Battery storage prices are tumbling
Even without being released, the Tesla product is proving to be a game changer.
The RenewEconomy website has reported that the price of Legato storage system being offered by AGL has dropped by a third over the past six months, largely due to the impending arrival of the Powerwall.
On Morgan Stanley’s figures, the estimated payback period on solar and battery installation currently ranges from about nine years in Queensland, to up to 16 years in NSW, and a tedious and uneconomic 20 to 38 years in Victoria, depending on the supplier.
However Tesla’s decision to recoup its research and development costs over a much longer period than its competitors has forced a major rethink on pricing in the industry.
One industry insider told the ABC that Tesla’s Powerwall battery – at the current Australian dollar level – could be landed and installed at around $1,100 per kWh of capacity compared to the current price of around $2,500 per kWh for mid-range units.
If that pricing regime was adopted across the industry, it would slash payback times and drive an even more rapid uptake.
Morgan Stanley said it does not expect a mass migration off the grid – at least in the medium term – primarily because solar and battery systems will not ensure the 99.9 per cent availability of power currently provided by the grid.
“Put simply … household battery systems won’t have enough juice to make it all the way through the winter, especially in Victoria,” Morgan Stanley noted.
On top of that, there are a large number of households – such as apartment dwellers and renters – with insufficient rooftop space, money or interest to totally unplug the grid.
Battery storage success not dependent on subsidies
Bloomberg research analyst Hugh Bromley said a big advantage of solar-plus-storage was it was not reliant on subsidies.
“Its growth is organic, unlike the large scale renewable generation sector which is driven by policy and without subsidies is not economically viable at the moment,” Mr Bromley told the ABC.
“The utilities are recalibrating their businesses to focus more on the customer and not so much on the technology,” Mr Bromley said.
The utilities are now well aware of the threat posed by rooftop solar-plus-storage and the risk of the so-called coal-fired “death spiral” to their businesses.
Rather than fighting or ignoring the threat, the big power companies best hope of survival rests with their ability to adapt.