I'll admit to some surprise at the speed of developments in renewables and storage. Apparently, some large commercial/industrial consumers are considering going off-grid. The more the incumbents try to shore up their moribund business model, the more progress overtakes them.

http://solarbusiness.com.au/wp-content/uploads/2013/10/head-in-the-sand.png
SA Power networks puts its head in the sand on solar storage

31 Oct, 2013

SA Power Networks in the monopoly Distribution network operator in South Australia.

In a subtle, surprise move, they very quietly recently announced that “If a customer currently receives feed-in credits under the Solar Feed-in Scheme, they will no longer be eligible for receipt of credits once they install a battery storage system or a Fuel Cell system”.

Given that the vast majority of South Australian’s are currently on some type of FIT, disappointingly this policy effectively wipes out the cost effectiveness of using storage in South Australia for the time being.  Intriguingly, only a few weeks ago some Californian Distributors http://solarbusiness.com.au/sa-power-networks-puts-its-head-in-the-sand-on-solar-storage/SA%20Power%20networks%20puts%20its%20head%20in%20the%20sand%20on%20solar%20storage used the same blocking tactics and refused to connect some customers who had purchased solar with storage systems although fortunately, only a  week later http://solarbusiness.com.au/trans-formative-solar-storage-policy-california/ new regulations were introduced that mandated the introduction of storage.

It is somewhat telling that in their own industry briefing SA Power Networks acknowledge that “..as customers and the Industry seek the next technological innovation to reduce electricity demand and reliance on conventional electricity distribution networks, the emergence of fuel cells and battery storage systems is starting to gain momentum”.

Innovation. Reduced demand.  No thought given to embracing the advantages or optimizing the network benefits which could reduce all consumers costs; just an immediate reaction to stop any threat to conventional business models.

And they are monopoly so guess what; you have absolutely no choice and absolutely zero consumer power to challenge their decision. This lack of market power was eloquently and acutely described in the report “Going Solar: Renewing Australia’s electricity options” which was recently released by the Centre for Policy Development.

The report noted that:

“Solar consumers have the right to a fair contract with electricity retailers, and one that is not to their financial disadvantage, under the Australian Consumer Law.177 However, the structure of the electricity industry, and relationship between retailers and customers, means that solar consumers have limited market power. Where this constrains consumer choice or creates an uneven playing field for solar compared to other sources of electricity, governments may need to intervene to protect consumer rights” .

Although we are talking about a Distributor in this case, I would think that equally, consumers have virtually no power here and are potentially being financially disadvantaged by this ruling. Ironically, stopping consumers from (potentially) making investments in storage has the bizarre consequence of allowing networks costs to potentially rise, or at least preventing the potential of helping to alleviate them, which would seem to be against the broader community’s interest.

Further, it is also plainly apparent  that this ruling is a retrospective condition, added subsequently to householders signing up for the FIT, which would hardly seem in the spirit of consumer law.

The report goes on to say that:

“..the threat posed to ‘gentailer’ profits by rooftop solar is significant and the level of market power and access to information is so heavily weighted in the utilities’ favour that it would be challenging for any consumer advocacy body to get traction. If this proves to be the case, a stronger regulatory approach may be required – particularly if around a million new solar households become disenchanted with the status quo. A recent poll by Essential Media suggests this is more likely than not – power companies are considered the least likely industry to act in the public interest..”

The excuse that SA Power networks uses to enact this ruling is that  “…this equipment can cause interference on our network and can impact the quality of supply for other users connected to the local network” obviously implying that they see a (perceived) technical risk.

[continued ...]

[... continued]

Really?Really?

Can someone explain how storing energy from a solar system in a battery and using it in the home to peak times to avoid peak charges (effectively avoiding the purchase of energy) creates a power quality risk? The solar industry is one of the most regulated in the country and I am all for standards and accreditation, don’t get me wrong. Anything we sell or install should be the epitome of quality and safety lest we do ourselves a disservice, but lets not confuse a device that alleviates network load and consumer costs with something that simply threatens the status quo.

