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Energy Insights

Battery storage: a game changer in 2018?

Battery storage for the consumer market (as an adjunct to solar PV) is becoming increasingly competitive, with prices for these systems having decreased markedly over the last 12 months or so. The price for some units has come down to as low as around $1,000 per kilowatt hour (kWh) fully installed.

However, while some early adopters are taking up the technology, this price point makes battery storage economically feasible only in a minority of cases. Most analysts suggest that mass uptake in the consumer market will occur at an installed cost of around $500 per kWh. The winding back of solar feed-in tariff subsidies in some states should also help to drive demand.

But is battery storage (combined with a solar PV array) likely to be an economically viable solution for the commercial and industrial (C&I) sector? The short answer is ‘not yet’ in most cases, but it is certainly worth examining some of the factors that should be taken into consideration when undertaking any feasibility study.

The main benefits of a battery storage system are being able to store excess solar power generated for later use, or by utilising ‘tariff arbitrage’ – charging your battery system from the grid at the lowest possible price and using it when grid prices are much higher.

The key determinants of the economic feasibility of a battery storage system (combined with solar PV) will be your business’s overall electricity consumption and usage patterns, and how these may change over time. The amount of space you are able to dedicate to a solar PV array is obviously something to consider as well.

While solar PV combined with battery storage would probably never be a complete solution for heavy business electricity users (i.e. manufacturing or processing), it may be a useful supplement to baseload grid supply to power lighting, for example.

For those in the commercial energy sector (particularly those who are not heavy power users), it would certainly be feasible with the technology currently available to greatly extend the amount of time they are ‘off grid’. However, the significant upfront cost involved and likely long payback time would seem to make this unviable for most at present.

Having said that, it may be economically feasible for some small to medium sized businesses in the commercial sector to implement the same kind of solar PV and/or battery storage systems currently being promoted to consumers, particularly as competition increases and prices come down.

Indeed, there are numerous case studies in the commercial sector that demonstrate the increasing viability of solar PV, so battery storage would seem to be the next logical step, particularly if the economics stack up.

Unlike the consumer market, those in business may be eligible for low cost finance funding or grants towards achieving energy efficiency, and there may be tax benefits as well. Subject to the size of the solar array, businesses may be eligible for either Large Scale Generation Certificates (LGC) or Small-scale Technology Certificates (STC), which are tradeable in the market, thereby providing further financial incentive.

If you are considering installing a new solar PV array, or upgrading your existing one, another alternative is to install a system that is ‘battery ready’. Which is to say, get the benefits of lower energy costs now through solar PV (if it suits your particular situation) and install a suitable battery storage system in future as technology improves and when lower prices makes this economically viable.

On that note, it is also worth considering which type of battery technology may best suit your situation. Most are aware of the lithium-ion battery technology currently on offer, in particular the Tesla Powerwall. A ‘home grown’ alternative is the Redflow system, which uses zinc-bromide flow batteries and which is gaining traction in both the consumer and C&I sectors alike.

Another alternative to consider is the advanced lead-acid type battery (like the one in your car), currently one of the cheapest on offer. Unfortunately its main shortcoming is a much shorter life span than its competitors. However, the fact that its components are highly recyclable makes it a worthy contender, especially as there have been significant improvements to this technology recently.

For the technically minded and those who would like to explore this topic further, a recent paper compiled by the Australian Energy Market Commission and CSIRO (‘Electrical energy storage: technology overview and applications’) provides an excellent insight into different battery storage technologies currently being used in Australia, and what the future may hold in this regard.

As this report points out, it is unlikely that there will be one technology that becomes the ‘silver bullet’ for energy storage. Rather, for commercial and industrial applications the type of battery storage suitable is and will be very much a case-by-case scenario, predominantly determined by the user’s energy needs and usage patterns.

In the meantime, with battery storage technology rapidly advancing and systems becoming more affordable, it is definitely worth making sure that your business is ‘battery ready’ – the time to act may be sooner than you think! As always, a good place to start would be by talking to Energy Action.

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