is made for distribution costs, and any difference is regarded as a subsidy. That’s defensible, though dubious, in relation to feed-in tariff schemes (all of which have now been closed), but the big numbers in the Grattan analysis come from applying the same analysis to self-generation. According to the report, someone who installs PV and uses the electricity themselves, saving the retail price (say 25c/kwh) is being subsidised by the amount of the difference between the retail price and the wholesale price of the electricity they would otherwise have bought (say 5c/kwh, for a subsidy of 20c/kwh).
This reasoning is bizarre, to put it mildly. Grattan’s reasoning is equally applicable (almost) every time you turn off an appliance or lightbulb: by saving 25c/kwh, you are robbing society of 20c.
The underlying argument is that electricity distribution charges are levied on a uniform basis per kwh, but the costs of the electricity distribution network depend, to a large extent on peak demand. This mispricing reflects the mess that was called ‘electricity market reform’, dating from the 1990s, and has nothing to do with solar PV or renewables. The real subsidy here is to airconditioning which produces a demand peak in the late afternoon and early evening. Stretching a bit further, you could say that electricity mispricing subsidises hot dinners and ‘Who Wants to be a Millionaire”, which produce electricity demand at or near the evening peak.
The Grattan argument is that consumers who reduce their electricity use at times other than the evening peak, for example by installing solar PV, or simply by being careful, are thereby shirking their obligation to fund the costs of meeting peak demand. Apparently, consumers are supposed to make decisions based on the prices that would prevail under ideal pricing rules, rather than those they actually face.
But, even granting all these assumptions, the Grattan analysis is both theoretically and empirically unsound. The errors are such as to make their estimated subsidy to solar worthless, even accepting their analytical framework.
The empirical error is to assume, on the basis of misleading and inadequate data, that solar PV makes no contribution to meeting peak demand. The data on which this assumption is based is derived from just five days, and one state: the second Tuesday in October, in South-East Queensland from 2009 to 2013. For this data set, they find increased use of solar power at midday, reducing demand, but no change in the peak demand, which occurred at 6pm, when most people are at home, settling down for dinner, and when airconditioning demand is strong.
This is a startlingly convenient choice of observation. It happens that sunset in Brisbane in early October takes place around 5:50 pm, just in time to rule out any contribution from solar PV. In choosing this date to request data from Energex, it may have escaped the Grattan team’s attention that;
* Brisbane is close to the easternmost point in Australia, implying an early sunset
* Brisbane is the most northerly state capital, implying less seasonal variation in daylight times
* Sunset is later in December than in October
* Queensland does not have daylight saving
If the Melbourne-based researchers had sought data from local sources, for December, they might well have found that the peak demand occurred well before sunset (8:40 pm).
It is, of course, true that, given the pricing distortions noted by Grattan, many solar panels are located suboptimally from a social viewpoint. But it is absurd to claim that this constitutes a subsidy.
Important though the empirical error is, it is less significant than the theoretical error. In treating the entire avoided wholesale cost as a subsidy, Grattan assume that the optimal distribution charge for off-peak use is zero, and that the entire charge should be imposed at peak usage times.
This is an elementary confusion of marginal and total effects. If such a policy were adopted, the distribution charge at the current peak time would have to be increased to something like$5/kwh. But of course, with such a pricing structure, the peak would turn into a trough, when only the most essential uses of electricity continued.
A more reasonable assumption would be that the peak charge should be something like double the current value. Assuming that the peak charge applied to 10 per cent of total usage, that would permit a reduction of 10 per cent in charges at other times, or around 2c/kwh. But with that pricing structure in place, the social value of solar PV would be around 23c/kwh, at least four times the value imputed by Grattan. Recalculated on that basis, the alleged subsidy would disappear almost completely.
To sum up, the headline finding of the Grattan Report is totally wrong, even ignoring all the criticisms that have been made of the analytical framework. The report should be retracted and rewritten.
fn1. This is way below most economic estimates of the social cost of CO2 emissions. The credibility of the report isn’t helped by the citation of the Warburton Committee as an authority.