Now to be fair, SA Power Networks do talk about an interim process and pending modification of the Small Embedded Generator request process to take into account storage. So the ruling doesn’t say you cant do it, but by default it certainly discourage’s it for pretty much every single South Australian.

We urgently need standards and regulations developed which allow storage on networks and encourage innovation and reduced demand, not policies that block them and dis-empower consumer choice. Let’s hope the modifications to their rules take a much more adaptive and progressive approach.

You can read the relevant SA Power Networks Industry News here.

Teething problems

heres the thing, how ould the power company know if you are  storing energy from a solar system in a battery and using it in the home to peak times to avoid peak charges

Hey hash

Did you expect business to treat the renewables energy with some kind of sympathy about saving the planet...???

If business isn't guaranteed  profit, and possible a monopoly then they will ditch whatever is on the table just as quickly as they embraced it.

Renewables energy will be treated exactly like any other commodity... there are no exceptions to rule.

Not all are as backward as SA, it seems.

Energy storage – a saviour for networks or a Trojan horse?
By Giles Parkinson on 4 November 2013

Australian network operators are turning increasingly to the use of battery storage to solve their problems with network management, particularly in grid demand. But just as storage looms as a potential glue to keep the networks together, it could just as easily offer the technology and the means to break them apart.

Australian power industry investor Tag Pacific predicts storage has the potential to become a major disruptive technology for the conventional power business – at the same time offering networks a unique opportunity to stabilise their grid management, but also offering customers the opportunity to leave the grid altogether.

Tag Pacific chairman Nathan Wise says the disruption from storage will come because it will challenge the traditional model of centralised generation and transmission over great distances.

The move towards decentralised power generation (such as solar) is changing the relationship with the grid. He says that while storage is needed by the network operators to manage those changes, and new technologies such as electric vehicles, it will will also give clients the option of taking themselves off the grid altogether, presenting a new problem for networks

Tag Pacific builds power systems for the mining and petroleum sector, as well as desigining and building solar installations for residential, industrial and commercial clients, and supplying components. It also installs trigeneration systems and back-up power systems in the CBD and clients such as Sydney Airport.

Tag Pacific, through its MPower subsidiary, is currently running a two-year pilot project for Victorian electricity distributor SP Ausnet, looking at how energy storage systems can address demand problems when the peaks exceed network capacity.

The trial is monitoring power demands within individual households and how the use of stored power during peak-load periods can reduce demand on the network and avoid peak tariff rates, cutting costs for householders.

Wise says MPower is developing the “smarts and controls” that sit around the battery bank and which interact with the grid and the solar systems. The system monitors power demands in individual households and stores power for use in peak-load periods, reducing the demand on the network and energy costs for the householder.

The systems incorporate rooftop solar PV, advanced lithium ion batteries, bi-directional inverters and programmable controllers capable of being monitored and controlled remotely.

Utilities are clearly interested in looking at how energy storage can be used within the networks. Energex, Augrid and others are all undergoing trials and pilot projects to look at the potential to use the technology to boost the reliability of networks, particularly in regional areas, and avoid costly upgrades, and to manage the high penetrations of solar, including in metropolitan areas. They are also looking at electric vehicles, and the role of their batteries – both charging and potential discharging –will also have an impact on grid management.

However, while utilities will use storage as a key element of grid management, Wise says there is also potential for battery storage to be used to take homes, and even businesses and communities  - off the grid.

“You can see how this could be quite disruptive,” he says. It will come down to cost, and where the value of storage can be found and exploited – for either the consumer or the operator.

The company is already seeing the economics of storage work in remote areas where the cost of a network connection is very high. “What will be very interesting to see is as the cost of battery falls, whether that impacts on decisions by households and communities to make that move.”

MPower recently won two awards for community storage and control systems in remote communities in WA, and for off-grid renewable energy storage systems for three communities in the Northern Territory.

