It makes sense to install a battery in a house with solar, and everyone expects system owners will soon rush out and buy them to make up for the end of generous feed-in tariffs, but still the phones are mostly silent.
“There’s an element of wait and see,” says 360 Energy sales and marketing manager Doug Meldrum. “There’s plenty of interest but people actually committing is a different thing.”
Meldrum’s theory is that people who spent $20,000 or $24,000 on a 5kW solar system five years ago probably have the means to buy batteries now, and maybe they are. When a battery is $8,000 to $12,000 to retrofit, compared with $20,000 for a solar installation, it doesn’t look like such a bad deal.
But to people who came into the market later and maybe only paid $5,000 to $7,000 for their solar, $10,000 or $12,000 sounds like a lot.
The real turning point, Meldrum says, is when householders start receiving $1,000 electricity bills that reflect a slump in feed-in tariffs.
Those customers are usually seeing the net effect of solar energy exported to the grid, “so it doesn’t hurt yet”.
Over the next six to 18 months Meldrum expects, or hopes, that the word-of-mouth buzz around storage for residential systems will reach critical mass and inquiries will turn into commitment.
“It’s not until you get that number of people with these sorts of systems talking about it that it will really kick off,” he says. “Our sense is it will be more like June that we will really start to see some numbers.”
The solar complex
Selling storage is not at all straight-forward. “The first thing we try to do is quantify the pain of doing nothing,” he says, pointing to annualised increases for east coast residents over the past 15 years of about 7.5%. It will likely get worse. The Australian Energy Market Commission 2016 residential energy report says sharp increases in wholesale prices are expected in Tasmania, South Australia and Victoria in the next 18 months.
The payback period on a residential storage system is between 6 and 9 years with return on investment between 8% and 14%, he says.
The cost of solar is about 7-10c/kWh, “which is very cheap.” The cost of a battery is about 30-50c/kWh – a lot more. But the price of energy from a complete solar-with-storage system of 5-10kWh, depending on the battery, is about 22-23c/kWh.
“For most people you are cashflow positive from day one.”
It’s not that the storage market is moribund. Meldrum says the Tesla Powerwall is being hung in Australian homes at a steady pace (about 10-15 units a week for 360 Energy’s sales network) but he says the technology suffers a bit from complexity and cost of the inverter systems which often accompany it. “It’s an expensive solution.”
The battery brand that’s on a roll is LG, he says, partnered with either the SolaX or Sungrow hybrid inverters. “For most households you’ve got six or seven hours of your evening peak usage covered for critical appliances.”
If batteries do suddenly become the latest must-have accessory in the solar-powered suburbs of Australia, there is still the issue of making sure installers and owners understand they should be handled with care.
Some lithium chemistries are more volatile than others, says Meldrum. “The lithium ion phosphate chemistry that BYD and others sell is inherently more stable and heat-resistant and safe compared to what LG and Tesla do.” However, LG and Tesla are world-leaders who include layers of mechanical and electrical protection in their products, he says, and anyone turning out batteries for use in electric cars will be meeting high standards. “[Design standards are] far more stringent than [for] hanging it on someone’s wall to run a couple of fridges and someone’s telly.”
On the flipside a wave of cheap imports, where no-one can tell you anything about a brand’s pedigree, may not be worth the risk.
“If you stick with the major brands – the Samsung’s, Sony, LG, Panasonic, BYD – you can’t go wrong, is my sense. Do consumers really understand that? Not implicitly, but I think there’s inherent trust with those big brands because people have those appliances in their homes.”
The pricing for Powerwall 2, Meldrum says, is “ground-breaking”. The problem is it’s too big for a lot of homes. “What we’re not seeing is that [cost per kWh] translate to 6-7kWh being $5,000 installed,” he says. “When you can do that – where 5kW of PV, 6kWh of storage are at that $10,000 to $11,000 level – that’s when it’s really going to take off.”
What could get us there, he says, is cheaper, simpler inverter systems.
In the meantime, it’s vital installers across Australia are training up for the battery binge, when it comes. “We’ve seen so many sparkies who just don’t read instructions. It’s shocking. That’s the industry’s greatest challenge.”