John Quiggin 
It may not be relevant, but I remember reading that power generators in Queensland were struggling precisely because solar pv was feeding in lots of power at peak demand. Apparently it is those extreme peak periods where the wholesale price of electricity skyrockets that make all their money. Solar pv kicks in during those times, and the power generators struggle.
But that’s the consequence of taking pareto efficiency seriously, isn’t it? A method of avoiding having to pay to someone becomes a cost to that someone.
Well thank you for this, JQ. I have been pretty disgusted by the Grattan Institute on solar for some time now (they brought out their first dubious report some time ago), and it’s good to see someone with your public profile telling it straight. Will have to tweet about this one.
But its consistent with the NSW IPART rationale for providing a very poor return to PV in NSW after the subsidy if dropped next year even during the peak period when prices are 7 to 9 times higher. Still the latter shock with push people to battery banks which are emerging happily just in time ….. until they are made illegal.
oops- sorry about not closing the block quotation.
How much ‘subsidy’ did fossil fuel generation, and fossil fuels generally, get during this period of PV ‘profligacy’? I’ve seen multi billions a year figures but have wondered how comprehensive and valid some estimates have been.
A few points, starting with a minor point first:
1. “That’s defensible, though dubious, in relation to feed-in tariff schemes (all of which have now been closed),” – JQ. Shouldn’t the statement in parentheses read “(all of which have now been closed to new entrants)”?
2. With regard to air conditioning in a place like Brisbane, it is my contention that solar power could drive all air conditioning needs for a house or building with the correct passive design or modifications. This correct design would include good insulation and heat ballast. The solar panels can drive an air-conditioner all day in hot sunny weather. The conditioning effect cools the internal heat ballast (any combination of tiles, stones, slab base, walls of block or stone, or internal heat ballast water tanks which can actually be rainwater tanks in some designs). The house interior stays cool all night due to the heat ballast effect.
So it not the case that solar power cannot provide cooling at night without batteries. It can provide cooling at night via heat ballast. I know this works because I have one large downstairs area (a granny flat area which also includes a large rumpus) which is kept cool in this manner. The fact that it is on a concrete slab with ceramic tiles means there is sufficient heat ballast right there without going to any extra modification cost. The rumpus room has a lot of glass and no double-glazing which of course is less than ideal for insulation and yet the process still works wonderfully.
In theory, Brisbane could, by a correct fit-out say over 20 years, move to a position of nearly 100% solar powered air-conditioning for all of its buildings private, commercial and industrial. This could be achieved with very little need for battery storage. Thermal ballast is the way to go: water, rocks, cement and tiles are pretty cheap stuff compared to batteries and most are construction materials anyway.
3. I agree with Newtonian that the current fossil-fueled capitalist orthodoxy essentially rigs study outcomes to denigrate and diminish the full possibility set of renewable power. Since our political economy system is unresponsive to majority interests (only being responsive to capitalist interests) we have to rely, for the time being, solely on new capitalists in this arena displacing old capitalists and becoming the new dominant force. As we have seen over the last 20 years, this is a slow process and maybe too slow to save us from dangerous climate change.
I’m waiting for a precis of the report to come out on free media so this is just a couple of quibbles based on second hand info. I seem to recall news stories of people escaping 35C heat at midnight on Melbourne beaches. That suggests plenty of others are using aircon.
In January sunset is about 8.30 pm local time. However PV output declines from about 6 pm. West facing fixed panels might delay this but give less output in the morning. When a demand region has high PV penetration it means dispatchable power sources have to ramp up even more quickly to meet the early evening peak. This could be done with energy storage but batteries aren’t there yet, gas peaking plant is costly to run and coal plant needs to be kept hot all day. Perhaps PV owners should pay more for grid electricity in the mid evening to compensate.
Ideally we want an energy mix which is low CO2 but the players can do what they want without overt or unintended cross subsidies. I’m not sure if this was the aim of the Grattan report but a a free synopsis would help. However at 1.5% of our electricity PV is not the big issue.