The WA system – which also addressed issues of periods of rapid weather change – enabled more renewable energy to be used in isolated electricity networks, particularly in the Pilbara region. The Northern territory system allowed for a significant reduction in the use of diesel.

“We are positioning ourselves at the leading edge of the energy storage and power convergence trend in Australia, which these initiatives show has particular relevance for remote communities and individual households.”

Tag Pacific also provides technologies to the solar industry, and Wise says that while the technology is growing in viability, even as most subsidies are removed, it not yet at a “tipping point.” But Wise says that is not because the economics don’t work, it’s more of a lack of knowledge.

[continued ...]

[... continued]

“I don’t think solar is the first port of call for households and commercial properties when they look at energy,” he says.

“They look at network connection and solar as afterthought. The penetration levels show it is certainly gaining traction – but councils are not requiring it to be built on new houses.”

But he says most people that do look at it, find there is value in installing solar. “It’s a lack of knowledge rather than economics,’ he says that is holding the industry back.

Still, Wise says it is a difficult industry because volumes and price changes change so rapidly.  “It’s clear that the cost of solar is going down, and the cost of diesel is going up. It’s one thing for the technology to be viable to a customer, it’s another thing to be able to make money from that business.”

ian wrote on Nov 3^rd, 2013 at 2:39am:

heres the thing, how ould the power company know if you are  storing energy from a solar system in a battery and using it in the home to peak times to avoid peak charges

My guess: installing batteries would require approval. That would be hard to hide.

Ajax wrote on Nov 3^rd, 2013 at 10:30am:

Hey hash Did you expect business to treat the renewables energy with some kind of sympathy about saving the planet...??? If business isn't guaranteed  profit, and possible a monopoly then they will ditch whatever is on the table just as quickly as they embraced it. Renewables energy will be treated exactly like any other commodity... there are no exceptions to rule.

Ajax is going to teach us how to add up and divide and multiply stuff: wat a big-shot crack smoker he must be  :D ya know how to do deals do ya buddy like every other tryhard wigger who gets off wielding a very short prawn  ;)

BatteriesNotIncluded wrote on Nov 4^th, 2013 at 2:17pm:

Ajax is going to teach us how to add up and divide and multiply stuff: wat a big-shot crack smoker he must be  :D ya know how to do deals do ya buddy like every other tryhard wigger who gets off wielding a very short prawn  ;)

Still TROLLING with ad homs and insults.

Is that all you were taught in your youth.......!!!!!

You must be a sad little miserable person...!!!!!!

Ajax wrote on Nov 4^th, 2013 at 4:00pm:

BatteriesNotIncluded wrote on Nov 4th, 2013 at 2:17pm: Ajax is going to teach us how to add up and divide and multiply stuff: wat a big-shot crack smoker he must be  :D ya know how to do deals do ya buddy like every other tryhard wigger who gets off wielding a very short prawn  ;) Still TROLLING with ad homs and insults. Is that all you were taught in your youth.......!!!!! You must be a sad little miserable person...!!!!!!

Lol, mirror  :D

BatteriesNotIncluded wrote on Nov 4^th, 2013 at 2:17pm:

Ajax is going to teach us how to add up and divide and multiply stuff: wat a big-shot crack smoker he must be  :D ya know how to do deals do ya buddy like every other tryhard wigger who gets off wielding a very short prawn  ;)

DRAH - Consider this a warning.

Meanwhile, across the ditch, New Zealand network operator Vector is offering leasing packages to encourage consumers to buy storage.


Quote:

Biggest challenge is for the industry to recognise that traditional thinking and traditional solutions aren’t going to be appropriate going forward.

Exclusive Interview with Gareth Williams, Manager - Strategic Solutions at Vector, New Zealand

Q. New Zealand has one of the highest percentages of renewable energy sources contributing to its power mix in the world (over 70%). Australia has a very ambitious target of 20% of all electricity generated by renewable energy sources by 2020; how does the energy distribution industry need to prepare for this?

