Antinuclear

It is an analysis by investment bank CLSA – partly informed by Frontier Economics, the consultancy behind the other notable analyses we reported on last week, here and here – and argues why rooftop solar and battery storage will never take off in Australia and why no one in their right mind would ever leave the grid. Or even install solar modules.

We wouldn’t normally bother with it, but it got some serious air-time in the AFR, and in other Fairfax media, and may just be cited by others.

So it’s worth looking at and pointing out that it is based on some extraordinary assumptions – not just about the cost of solar and storage, but also about the way people would use the technology.

Let’s take its assumptions on going off-grid for instance. It cites as an example an energy hungry, four-bedroom house, the sort of consumer that would likely be the last to choose to go off grid.

No matter. It assumes that such households would want to use all of their appliances at the same time (the oven, the microwave, the dishwasher, the washing machine, the iron, the kettle, the air-con, the drier, the TV, and every light in the house as well as laptops) and would therefore need 19kW of continuous power to supply all that. [good table here on original]

This, concludes analyst Baden Moore, would require 3 Tesla Powerwall 2 batteries or three Redflow ZCells, just to manage two hours of that demand – not to mention the 3-7 days of backup. Just the cost of meeting this peak, he says, would be prohibitive and cost more than $50,000 for the battery storage alone.

There are myriad problems with this calculation. The first is that many houses simply can’t download that amount of power anyway even from the coal-powered grid. In Victoria, for instance, new households have a “capacity” limit of around 10kW.

And then there is something called the “diversity factor,” which, as SolarQuip’s Glen Morris – a leading authority on solar and storage – explains, means it is almost impossible to reach such peak demand at the same time.

One appliance might go for a few seconds at maximum demand then ease off. “I’ve got 10kW (of maximum demand) just in my kitchen but I’ve never been able to turn them on all at the same time and trip the 5kW inverter,” says Morris, who lives off grid.

If a household was going to consider going off grid, would they choose to pay more than $50,000 for batteries that would not be needed most of the time, or would they pay $1,000 or less for smart controls to ensure that most of these appliances are used in off-peak?

But Moore doesn’t seem to see a problem here. He argues that the grid has been built and paid for, and that the energy networks should use any means possible to recover their costs.

“The Australian Energy Markets Commission (AEMC), the key regulator of Australian energy markets, highlights the networks will be allowed to vary the price of grid connection to ensure the cost of capital on the network is recovered,” Moore writes.

“On this basis, the cost of the network will be recovered from all consumers regardless of their usage of battery and solar energy.”

Even the networks know how crazy this attitude is. In the report they prepared with the CSIRO, and in their advice to the Finkel report, they say that millions of households will be driven, economically, to take up solar and storage.

And unless the industry gets its act together and offers them a decent and competitive service, then many will choose to leave the grid, leaving the economics of the industry in a complete mess.

Part of the problem is what Moore and Frontier Economics are comparing the price of solar and storage to. Instead of the full grid price, Moore and Frontier compare solar and storage to the retail and wholesale component of people’s bills. But then they come up with some extraordinary estimates of those prices……

[good charts on original] ….The CLSA report even highlight an analysis on South Australia’s recent blackout by Russell Skelton, a former head of the two biggest coal generators in NSW. Needless to say, Skelton says the high level of wind energy was at fault for the blackout and will cause similar problems elsewhere.

This is in direct contrast to the AEMO report, which said that the nature of wind energy had nothing to do with the outage, and of the Finkel review, which pointed out there are plenty of technology alternatives to coal and gas to ensure grid security and reliability as renewables grow.

It also contradicts the CSIRO and the network owners, who see no problem incorporating more than 90 per cent wind and solar over time, and more than 80 per cent in South Australia in the same time frame that other states are aiming for 50 per cent.

CLSA’s principal point out of all this is to argue that the incumbent utilities are in the box seat when it comes to (slowly) migrating the energy system from black to green.

It is true that these utilities, and the networks, wield enormous influence at political and regulatory level on policies. But simply wishing away the cost competitiveness of new technologies is no strategy to protect the incumbents, or the consumer.  http://reneweconomy.com.au/analysts-kid-future-solar-storage-33799/