John
Notionally, you are correct in your assessment of the impacts of solar and the comparison to traditional generation rather than larger scale renewables however, in your analysis there is also a flaw.
The cost of managing a demand in a localized area when there is insufficient peak demand within the distribution network to accommodate the load being fed-in.
In the very early stages of the QLD scheme, Energex identified some significant issues with load on localized network areas that warranted augmentation to manage because it was occurring at the peak solar generation time not the peak demand time. At the time it was believed that there were a large number of transformers installed to manage this at a cost of $70k each.
So as much as there may be a benefit on one hand for avoided coal generation there is an equal negative impact in network augmentation and forgone revenue at the network end that removes the benefits.
I would also suggest looking at the VCEC analysis of the economics in 2012, link below, that considered the costs associated with the network as much as the generation. The conclusion was also factoring in that there had to be some benefits for consumers installing these systems otherwise there would not be any future investment and the price of panels would be uneconomical.
@Hermit
Have you not read and understood my point about thermal ballast? A room, house or building which is air-conditioned all day by solar power, which is reasonably well sealed and insulated and which has internal thermal ballast CAN stay adequately cool all night. Under these condition there is ZERO requirement to run the air-conditioner at night from solar-generated electricity or any other generation source.
Your assumption that electricity always has to be available at night to drive air-conditioners is 100% false and demonstrably so in practice. I air-condition essentially the entire lower level of my house by solar power in summer by day and then it stays comfortably cool all night with the heat ballast effect and the air-conditioner off. Every residence could do this on any floor with adequate seals, insulation and heat ballast.
I am beginning to wonder why you don’t absorb these rather simple concepts and why you repeat the same endless, unfounded objections to solar power and the possible ways to use it. I don’t think it is because you lack the intellectual ability to understand and absorb such concepts. I think it is because you don’t want to understand and absorb these ideas. You might do well to analyse yourself and ask where this emotional resistance is coming from and what lies behind it. It is interfering with your capacity for logical analysis.
In inland areas and areas with relatively low humidity evaporative air cooling is adequate and places little demand on electricity
Why not? That would be the charitable assumption, I feel. Where does your certainty that he could come from, is there some other area you’ve seen him demonstrate the needed insight?
@Doug
Good point. What demand would it place on water resources though? I am just asking. I don’t know if the demand on water resources would be significant. It might be significant for people who survive mainly with rainwater tanks.
OTOH, solar powered air-conditioning with heat ballast providing cooling at night is eminently feasible in any sunny place which is all of Australia.
As an aside, I note that on days with complete cloud cover, not too many of the deep gray storm-type clouds and little actual rain, my 5.5 kW (nominal) solar panels still push out a variable 1,500 to 2,000 watts. That’s not bad. On sunny day peaks they push out 4,500 to 5,000 watts. At my end of my suburb about 1/3 of houses have solar pV systems varying in capacity from about 2.5 kW to 5.5 kW nominal. I have noticed no problems with supply (i.e. no problems with integration with the grid). If anything, the slight but noticeable problems acreage residences have with voltage drop appear to diminish by day with solar panels as part of the mix. Then again I might be imagining that. Certainly, nothing has got worse.
@Ikonoclast
I am sure Hermit understands that it doesn’t rain all the time and yet people can live for long periods on the water from rainwater tanks and cattle can live on water from waterholes and dams. It’s simply the concept of accumulating a store from an intermittent flow. He needs to transfer that concept from water to energy. (From Hermit’s general facility with language I have inferred that transferring this concept from water storage to energy storage is not beyond him intellectually. Hence I wonder where his resistance to the concept comes from.)