A. In terms of New Zealand, you said the country has 70% of RE sources but it’s predominantly hydroelectricity and geothermal which is fairly predictable and manageable. I think the challenge for the distribution industry is the need to incorporate less predictable RE sources such as solar and wind and to deal with the intermittent nature of those sources. So the challenge is trying to work out how to cost effectively distribution companies can facilitate high levels of intermittent RE generation. And also key is to recognise that a lot of that RE isn’t going to be deployed in the traditional central generation model. A lot of that RE, particularly solar, is going to be deployed at customer’s premise. So it’s not a case anymore of distribution companies bringing energy from central generation sources to homes; the generation sources are at the home, so the whole architecture and business models, the thinking for distribution companies, need to change in order to recognise the fact that their role has shifted significantly.

I guess the only thing to be reminded for an Australian audience is that New Zealand doesn’t have any feed in tariff or incentive for solar so we haven’t had the huge uptake that Australia has had. Across the whole of New Zealand there are probably only 1-2000 solar PV systems so, from our point of view, we at least got the luxury to prepare for this shift and to change and grow our business to adapt, rather than having things happening as fast as they have in other parts of the world.

Q. Vector has been internationally recognised as an innovative energy distribution provider. Your solar leasing programme is making headlines around the world in a time where distributed energy generation and solar PV are perceived as a threat to utilities’ traditional business models. What do you think are the industry’s biggest challenges related to RE integration and storage and what needs to be done to overcome them?

A. I think that, on one hand, the new option that customers have to implement their own generation certainly is a threat to the traditional models and it really requires utilities not to try and resist that change but to try and work out how they can actually change their business models. And also to change the ways they think about and design their network to recognise that change. What we are trying to do with the solar leasing programme is to recognise that customers have a choice to put solar on their roof and if this isn’t done properly, from a New Zealand point of view, it isn’t going to provide the benefits as if it was done in a more managed way. What we are trying to do is to recognise that if we can combine solar with batteries there are network benefits for us, in terms of being able to time shift the solar output to coincide with peak demand, and it also provides buffering on our network to be able to facilitate high penetration of PV on houses, which we predict will happen in the future. From a customer point of view there’s still a relatively high investment cost for solar so our model with us owning and managing the system, takes away that upfront cost of ownership and also the burden of owning the systems themselves. We see it as a win-win situation where we can achieve some network benefits and the customer would benefit from having a solar solution. That’s what we are trying to do and we think this is the first initiative of this sort. We can combine an option for customers, that helps the network (rather than causing issues to us) as well as providing our customers some new options. So, to reply to your question, “what do you think are the industry’s biggest challenges”, I think the biggest challenge is for the industry to recognise that traditional thinking and traditional solutions aren’t going to be appropriate going forward.

[continued ...]

[... continued]

Q. What role do you foresee energy storage to play in the near future?

A. The price of storage has been reducing, so at the moment we think it’s on the cusp of being a financially viable alternative to traditional network solutions. With the cost of energy storage falling, it will become more and more viable. Energy storage has three key roles:
1 - It provides an option value, in the sense that it provides an alternative to make a large network investment die by providing an option to incrementally roll out batteries annually to keep up with low growth. Particularly when you look at the future there are a lot of uncertainties into what the demand growth on the networks are going to be. There’s some forecasts that would expect demand growth to be falling into the future so battery storage essentially would be able to buy you time rather than making a big investment today on the assumption that growth with continue.
2 - It technically provides the capability to reduce peak demand and it certainly provides the capability to improve network reliability. The solution we are rolling out provides customers with an uninterruptible power supply into their home. Something the customer is looking for, and certainly a key service for some of the business customers we are talking to.
3 - It provides the facility to firm up the output from intermittent generation such as solar and wind and buffers the network from rapid change such as when clouds pass over.

So we see multiple roles for energy storage. We see it will become a significant change in the whole infrastructure of the energy industry. And some of that storage will be owned by customers. As we see that storage prices reduce, some customers will go ahead and install it themselves. So we see a combination of utility owned and managed storage and customer owned and managed storage which is going to be a key part of the industry in the future.

