For complete article: http://reneweconomy.com.au/2014/ubs-australian-households-go-grid-2018
Global investment bank UBS has highlighted the challenges facing Australian energy utilities by suggesting that the falling cost of solar and battery storage means that the average Australian household could find it cost-competitive to go off-grid by 2018.
The report by its Australian based analysts says the current cost of going off-grid for a households consuming the average of around 7 megawatt hours would be around $39,000.
That translates to an average cost of around 44c/kWh for the life of the system. That leaves it in the hands of early adopters and hobbyists in the city, but assuming capital cost falls of just 5 per cent per annum, by 2018 it would become cost competitive for average households with staying on the grid.
For those in remote rural communities it may already be attractive – a situation recognised by Rob Stobbe, the head of SA Power Networks, who suggested last week that rural communities could soon decide that looking after their own energy needs will soon be a viable option.
As RenewEconomy pointed out from the Energy Networks Association conference last week, there is a growing recognition, particularly among regional network operators, that a new business model is needed to deal with technological changes,
UBS takes up this point as well, but notes: “The current regulatory system for networks (cost minimisation) and the desire to protect the current asset base of the unregulated companies make them poorly placed and incentivised to respond to the disruptive change.”
It notes that lithium-based storage is starting to become commercially available and the cost currently comes to around $0.70 kWh of energy consumed. That is 40 per cent above the cost of grid-delivered electricity in Sydney, and while there may be limited scope to reduce the costs of the battery side of the storage devices, the balance of system costs could fall greatly if demand rises.
UBS argues that battery storage at the household level is likely to be most cost effective if the household remains connected to the grid, and simply uses the grid when storage is insufficient. “Since the current grid is largely a sunk cost there is little penalty to society for using the existing grid in this fashion,” it notes.
“Storage intuitively makes the most sense the further consumption is from production, i.e. where the grid costs are highest, as the regional networks with just three or four customers per kilometre of poles and wires. UBS notes that it is “interesting to obverse therefore that some of the network owners are now themselves looking at micro grids and community level storage.”
UBS notes that the cost of household storage varies, with some reports suggesting that lead acid battery storage can be achieved for less than $0.30/kWh. But it notes that the focus is on lithium technologies, and the economics of systems such as this of Zen Energy are coming down quickly.
“Based on about $30k installed for a system that can deliver 5 kW of power and 14 kWh for 3000 cycles, the cost per kWh comes to $0.71 kWh. This compares to $0.50 kWh for peak electricity in Sydney. In other words, it’s not economical yet, but it’s not hard to imagine costs coming down further over the next five years. The Zen system is packaged with the “command and control” system that decides what the household system should do at any time i.e. buy from grid, charge from solar or supply to the house.”