There's plenty of hype around the ability of households to store energy from their solar system on the roof and virtually become energy self-sufficient.
The cost of energy is consistently rated as the number one concern of Australian consumers, and two-thirds of us want to be self-sufficient when it comes to energy.
Electric car company Tesla is using its knowledge of battery storage for cars to move into home energy storage with its Powerwall batteries. Already some have been installed in homes around Australia.
No more power bills is one of the attractions, especially as energy prices appear to keep rising every year. No wonder many Australians feel like they are being ripped off by the electricity providers. Being able to tell the energy company you no longer need them would almost certainly be awesome.
Unfortunately, the reality is that hardly any households will be able to completely switch off the grid and there are a number of reasons why…
- There are only a small number of battery suppliers at the moment, and the costs are still prohibitive. Tesla's Powerwall and a compatible inverter will cost between $12,000 and $13,000. Add the costs of a solar system to that and the payback period could be a number of decades – but the battery warranties only last 10 years.
- The Powerwall is rated to store around 7kWh, but operates at around 92% efficiency according to ABC News, meaning it can store around 6.4kWh. That's hardly enough to supply most homes during the evening. Adding another battery or two could solve that issue, but the cost also rises.
- To disconnect from the grid, the home needs to be able to supply power even if there's no sun for many days. That means even more battery storage would be required. If an average house used 25kWh each day, it would need at least 25 Powerwall batteries to supply a week's worth of energy.
- Extra energy produced by the solar system not used or stored could be pushed back into the grid for use by other households or businesses, which only works if the pipe back to the grid is left 'open'.
- Falling demand for electricity and rising numbers of Australians turning to solar has also created an almighty problem. As more and more people turn to solar for energy, there's less need for the energy infrastructure already built but it still needs to be maintained. Energy costs could spiral for those left on the grid – likely lower income consumers. And where do energy producers, transmitters, and retailers turn? If their assets in which they've invested billions are worth virtually nothing, should they be compensated and if so, by whom?
The last factor is driving a number of energy companies to branch out into providing renewable energy solutions, including the likes of Origin Energy Limited (ASX: ORG), AGL Energy Limited (ASX: AGL) and Energy Australia.
The energy companies aren't blind to the problem confronting them. As well as offering solar systems and batteries, some companies are also allowing consumers to lease their systems, meaning no up front expense for the consumer, but ongoing repayments and steady recurring revenues for the energy suppliers.
Foolish takeaway
Energy companies, from those digging up coal and uranium or pumping gas, to owners of energy plants, electricity transmission owners and the retailers of energy face an unprecedented revolution in the way we generate and consume energy. The arrival of battery storage as a commercially viable and affordable solution has accelerated that revolution.