The next step with energy is understanding that energy storage can take a number of different forms and each the various forms can be efficiently matched to intended use. When heat energy (or a temperature differential) is involved it is usually better to shift heat and store heat energy or “store” cold. Of course you can’t store cold but you can set up an insulated temperature differential. Then you “direct use” the heat or the cold as it were. Losses do occur during heat differential storage but these are usually less than converting heat or radiation energy to electrical energy then that to chemical potential energy in batteries then that back to electrical energy and then that back to heat transfer work. Phew, just saying that long chain suggests the big losses involved.
Oops I meant to link that reply to Collin Street. Even in the blogging world, talking to oneself is not a good sign. 😉
@Ikonoclast
Silly me I go on statistics, namely that annual peak electricity demand is associated with heatwaves. If your remedy was both available and acceptable to all then it could revoltionise power supply. Therefore you’d better direct your ire at the greater public not me.
As it happens I’ve solved the heatwave problem by going underground (with LAN connections) at 16C when it is over 40C up top. On a point of principle I refuse to use air conditioners and some other types of high wattage appliances. I decline interstate wedding invitations as I don’t want to waste fuel. However I realise the underground option is not available to everybody so no point in berating others for failing to implement what works for me.
If your solution is widely applicable you must promulgate it to prevent deaths and heat stress this summer. Expect a reminder a few months from now.
Doug, evaporative heaters were a competive option for home cooling in places like Adelaide, but with the decreased cost of solar PV and decreased solar feed-in tariffs that’s not so clear anymore. This means the incentive to install electrical air conditioning has increased. Time of use tariffs will encourage people to cool the house down during the day while the sun is shining and lay off during peak grid demand (peak total demand will still be in the afternoon as usual). Of course, time of use charges will encourage people to install on-grid energy storage. If we could actually get our hands on 7 kilowatt-hour Tesla Powerwalls they could potentially pay for themselves for on-grid storage for people on time of use tariffs in NSW, WA, SA, and QLD. (They would be marginal in Queensland, but some people would still find them a worthwhile investment.) If 1% of Australian homes had 7 kilowatt-hours of energy storage it would have a large impact on electricity markets.
Using Grattan assumptions that rational consumers have PV and battery systems, the entire cost of the grid is a subsidy to those irrational people who depend on the state-provided grid. Is that what you were asking?
The real answer is smaller (for the grid component), but I think it’s probably complex because the legislated rate of return is pulled out of someone’s proverbial and that has distorted grid investment to the point where “how much grid should we have” is now a political question answered by politicians rather than anything to do with electricity demand.
Who benefits from the Grattan Report? Perhaps we should follow the money. The Origin Foundation is an Affiliate Partner of the Grattan Institute. Origin Energy founded the Origin Foundation.
Running aircon off a battery was previously the domain of submarines and space stations. In theory the 7 kwh Powerwall should keep you cool past midnight. The output is apparently limited to 1 kw presumably for 7 hours. A 2.5 kw output aircon with a COP of say 3.6 draws 0.7 kw and presumably could run for 10 hours. Then recharge with daytime solar or post midnight offpeak.
However I’d like early adopters to report back by 2020 or so whether they’ve actually achieved this since it is unprecedented. As usual battlers miss out.
@Hermit
You can’t go by statistics (by definition what happened in the past) and then assume that no new developments will ever or can ever change the picture. This is what you seem to do.
It is within every person’s financial reach in Australia (if they are middle class or better off) to make the changes necessary to run an air-con system (if they want air-con) with solar panels, home insulation and heat ballast in the manner I advocate. The costs are not prohibitive. Clearly the most economic way for this to occur nationally is a phased changeover period of about say 20 years. People will make individual decisions based on costs. It would be within government power to assist elderly battlers to do this.
It would also be possible for government to mandate by regulation that all new houses pass environmental passive design and insulation standards. I am sure we are already at least part way to that. In addition, government could easily mandate that if you install air-conditioning then you must install solar panels system such that the nameplate capacity is 120% of the maximum draw of the air-con unit. Subsides for installing thermal ballast could be added with information on the thermal ballast concept. To get the subsidy, you sign up to a tariff that does not allow you to use mains power at night on the air-con circuit. There are a hundred and one ways to tackle these issues. The one way that won’t work is to throw up our hands and say “It doesn’t happen now, therefore it will never happen.”