It’s a game changer and when we think about energy storage we also think about Electric Vehicles which is another element of energy storage. While it has had a slow start we are starting to see in some parts of the world EVs getting some traction. Again, if you look at it in 5 to 10 years, having EVs and the storage element that they add into the network, will add another factor that could be advantageous, if it’s done properly.

DONT waste an hour :o

It's about QUALITY of energy... W/out weeks of storage,... And tax payer dollars supporting the exploration toward such a goal, it's not happening!

Solar storage below $100/kWh – with the help of a steam engine
By Giles Parkinson on 6 November 2013

Terrajoule, the Australian-led California-based start-up that proposes to use steam engine technology to help deliver cheap solar storage at a distributed level, has raised $US11.5 million in a funding round, and revealed that it is ready to deliver storage at less than $100/kWh, way cheaper than batteries.

The company has tapped funds from companies that include Air Liquide, a specialist gas producer, and investment firm New Enterprise Associates, as well as a bunch of individual investors including Australia’s Craig Winkler, the founder of accounting software company MYOB.

It will use the money for the next stage in the rollout of its technology, which it claims to be a breakthrough because it can deliver on-demand solar power to businesses at a cost five times below the cost of battery technology, and without degradation from life cycles.

As RenewEconomy wrote in its profile of the company last month, the company is planning on volume production of its technology in 2015.  It has already teamed up with solar power systems supplier JKB Energy, and Roush Industries, a leading developer of automotive and energy systems.

It is targeting systems from 100kW to 20MW that operate 24/7, and promises a “compelling” payback for off-grid and on-grid power. Its initial focus will be industrial and agricultural sectors, particularly in those locations which have expensive or inadequate grids, or where waste heat can be used to improve the efficiency of industrial operations.

http://reneweconomy.com.au/wp-content/uploads/2013/11/terrajoule.png
The first pilot project was installed in an irrigated almond farm in California’s Central Valley (pictured), and the company sees a huge demand among the irrigated farm community, particularly in the solar-rich south west of the US, and in Australia. Irrigated farm operations in Australia are watching with interest, because if the company delivers what it says it can, it will be an attractive proposition.

Terrajoule says it is aiming in 2015 for a price per peak watt of $1.50 to $2.00 at a 20 per cent capacity factor, depending on system size, the strength of the solar resource (DNI) and other factors.  Mostly, this is comparable to the price for a PV solar panel system (without storage) at the equivalent capacity factor.

But it says its price of net electrical storage capacity will be less than $100/kWh.  This is a fraction of the cost of most battery storage technologies, and comes without cycle limitations, degradation of capacity, disposal costs, and all balance of system costs. It sees further cost falls as production is scaled up.

Terrajoule’s chief technology office Robert Mierisch searched back into the historical manuals to develop his idea of using the 300-year-old technology of a steam engine and a tank as the means of storage and delivering electricity and/or waste heat on demand. Its proposal use a type of steam engine that has been out of service for decades, apart from tourist ferry or two, has raised eyebrows.

But Arno Penzias, from NEA Venture Partner, and Nobel Prize winner in Physics in 1978, said the company has made outstanding technological progress. “Terrajoule’s energy storage solution removes a fundamental obstacle to the next few decades of sustainable energy growth,” he said in a statement

According to Terrajoule (it now has its own website), the essential characteristic of the its system is its ability to rapidly respond to changes in load, functioning equivalently to the diesel generators it replaces, and without volatile fuel costs.

“Energy storage is based on pressurized saturated water, with 98% storage/retrieval efficiency,” it says in its press release. “Energy conversion is performed via reciprocating steam piston engines that are highly efficient across a wide range of operating power. The system generates steam through mature solar concentrator technology” (such as parbolic troughs).”

