Why Energy Storage Will See Massive Adoption in 5 Years
Tesla made waves when it released its sleek and powerful home battery storage unit, the powerwall. In fact, most people did not hear of home batteries until Tesla released its own. They quickly became the new favourite among green energy enthusiasts and for a moment, it looked like we had stumbled upon the ‘holy grail’ of renewable technology.
However, once the fanfare had died down and Elon Musk exited the building, the reality set in. The Powerwall is to the energy storage, what the iPhone was to the smartphone market. It changed the game, and got people talking, but like the iPhone, it’s expensive. Fortunately, the prices of home batteries have been dropping at an alarming rate as companies race to gain a share of a quickly expanding market.
The demand for home batteries is expected to explode in 2016, with nearly 75MW of storage being installed, up from only 6.4MW in 2015. Even more impressive is the fact that the market is predicted to nearly quadruple by 2020, to nearly 244MW. It’s no surprise that the several companies offering home batteries are doing everything they can to get better quality and cheaper products to the market.
The Deutsche Bank released a report that claimed home batteries to be, “the missing link” of solar penetration, and will become affordable enough to deploy on a large scale. The report which was published last year, claimed that it would only take 5 years before we saw mass adoption of the new technology.
The report from 2015 states that;
“Using conservative assumptions and no incentives, our model indicates that the incremental cost of storage will decrease from ~14c/kWh today to ~2c/kWh within the next five years.”
Currently the price of home energy storage is approaching the $1000 per kw of capacity which is a milestone for the industry. The report states that this reduction isn’t going to stop, stating that, “We believe 20-30 per cent yearly cost reduction is likely (for lithium-ion batteries), which could bring (them) at commercial/utility scale to the point of mass adoption potential before 2020.”
Unfortunately, the report doesn’t expect home storage to take hold in the residential solar market as quickly, due to less government incentives. However, if home batteries do expand through the commercial sector, this will lead to further price drops as demand increases.
The crucial factor that will surely be playing on the minds of many Australians considering battery storage is the lack of proper government incentive. While there has been a long standing incentive for solar power, there is no further subsidies that will benefit early adopters of energy storage technology.
In fact, state governments are having to rely on the private sector to help reduce the cost of home batteries. The ACT recently held energy contract auctions that required companies to pay an extra fee, which would then go on assist in cutting cost for consumers interested in energy storage
Despite this, companies are continuing to wage a price war with LG Chem leading the way. LG Chem was the first company to approach the $1000 per Kw mark, and believes that prices will continue to fall as consumer adoption picks up.
The real benefit of battery storage comes from aggregating household storage units into what would essentially be a community grid. Once batteries are more common, this would allow households to avoid peak tariffs and effectively create a ‘smart grid’. Smart grids are able to monitor usage and transfer power to where it is needed most at any one moment, avoiding excess use and energy wastage.
Until then, we salute all members of the public who take advantage of pioneering this game changing technology while it is still in its infancy, and we look forward to ever decreasing prices.