I am an early adopter of the thermal ballast concept. I simply discovered that my home fortuitously had enough insulation and thermal ballast on the ground level without even being designed for the idea. I am reporting back to you right now that the idea works and that one doesn’t need batteries to make it work.
I think you misunderstand what “middle class” actually means today. The 1960’s and 1970’s “middle class” expectations are now the upper classes.
Just for example, those people in their 30’s who own their house typically have a poorly constructed second hand one, or a really poorly designed and built new one. They’re also not middle class in the 1970’s sense – they both have jobs, they are doing pretty well in those jobs, and they don’t have a lot of financial freedom. Sure, they can buy stuff that was either ridiculously unaffordable or flat-out unavailable in the 1970s. Cellphones, for example.
The other 50%+ of the “middle class” either don’t own a house, or don’t own a dwelling of any sort. So the notion that they have any control over their home is laughable. If they’re lucky they’ll be allowed to buy a better air-con than the one installed, if there is one. And have it installed at their own expense, and leave it behind when they get booted out because with the improvements the landlord can demand a higher rent.
@Moz of Yarramulla
It might be interesting for you to read this thread at The Conversation: https://theconversation.com/without-affordable-housing-we-wont-have-a-society-worth-living-in-41962
In one of my comments there I ran some numbers:
(Sorry, The Conversation prevent me from linking directly to that comment so I’ve pasted it here)
I have evap air-con in Canberra. Works a treat. Power use is very low. I once measured the water consumption, but I can’t recall the exact figure. It wasn’t a lot. Less than 1L/hour? Not sure, but it would depend on temperature and relative humidity in any case.
My system keeps recirculating the water until salt levels get too high and it dumps it, every few days I think. So the water consumption is just what is evaporating.
I totally agree that passive solar is the way to go, but retro-fitting thermal mass (concrete?) into a wood frame hour like mine is a major expense. Some sort of phase change material is the go, but it is way too pricey at the moment
http://www.phasechange.com.au
Iconoclast – Water usage on evaporative coolers is very limited – no noticeable impact on our water consumption. On the economics of electricity I defer to Ronald – though my recommendation would be to check out the actual consumption on its operation as the operation of the technology has improved over time.
Certainly they are very popular in Canberra
@Ikonoclast
Your “ballast” method works in winter too with a reverse-cycle aircon. Heat up the house using solar PV output and it will remain warm until you get to bed.
Getting back to the Grattan report, it (one 64 page version) can be downloaded from their web-site.
On p13 we find
“2.2 Subsidy two: network tariffs that do not properly reflect
costs
A second subsidy associated with solar PV is related to how
electricity is priced. Peak demand determines the cost of the
network, which in turn determines the amount of our power bills.
Yet the cost of meeting peak demand has no effect on the bills of
households and small businesses, which are typically charged the
same or a similar amount for each kilowatt hour of electricity,
regardless of when it is consumed.”
This clearly wrong, as there is a fixed “connection charge” (at least in Victoria) which is the same every day irrespective of how much energy you consume, and this is supposed to reflect the cost of the grid. So how can they insert a para like that ?
Then on p16 we have:
“Lowering wholesale prices does not constitute a net economic
benefit to society, which is why it does not appear in the costbenefit
analysis presented on page 15. Instead, it is a short-term
financial transfer from existing generators to electricity retailers,
who may then pass these savings onto consumers. In economic
terms, society as a whole does not benefit.”
Not being a trained economist, I cannot tell under which “school” of economics this is true. In common-sense terms, it says that if the govt. makes an investment, which lowers the wholesale cost of electricity, then society does not benefit. Will someone please explain?
@Ikonoclast
One litre of water takes 2270 kJ or 0.63 kWh to evaporate. So providing the equivalent of a 3.5 kW home system at full capacity would use like 6 litres of water an hour. For comparison, this is about full flush of a reasonably modern toilet or 50 seconds of showering with a water saving shower head.