As the company explains on its website:

Quote:

Major problems are sometimes resolved with unexpected solutions.  Who expected that reciprocating steam piston engines would play a major role in 21st century energy growth?     Reciprocating steam engines powered the industrial revolution and steam itself is ubiquitous throughout industry to this day.  Actually it is the phase change between steam and water that makes water a fundamental component of both life and industrial processes.     Steam is fundamental to the conversion between thermal energy and electricity, and steam piston engines built with modern automotive technology are back.

We explained more about how it works in our profile.

[continued ...]

[... continued]

Terrajoule CEO Steve Bisset said the funds would enable the company to bring the technology to global markets, although it will be careful and cautious about the pace of deployment and the markets it is targeting.
     
“Developing a game-changing energy storage solution is about more than technology. We’ve focused on building the right value proposition, market channels, and capital partners to build a business with global reach and scale without depending on government subsidies,” he said.

This means avoiding the need for massive capital requirements which has challenged developers of other technologies. Air Liquide, which provides specialty gases to a variety of industries, is attracted to the technology because it will help boost the efficiency and reduce the carbon footprint of its hydrogen units.

so how much does Giles Whoever pay you to rehash his crap hash? or are you related and feel sorry for him?

Rider wrote on Nov 6^th, 2013 at 7:37pm:

so how much does ... pay you ...

I promulgate the best out of the goodness of my heart. Good karma, you know?

There are two problems with storage of that kind. The same applies to the Ammonia Synthesis Rankine Engine storage model.

The first problem is that both are specific to Solar Thermal.
The second problem is that the costs of Solar Thermal are increasing and the cost of Solar PV are dropping like a stone. In a matter of a few years, any thermal based storage will be at a disadvantage because of the huge drop in efficiency when you try convert from electrical energy to thermal.

Solar Thermal plants are mostly huge, and located in one place. Solar PV has the advantage that they can be spread out, giving the advantage of diversity loading. If you have diversity loading, potentially, you don't need the same elaborate equalisation techniques to compensate for cloudy intervals. 

http://2.bp.blogspot.com/-JWdI8aKt8dk/ThRkkgjlyvI/AAAAAAAAAUY/arLCIieDxNM/s400/DontFeedTheTroll.jpg

muso wrote on Nov 6^th, 2013 at 8:33pm:

... If you have diversity loading, potentially, you don't need the same elaborate equalisation techniques to compensate for cloudy intervals.  ...

The planet as a whole could be self-sufficient. Come to think of it, the planet was doing quite nicely; then we came along.

I really think that Solar PV combined with a network of grids interconnected by HVDC transmission lines will eventually dominate the solar scene.

Solar PV is going through intense development at the moment. 47% efficiency has recently been attained. New perovskite technology could eventually take this higher with lower cost.

http://www.poplarnetwork.com/questions-and-answers/perovskite-manufacturing-solar-pv-material

9% might seem low at this stage, but we're talking of panels that can be printed, and they can be incredibly thin. "Sub Micron" translates to cheaper.

5 times cheaper (at least)

http://www.laserfocusworld.com/articles/2013/10/perovskite-solar-cells-5x-cheaper-than-comparable-thin-film-technology.html

Watch this space.

# wrote on Nov 6^th, 2013 at 7:31pm:

[... continued] Terrajoule CEO Steve Bisset said the funds would enable the company to bring the technology to global markets, although it will be careful and cautious about the pace of deployment and the markets it is targeting.       “Developing a game-changing energy storage solution is about more than technology. We’ve focused on building the right value proposition, market channels, and capital partners to build a business with global reach and scale without depending on government subsidies,” he said. This means avoiding the need for massive capital requirements which has challenged developers of other technologies. Air Liquide, which provides specialty gases to a variety of industries, is attracted to the technology because it will help boost the efficiency and reduce the carbon footprint of its hydrogen units.

