UBS: Solar plus storage is already cost effective in Australia

RenewEconomy
The new report suggests that one million households could invest $20 billion in storage systems in current years – nearly equal to the investment required for a new LNG export plant.
According to UBS would be relatively low risk. More importantly, it would herald a revolution in the domestic electricity industry.
UBS says the arrival of cost-competitive solar plus storage will have major impacts on utilities, depending on how they react. They could see it as an opportunity – and provide zero-down installations of battery storage and solar to their customers and help the costs come down even quicker for Australian households.
Or they could see it as a threat, and leave the way open for others to do the same.
The UBS analysis looked at the price of current solar plus storage offerings in Australia. It estimates that such systems – which allow households to use all the electricity produced by their solar array by storing it in a box (battery) for later use – are already offering a return of capital of 10% a year or more compared to buying power from the grid.
It commissioned consulting firm GSES to look at systems that comprised 5 kW of rooftop solar and 5 kWh of battery storage. At $18,000, some of these systems were already economic.
“The cheapest system looked at is already capable of earning its cost of capital,” the team led by UBS utilities analyst David Leitch says.
More significantly, there is clear potential for dramatic cost reductions in coming years, in much the same way that the cost of solar panels plunged so dramatically over the last five years.
UBS says this will happen just by bringing the battery sales price down to those that are already available in the U.S., scaling production of battery housings, battery management systems and energy monitoring (Australians currently pay four times the price in the U.S. for some battery management systems), and integrated manufacturing of components including inverters.
It suggested that Australian consumers were being overcharged compared to the U.S. And offered this comparison as an example.
The study is a follow-up to a report in May, where UBS predicted that households in the major cities of Australia could find it cheaper to go off-grid rather than stay connected. Another report in August suggested the time was right for a solar plus storage plus electric vehicle revolution.
Those reports sparked a huge reaction, and prompted UBS to look a what technologies are available now, not necessarily to go off-grid, but to maximise the amount of self-consumption.
The Australian Energy regulator recently flagged that Australia will likely be witness to the rise of “prosumers” who will create an “energy revolution” who will generate their own electricity and store for use at a later time. This so-called “democratization” of the grid will have a major impact on the decades-old centralised business models based around large coal fired power stations and huge networks of poles and wires.
We liked this explanation from UBS as to why solar plus storage is so compelling in Australia:

Solar’s differentiation compared to virtually all other forms of generation is that its generation costs are invariant to scale. It’s just as cost-effective whether it’s scaled to run a torch or a city. In addition the fuel source is mostly available at the point of consumption. This means the only real constraint on where solar is situated is having enough space for the panels.
There is no noise, no moving parts to wear out. These attributes are why it so well suited to Australian detached housing, or for that matter, the commercial and government sectors. Virtually the only disadvantage of solar is that the sun only hits the panels for a limited number of hours per day.
That’s where the storage comes in. The battery’s function is to ensure most of the solar power can be used in the house and nothing is sold back to the grid.
Until recently, and even today, storage has neither been consumer friendly (lead acid batteries are heavy and require relatively large amounts of space) and relatively expensive. However Lithium Ion batteries are changing that; their costs are falling sharply, maybe 10% or more per year in $US terms. Li-Ion batteries have other consumer friendly advantages, they are much lighter, take up less space, can be virtually fully discharged at a constant voltage, and hold charge for extended periods of time.

UBS suggests that Australians are currently paying around double for the same battery storage than in the U.S. “Australians are paying around a 100% premium on this basis even for a “do it yourself system”,” it says. It says that’s partly to blame on the “cottage industry” nature of the business in Australia.
RenewEconomy. Reproduced with permission.