So, within the capability of most household water supplies. The bigger problem with evaporative aircon is that the increased humidity reduces the body’s own evaporative cooling capacity.
@totaram
And for some people that’s most of the cost of their electricity. And if those people fall for the Powershop scam where there’s no supply charge, they discover that their unit cost goes up to the point where even a small increase in consumption becomes ridiculously expensive.
My understanding is that the actual grid cost is a bigger part of the electricty cost than the current supply charge indicates. So to some extent smaller users are being subsidised by larger ones. There may be an equity argument in that, or an argument that those who have low consumption due to smart use of PV should pay extra. But the latter runs into the “solar death spiral” problem where higher connection charges make going off grid more attractive, and at some point in the near future it will likely become economic for those people to drop off the grid entirely.
@Newtownian
Nicely said!
@Moz of Yarramulla
It should not be impossible to work out what fraction of the total cost of poles and wires each user should pay for the actual poles and wires that deliver electricity to their house.
That would be a fun exercise.
I think this tweet says it all. Grattan know who they’re playing to.
Geez, Ikonoclast, you might persuade more people with your arguments if you didn’t start off by assuming they are wicked or stupid.
But then I do think that, as a critique of the Grattan report (which I’ll take John’s word for it is technically crap), your paean to the wonders of thermal ballast misses the point. The Grattan report is not concerned with how cost-effective domestic PV would be if done right, but about how cost-effective an actually existing scheme is. I’m sure you’re absolutely right that things like smart meters, better house design and water ballast could fix that load matching problem, but that does not bear on the question of whether or not we currently have such a problem or how much it currently costs.
@totaram
Yes, exactly. Of course, it is not “my” thermal ballast idea. Humans have been using the idea in one form or another for thousands of years.
@John Brookes
“fun” is the right word. It would vary from month to month according to what happened historically in the electricity market at those 5 minute intervals, where the generators bid for despatch etc. and you would need to know the energy flows in the entire grid in each of those blocks etc. etc. Just not worth the effort I guess. That is why they leave it to the retailers and distributors to fix it up amongst themselves and come up with some tarrifs. A true monument to the ideology of trying to have a “market” where there is a natural monopoly.
@derrida derider
The Grattan report is not concerned with how cost-effective domestic PV would be if done right, but about how cost-effective an actually existing scheme is.”
Maybe, but they can’t even get that assessment right as J.Q. demonstrates. It calls into question their analytical ability or their intellectual honesty or their vested interests. And these are, in the Boolean sense, “ors” not “exlcusive ors”.
Just so people aren’t mislead, the characteristics of the Tesla Powerwall are easily available on the Australian Tesla site:
http://www.teslamotors.com/en_AU/powerwall
As it clearly states under Specs its output is 2 kilowatts continuous and 3.3 peak.
@Moz of Yarramulla
I agree that the modern middle class is under pressure especially in the younger cohorts. Uni student who graduate will graduate into a difficult job market. The signs are that at least 30% and maybe higher of 2015 graduates will still have no jobs by May 2016. The signs also are the Australian economy is heading for recession.
They will also graduate with HECs debts. I do not consider it fair that they begin their working lives with such debt when my age cohort got a free tertiary education. (I intend to pay my kids’ HECs debts for this reason).
In addition, they graduate into an economy where house prices are so inflated young people in their 20s might as well forget about buying a house. People in their 30s appear to be taking huge loans to afford the prices of our inflated housing stock in the current bubble. Yes, it is a big bubble. Houses cost at least double and maybe treble what they cost a generation ago relative to wages. Unemployment edges ever higher and the young are particularly badly affected by unemployment.
I am not sure what the statistics say about your assertions. If your assertions are correct, the age 30s cohort and age 20s cohort will experience a shrinking middle. That is to say the middle class for those cohorts would be shrinking with most falling into the lower classes of working poor and unemployed. I suspect this is happening. Certainly the statistics in related areas show that wages are stagnating and a greater share of national income is going to profits. This is occurring even though labour productivity has been improving.