Hybridisation is of course the answer  ;)

muso wrote on Nov 6^th, 2013 at 8:51pm:

I really think that Solar PV combined with a network of grids interconnected by HVDC transmission lines will eventually dominate the solar scene. Solar PV is going through intense development at the moment. 47% efficiency has recently been attained. New perovskite technology could eventually take this higher with lower cost. http://www.poplarnetwork.com/questions-and-answers/perovskite-manufacturing-solar-pv-material 9% might seem low at this stage, but we're talking of panels that can be printed, and they can be incredibly thin. "Sub Micron" translates to cheaper. 5 times cheaper (at least) http://www.laserfocusworld.com/articles/2013/10/perovskite-solar-cells-5x-cheaper-than-comparable-thin-film-technology.html Watch this space.

Solar powered newspapers? Could save an industry and count as a distributed systemic part of a whole... i'm sure ed de bono would say hold that thought for it may contain a kernel.... <cough splutter>  :D

BatteriesNotIncluded wrote on Nov 7^th, 2013 at 1:34am:

Hybridisation is of course the answer  ;)

In the short to medium term, that's exactly right. The only problem right now is the shortage of gas at any price.

http://ecogeneration.com.au/news/creating_solar_and_natural_gas_synergies1/076538/

We are facing a stalemate and electricity cuts, starting in Queensland. There will be a shortfall in generated electricity by the end of next year at the latest.

The problem with Gas turbine combined cycle with solar - all the gas is tied up in international contracts.

The problem with coal - No bank will finance a new coal fired power station in Australia.

The solution - and hopefully the current government will wake up to it, is to kickstart renewable energy options - urgently.

Of course, the Germans are in on the act.

Germany finances major push into home battery storage for solar
By Giles Parkinson on 7 November 2013

(Editors note: Rather than listening to the new Australian parliament debate climate change and clean energy, RE’s editor has chosen to flee, at least temporarily, to Germany, where he has discovered that the majority of the population believes that the planet is, in fact, round. This is the first of a series of articles on Germany’s energie-wende, its energy transition that will likely have  a major influence on the pace of change in the rest of the world. Many want it to succeed, some want it to fail).

The German government has responded to the next big challenge in its energy transition – storing the output from the solar boom it has created – by doing exactly what it has successfully done to date: greasing the wheels of finance to bring down the cost of new technology.

Over the past five years, Germany has been largely responsible for priming an 80 per cent fall in the price of solar modules. Now it is looking at bringing down the cost of the next piece in the puzzle of its energy transition – battery storage.

At its disposal is the giant state-owned but independently run development bank KfW. It performs in the clean energy space a similar function to Australia’s recently created and imminently doomed Clean Energy Finance Corp, but at such a scale that is not contemplated in most countries other than China.

It has assets of more than €500 billion, and lent €73 billion last year – with one-third of that targeted at renewables and climate investments. Over the past three years it provided €24 billion in loans for energy efficiency investment in homes, leveraging a total investment of €58 billion, helping insulate and seal more than 2 million homes, employing 200,000 people a year and saving more than 150 million tonnes of carbon.

Six months ago, it began a new program to finance the introduction of battery storage into homes, which it says is absolutely essential if the “energiewende”, the German expression for its energy transition – is to successfully move to the next phase and beyond 40 per cent renewable penetration.

The energy storage financing program has generated a higher than expected response.  Already 1,900 homes and small businesses have put their hands up for loans and grants (provided by the Environment Ministry) to install new solar systems and a battery storage system in their home. Around €32 million in loans has already been allocated and €5 million in grants, about 10 per cent of the sums allocated in the initial phase of the program.

Unlike the subsidised uptake of solar PV enabled by the deployment of generous feed-in tariffs, the support mechanism for energy storage is more cautious. Indeed, KfW is looking for investors who are ready to be “pioneers” and early adopters, and willing to take a loss on their investment.

“The market for energy storage systems is very young  … batteries are still very expensive  … and the economics don’t yet work,” program manager Dr Holger Papenfuss, told RenewEconomy in an interview in KfW’s sprawling headquarters in Germany’s financial centre of Frankfurt this week.

