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With low cost batteries returns to home owners from solar systems like these will soon get a whole lot better. Photo: Edmund Tse via Flickr.
With low cost batteries returns to home owners from solar systems like these will soon get a whole lot better. Photo: Edmund Tse via Flickr.
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Mayday, Mayday - Tesla's battery just killed fossil and nuclear power

Oliver Tickell

1st May 2015

Tesla Energy's new mains power battery has just transformed the energy market - giving a huge boost to small scale renewable energy and killing off both fossil fuelled and nuclear power in the process.

As wind and solar power get cheaper all the time, and now battery costs are collapsing into the bargain, nuclear power represents a very slow, expensive and completely inflexible solution to a 'problem' that no longer exists.

Tesla Energy's new mains power battery has just transformed the energy market - giving a huge boost to small scale renewable energy and killing off both fossil fuelled and nuclear power in the process.

The announcement of its two domestic-scale lithium batteries, rated at 7kWh and 10kWh of energy storage was widely trailed.

But what no one expected was the price - which came in at a half to a quarter of market expectations: "Tesla's selling price to installers is $3,500 for 10kWh and $3,000 for 7kWh. (Price excludes inverter and installation.) Deliveries begin in late Summer."

And according to energy analyst Arnie Gundersen of Fairewinds Energy Education, that equates to a life-cycle cost of about $0,02 per kWh stored and released, or a little over 1p in UK money.

And that is transformational. With grid power prices typically 14p / kWh in the UK, or $0.12 in the US, it's just a fraction of the cost of buying power in - for the first making it economic for small scale generators to 'save and re-use' their power surpluses.

Selling cheap, buying dear - no longer!

Currently power users with solar panels or wind turbines get paid just a few pence for every kWh (that's one kilowatt of electrical power for one hour) they dump into the grid. So the main value they get (in addition to any feed-in tariff) is that while the sun is shining or the wind blowing, they get 'free' electricity.

The problem comes when there's no sunshine or wind - and then they have to buy high-priced power in off the grid. But now with the Tesla battery system they will be able to store any power surplus to their needs - dumping less power onto the grid, and buying less in.

And that's just what Tesla's battery is designed to do. It can "provide a number of different benefits to the customer", writes Tesla, including:

  • "Load shifting - The battery can provide financial savings to its owner by charging during low rate periods when demand for electricity is lower and discharging during more expensive rate periods when electricity demand is higher
  • "Increasing self-consumption of solar power generation - The battery can store surplus solar energy not used at the time it is generated and use that energy later when the sun is not shining
  • "Back-up power - Assures power in the event of an outage."


As they do this technology adopters will slash the money they spend buying grid electricity. And if enough people do it (as they surely will as prices continue to fall) the entire business model of centralized power generators is doomed as sales falls, fixed costs have to be shared among a dwindling pool of customers, and the incentive to 'go renewable' increases.

But the revolution doesn't stop there!

It's not just domestic-scale generators that can benefit from the technology - large utility-scale renewable power generators can also get in on the act by installing banks of batteries at solar and wind farm sites - holding back electricity when the price is low, and selling it when the price is high.

And yes, Tesla has a product for them too: "For utility scale systems, 100kWh battery blocks are grouped to scale from 500kWh to 10MWh+. These systems are capable of 2hr or 4hr continuous net discharge power."

Result: returns to wind and solar investors go up, making wind and solar power even more competitive against fossil-generated electricity than they already are. In the process renewable generators will also stabilise the grid, playing a big part in ensuring that, second to second, power supply matches demand.

And as they do this it will cut away life support from coal and gas fired plants that are currently paid to step in and make good any fall-off in power from renewable generators, or meet demand surges from power users.

Good news for everyone ... almost everyone

And that's good news for everyone. Except the owners of the fossil fuel plants, that is, and the extractive industries that supply their fuel.

Oh yes, and nuclear power operators. The nuclear industry argues that of all the 'low carbon' power sources only nuclear can supply 'base load' demand, day in, day out. In fact the claim is highly dubious - not least because all nuclear plants are prone to sudden emergency cut-outs that require a huge 'spinning reserve' as backup.

But that, they argue, justified the very high prices consumers are forced to pay for their electricity. The UK's planned Hinkley C nuclear power plant is set to receive about double the current wholesale price for power, index linked, for 35 years after it goes into production, at least a decade in the future (if indeed it ever does).

But with cheap battery power now, why bother? As wind and solar power get cheaper all the time, and now battery costs are collapsing into the bargain, nuclear power represents a very slow, expensive and completely inflexible solution to a 'problem' that no longer exists.

The end of the big centralized power generators and their nuclear and fossil fuelled plants is no longer in doubt: it's not 'if', but 'when?' Will they last out another decade? As revenues, investor confidence and future prospects ebb away, it's hard to see how.

 


 

Oliver Tickell edits The Ecologist.

 

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