Archive for June, 2015

Just a bit different

Hardly anything better epitomizes the easy judgments and one-sided moralizing of the 24/7 media than the recent rush of blood over energy storage.

This is an environment where solar is good, fossil fuels are bad and the power networks are (almost) everyone’s favorite punching bag.

Conflate the prevailing sentiments and you get the death of coal and the imminent demise of the grid.

Reality, needless to say, is just a bit different.

Let’s start with the perception that, now battery storage is becoming available, solar PVs will kill the grid.

Here’s what the Grattan Institute’s Tony Wood and David Blowers have to say in their controversial new paper – controversial because the solar propaganda crew don’t like a number of the observations.

“Many households,” they write, “ are excited about the development of battery storage, believing it will enable them to disconnect from the grid.

“But without a back-up source of power, a very large financial investment is required to have a reliable off-grid system.

“Households in urban areas will be much better off using the grid as their back-up source of power instead of a diesel generator.

“An off-grid household loses the financial benefit of being able to export electricity to the grid.

“And because solar output is highly variable it cannot reliably generate all of a household’s power, particularly on winter days of cloud and weak sunlight. This means the battery must be large enough to cover for days of heavy cloud. The size of the required battery and solar PV system is likely to exceed the dimensions of all but the biggest houses.

“For example, a seven-kilowatt solar PV system — the minimum size system needed to go off grid and have reliable access to electricity — is likely to require between 60 and 70 square metres of roof space. Ideally the panels would face north and be tilted at about 60 degrees to maximise output in winter, although east- and west-facing roofs can be used if necessary.

“Many city houses just do not have that amount of clear roof space.

“To attain 99 per cent reliability, a household would require a 10- kilowatt solar PV system and 60 kilowatt hours of storage, at an upfront cost of about $52,000. This would require even more roof space, ruling out even more households.”

The broader picture, of course, is that electricity consumption is not just residential.

As an example (because the three States, including the ACT, represent most of Australian demand), householders in New South Wales, Victoria and Queensland use 43,000 gigawatt hours of electricity annually versus business (and this includes public services and transport) consuming 109,000 GWh.

How much of this business sector will be able to, or want to, service its electricity needs with solar PVs and battery storage?

If, as the Zero Carbon mob would have it, we opt for all renewables – wind, large-scale solar, geothermal, wave power and hydro power – how do the electrons get delivered without a grid?

In the case of 100 per cent renewables, there’s a need for about $90 billion worth of extra high voltage transmission.

In the real world, of course, as existing coal plant is phased out over the next 30-40 years, we can expect gas-fired generation, nuclear power (possibly a lot of small modular reactors) and maybe a new breed of high-tech coal plant with carbon capture and storage to play a substantial role alongside greater use of renewables, particularly wind power. Solar/gas hybrid generation is a utility possibility, too.

None of which is to say that prospects for substantial use of energy storage along the power supply chain are a pipedream.

Its role in frequency regulation at the wholesale power level, load shifting and grid optimization, as well as to hold excess renewable power for later use, is very much on the mind of supply managers.

Leading consultants IHS CERA think that 40,000 megawatts of non-hydro storage will be connected to the global grid by as early as 2022. (This may sound huge to lay people, but it represents only a fraction of the planet’s power supply system.)

Underpinning the projection, the largest transmission and distribution utility in Texas (which has a power market 50 per cent bigger than the whole of Australia) is planning to spend $US5 billion on energy storage.

The big ticket issue here, as in so much else in the technology transition story, is cost.

Storage costs are high.

Lazard’s bank, in a recent analysis of levelized electricity costs, has battery storage costs well above other technologies. And the cost equation must include infrastructure supporting utility-scale storage (eg cooling systems and inverters), which are also today on the expensive side.

For corporate investors, as in every other form of business, the bottom line is the bottom line: how do you make money out of investing in this technology.

Contrary to what the Greens (and their media fellow travellers) may think, people invest to make money, not to “save the planet.” Ask anyone who belongs to a superannuation fund.

A major challenge, here and in other energy spheres, is getting the policy and regulation right.

A key thrust of the Grattan Institute paper is that, with solar PV, politicians have got things badly wrong in Australia and created an environment where those who have not taken up PVs (seven-eighths of residential customers) are forking out billions of dollars to support those who have.

The solar boosters etcetera, of course, hate having this pointed out to the community at large and have lashed out at Wood and Blowers; so much so that Wood felt moved to write another commentary (published in The Guardian’s Australian edition on 29 May) protesting that the institute has not set out to demonize solar but Australia must learn from mistakes of the past.

One of the big points Wood and Blowers seek to make is the need to get network tariff reform right, both to incentivize the use of solar PV and storage to reduce peak demand and to reduce more, large long-term expenditure as well as to get cross-subsidies out of the system.

(The other two key areas of the institute paper relate to the need to rewrite regulation to encourage use of distributed generation and the need to deal efficiently with redundant surplus power assets.)

In his newspaper addendum, Wood agrees that the advent of affordable battery storage can change the game for power networks, but “it is not yet economic” and “we would have been better off if we had waited for solar to become economic as well.”

Most importantly, he re-iterates a key theme of the institute paper: the journey to a new model of electricity supply is under way – and how we (that is, policymakers and regulators as well as investors and consumers) manage the transformation is critical.

Unfortunately, what we (the community) are being fed in the media in the wake of the Tesla PR exercise is hyperbole, wishful thinking and self-interested chattering, mixed with a fair amount of energy illiteracy. Nothing could be less helpful.