In fact, even with the assistance of the loans and grants, it is still not economically viable. Which is why KfW has stepped in to ensure that the commercial banks provide the funds for development.

The program is relying on “early adopters” and “renewable pioneers” – the same profile that were the first to get into electric vehicles, or solar panels a decade ago – who have the money and are willing to accept a negative return on their investment. Right now, Papenfuss says, people would be better off selling power to the grid.

So what’s motivating them? Being independent of the large power producers, and hedging bets in the face of rising electricity prices.

According to Papenfuss, households will spend between €20,000 and  €28,000 on solar and battery, depending on the size of the system. The battery component – it is targeting lead acid and lithium-ion batteries – is between  €8,000 and  €12,000, and the grants for this average around €3,000 (or about 30 per cent of the battery cost).

The average loan for the whole system is around  €17,000, but it is not offered at a discount. At just 1.5 per cent, the interest rates probably don’t need to come down any lower in any case. KfW’s function is to simply ensure that funds are made available for deployment by commercial banks, who may not touch an unprofitable venture otherwise.

Papenfuss says KfW is targeting 20,000 to 30,000 under its loan program, suggesting a commitment of at least €300 million.

KfW’s aim, according to Axel Nawrath, a member of the KfW Bankengruppe executive board, is to ensure that the output of wind and solar must be “more decoupled” from the grid. Which means that the grid is not necessarily required to accept the output just because the wind happens to be blowing a lot at the time, or the sun is shining.

“The success of the energy turnaround will entirely depend on integrating electricity from renewable sources into our energy system on a reliable, permanent basis,” he said in his announcement earlier this year.

[continued ...]

[... continued]

Storage means that the energy output can be held in reserve. The idea is to even out the peaks and troughs which is making it difficult for other generators to stay in business. This is seen as critical as the level of renewable penetration rises to around 40 per cent – a level expected in Germany within the next 10 years.

In a perfect world, the output might look something like this, as illustrated  by Citi in a recent analysis. It would spread solar and even wind output through the day, and cause less headaches for the other plants required to fill in the gaps between the variable output of wind and solar.

http://reneweconomy.com.au/wp-content/uploads/2013/10/citi-storage.png

According to Papenfuss, households participating in the scheme will spend between  €20,000 and  €28,000 on solar and storage, depending on the size of the system (the average size is expected to be around 7kW for the solar array and around 4kWh for the battery).

The battery component is between  €8,000 and  €12,000, the grants average around €3,000 (or about 30 per cent of the battery cost) and the average loan for the whole system is around  €17,000.

The program is not open to systems of more than 30kW, and nor is it open to solar arrays that were installed before December 31 last year. They are deemed to have already gotten a good enough deal from the FiTs.

Papenfuss says that to make sense, battery storage needs to be half the cost it is now. This program is designed to set that price fall in motion.  He expects the costs to start to fall in 2014, and within two years could be offering a positive return. At that point, he says, the grant component is likely to be withdrawn, although the loan finance program will likely continue.

Over the longer term, KfW hopes that the program will help define standards for use of storage systems.  Papenfuss expects storage systems to then focus on wind power and other larger solar systems – allowing owners to earn a fee for storing energy and releasing it at certain times.

muso wrote on Nov 7^th, 2013 at 7:00am:

BatteriesNotIncluded wrote on Nov 7th, 2013 at 1:34am: Hybridisation is of course the answer  ;) In the short to medium term, that's exactly right. The only problem right now is the shortage of gas at any price. http://ecogeneration.com.au/news/creating_solar_and_natural_gas_synergies1/076538/ We are facing a stalemate and electricity cuts, starting in Queensland. There will be a shortfall in generated electricity by the end of next year at the latest. The problem with Gas turbine combined cycle with solar - all the gas is tied up in international contracts. The problem with coal - No bank will finance a new coal fired power station in Australia. The solution - and hopefully the current government will wake up to it, is to kickstart renewable energy options - urgently.

~}84\/,\\\'< GO MUSO