On the one had, our government says we are the wealthiest we have ever been as a nation. On the other hand, we force HECs debts, unaffordable housing and very high youth unemployment on our young. And here we need to debate whether the age 20s and age 30s cohorts can afford what older middle class cohorts take for granted. As the saying goes, something does not compute.
@Ronald Brak
The text part of the ad doesn’t mention costs. I think a typical household with kids might need two of the 7 kwh units. Then there’s the extra roof panels that might be needed, a new or different inverter and installation costs. Some outside walls might not take the weight. Suppose it cost $10k+ that’s years of operation to recoup the cost. If the payback period was over 10 years as suggested by Climate Spectator you would have already replaced the battery in that time. If the homeowner is making a statement that statement is ‘we have lots of money to throw around’.
> I think a typical household with kids might need two of the 7 kwh units.
[i]basis?[/i]!
You’ve come to a conclusion: show your working. Not hard, if you’ve done things properly.
@Hermit
I think whether a Powerwall (or two) makes sense for households will be very situation dependent. In time, we can also expect the price to come down. So more households may then find a Powerwall makes sense.
At the same time, the nature of the renewable energy, energy storage and energy saving revolution is not that it will provide one “killer app” which will solve all problems everywhere for everyone. Rather it will provide many micro, middle and even macro solutions which when added together and networked in a synergistic fashion will provide the overall solution.
TBH, I find you use the “divide and criticise” principle. Sequentially, you point to each one component of a multi-component solution and say ” that won’t get us anywhere much”.
Also, you assume us to be frozen in time with no more technical advances to come and no price reductions to come as new technology gains market share and benefits from production volume (and also benefita from entering the phase where R&D costs are essentially recovered and further sales are all profit bar immediate manufacturing costs).
Hermit, it is easy enough to look up the price on the internet. (The internet is an amazing funhouse full of both information and people who ignore the fact that information is right at their fingertips.) The 7 kilowatt-hour Powerwall is $3,000 US. That’s about $3,800 Australian. A compatible inverter for on-grid use can be had for around $1,000 Australian. (Note this is not an islanding inverter. Even remotly satisfactory islanding inverters cannot currently be had for that price.) So if you think it through, for a new on-grid solar installation, there should not be a great deal of extra expense over the cost of the Powerwall itself.
Hermit, why would the typical household with kids require two units? The typical household with kids in Australia is on-grid so one would always be sufficient for such households, although they could get additional Powerwalls if they wanted to if they were weird or something. For off-grid use more than one could be very useful, or for use as an uninteruptable power source, but those two things are very different from on-grid energy storage without an islanding inverter. It’s very important to be clear about these things otherwise confusion can result. The Tesla Powerwall is too large to be cost effective for the majority of Australian households when used for on-grid energy storage. It will be cost effective for a portion of households that have time of use tariffs and sufficent electricity consumption in the late afternoon and evening. But only a very small proportion of households could save money by having two powerwalls.
Hermit, if the battery is used over 10 years, why would the battery already be replaced at that point? The Tesla Powerwall’s warranty is for 10 years, so it can be expected to operate for at least 10 yeears even when used at high capacity. (The warranty period is right there on the page I linked to under Specs.)
I’ll refrain from using links as it requires too many for this site. I assume the aim is to be independent of the grid using onsite solar. I’ll give broad parameters and you do the maths. Australian per-capita residential electricity use is about 6.6 kwh per day. For a family of four in an all electric household that is 26.4 kwh. A 5 kw peak solar array can generate over 20 kwh in mild sunny weather but as little as 3.5 kwh in overcast rainy weather. A single 7 kwh battery and an average solar array won’t be enough.
Tesla say the wholesale cost to installers will be $US3,500 for the 7 kwh unit. I suggest here in Oz the installed price could be 2 X $4k = $8k maybe less for just one. Then there’s the inverter which must be compatible with the Powerwall…another $2k? Maybe more for a ‘smart’ internet connected inverter. You might want extra roof panels for winter ..remember the aim is not to use the grid.
