Why you’ll learn to love batteries

Also, thanks to a move by regulators to force a switch to time varying tariffs, you’ll also see that the price of power once the sun goes down will be jacked up significantly in price to help power companies maintain their revenues as they see less and less power consumed during daylight hours.

While that reform of tariffs will likely come with the side benefit of lower retail prices during daytime hours, that doesn’t help a solar system owner who gets most of their daytime power from solar.

Typically, a household with a standard 6.6 kilowatt solar system exports around two-thirds of the system’s generation to the grid. Based on average feed-in tariffs prevailing in the year 2020, using NSW as an example, that returned around $600 per year, while the rest of the solar generation that was consumed on-site avoided grid imports with an annual value of $730.

But we expect things to rapidly deteriorate. Under our Progressive Change Scenario if the system owner doesn’t invest in a battery the exported generation will fall in value to $245 per year by 2035 and the output self-consumed on-site will have only avoided $285 in electricity imports from the grid.

Now in my column I’ve repeatedly told readers that a battery system doesn’t make financial sense at present. However, a battery system will be pretty much an essential addition to a solar system in the future.

What’s made batteries a poor investment to date has been their high prices. But there is light on the horizon.

In spite of the impression you might get from the Australian press, plummeting prices for key battery inputs like lithium, nickel and cobalt are incredibly good news, even if miners don’t like it.

The fact that electric vehicle manufacturers are being forced to discount prices is also very good news.

In spite of what the white shoe brigade miners and climate change deniers have been promoting, the minerals to make batteries are plentiful, as detailed by electric vehicle expert Auke Hoekstra and the think tank Transport and Environment.

The issue is, we need to substantially scale up our extraction and processing capacity, which does take time but means high prices are temporary.

Back in the mid-2000’s the price of photovoltaic-grade silicon experienced a dramatic spike in price as Europe drove up demand for solar PV and the decline in the price of solar modules halted.

I recall a number of technology researchers and policymakers saying this meant silicon-based solar panels could never achieve affordable costs and new materials were required.

Yet, those high silicon prices ended up collapsing and solar module prices resumed their rapid descent. The issue wasn’t a fundamental physical limitation of silicon-based solar technology.

Instead, it was a temporary production capacity bottleneck. The solar industry had outgrown its reliance on purified silicon from the semiconductor industry and needed its own dedicated silicon processing facilities. As these facilities were built and production caught up with growth in demand, prices fell, and they stayed down.

The problem, of course, is not so much if home battery systems become attractively priced, but rather when.

Back in the late 2000s and early 2010s, even after the silicon price had plummeted, solar systems were still a pretty poor financial investment. But at the time governments decided it was worthwhile subsidising them such that they were an attractive option.

Those subsidies have been steadily wound back, yet because solar prices have continued to fall these systems have remained an attractive investment.

Australian governments have been less enthusiastic about subsidising batteries. That means you may have to prepare yourself for several years of declining power bill savings from your solar system before batteries eventually come to your rescue.

Tristan Edis writes a regular column for Carbon Challenge that explores consumer options for individuals who want to reduce their greenhouse gas emissions.