I suspect builders will have drill through exterior walls to find structures to take the 100kg weight of just one module. More expense. There’s probably other hidden costs which are discussed on the web if you look. An Australian estimate (Climate Spectator) for the payback period for a Powerwall is 11 years. That heroically assumes we know future fixed and variable grid charges. Suppose you get one in 2016 and recoup that original outlay by 2027. However in 2026 you had to fork out another say 7 X $300 = $2,100 for a replacement battery.
That’s why I think the Powerwall is like Windows 10 in that I’d let others discover the bugs or perhaps in this case the hidden costs. Glossing over them may lead to tears.
@Hermit
What are you saying? The Powerwall will;
(a) never suit anyone?
(b) never suit you?
(c) never pay for itself?
(d) never come down in price?
I am not exactly sure what your argument is.
Here’s a graph of solar output for one particular installation in QLD on 26/12/2011
It looks as though daylight saving would make a big difference to PV’s contribution to a 6pm peak — the curve is very steep before 6pm.
@Ikonoclast
I think the gist is “renewables bad”.
The only merit in the report is to highlight that on balance investment in PV (at least on homes) is not really NPV positive in its own right. The other point is as Newtonian notes is that the feed in rate promotes grid bypass through investment in even less efficient batteries. Presumably, if household aren’t priced on time of use then their feed in rate should also not reflect time of generation (as determined by QCA and others). I would assume that grid owners would prefer the feed in rate to be the same rate as the take out rate to make the householder indifferent to grid bypass (expect where they want to shift the timing of consumption of their own generation which would be more related to the materiality of the difference in peak and off-peak rates). Happy to accept $0.08 cents if thats also what I’m paying to buy in (subject to some form of TUOS adjustment for the retailer).
I should point out I’ve had PV since 2005, make my own biodiesel, cook and heat on wood stoves and help on microhydro projects. My conclusion is that all of it will barely make a dent in our fossil fuel dependence. Just look at the official stats rather than listen to dreamers.
I’m in a dilemma about what to do when my FiT runs out in 2019 hence the critical look at Powerwall. At this stage I’m more inclined to build a small shed with nickel iron batteries. While they last 20 years they are not ‘set and forget’ and require active management. Call me sceptical but builder mates go through lithium batteries like lollies for their cordless drills so can it be so much better.
That’s why I’ll wait to hear reports back but not from uncritical supporters. Like pink batts it might not go as smooth as hoped. I wouldn’t be too upset if they nationalised the grid and gave us all cutprice power so households wouldn’t even have to bother with batteries.
Hermit, I’ve just had a long and frank discussion with the imaginary people in your scenario above and they are very upset that you have tried to make them go off-grid using the Tesla Powerwall. They said they never had any intention of going off grid and they were only interested in saving money and protecting the environment. They have no interest in being independent from the grid, and in their own imaginary words, “We don’t want to spend more money on an energy storage solution that would less beneficial to the environment than staying on-grid and using our surplus solar generation to displace fossil fuel generation. Staying on-grid would be far better for the environment and more ethical than going off-grid and simply curtailing a large portion of our solar production.”
But once I explained to them how the Powerwall could potentially save them money when used for on-grid storage, depending on their time of use tariff and electricity consumption, they seemed pretty excited about that.
RB I’m not denying that Powerwalls could help some people. I agree it would be insane for people in the suburbs to go off grid particularly if they got a diesel generator for backup. I suggest that the cost of the Powerwall, new inverter, extra panels for winter and possible building work will be at least $10k. I’ve seen US estimates several times that amount. It means the poor need not apply, nor renters nor flat dwellers.
Therefore I think home batteries will have limited uptake unless the power companies themselves install and maintain them. I predict there will be no utility ‘death spiral’. That leaves us with coal and gas making 87% of our electricity even before electric transport goes prime time. The major solutions if any must lie elsewhere.