19/11/2015 - 13:30

Battery power shift in store

19/11/2015 - 13:30

Bookmark

Upgrade your subscription to use this feature.

If news from the science and banking communities proves to be as promising as it sounds, a new business opportunity is brewing that promises to be as disruptive and profitable as the early years of mobile phones – while also derailing a century-old government service.

HOT TOPIC: There has been a significant rise in small-scale solar in WA.

If news from the science and banking communities proves to be as promising as it sounds, a new business opportunity is brewing that promises to be as disruptive and profitable as the early years of mobile phones – while also derailing a century-old government service.

Long-life, affordable, electricity storage batteries are shaping as something households (and commercial users) have been waiting to buy, having been put off by the cost and the relatively poor performance of what is currently on offer.

That’s changing, with leading investment bank Lazard giving electricity storage batteries a tick of approval in a report released in New York yesterday, a development that follows an earlier breakthrough in the science of electricity storage at Britain’s Cambridge University.

The new science evolving at Cambridge is based on a clever combination of lithium (a light metal) and oxygen, and will probably find its way into future generations of long-life, high-power, batteries because it offers to store five times the amount of electricity as batteries currently in use.

Lazard isn’t waiting for the next generation of batteries. It reckons the science already in use is good enough to produce batteries that will enable households to store power from the sun or wind during the day so light and power are available overnight.

More importantly, the cost and size of the batteries is making them a threat to existing power distribution grids, such as that operated around Western Australia by the government agency, Western Power.

A whiff of what’s coming was what caused Energy Minister Mike Nahan to complain earlier this year that the rapid uptake of solar power by households and business had punched a hole in demand for government-generated electricity.

The rise of small-scale solar has been so rapid that up to 40 per cent of the government’s power generating assets are sitting idle on an average day, raising the question of whether older power stations need to be mothballed.

Lazard’s latest research, and with further improvements in technology a near certainty, means that electricity storage is on the verge of becoming the hottest industry for investors, business and consumers.

What the investment bank did was undertake what it calls a ‘Levelised Cost of Energy Storage Analysis’, or LCOS 1.0 – a name only a boffin with zero communications skills could possibly have conceived.

LCOS 1.0 is a step along a path taken several years ago by Lazard when it put an equally cumbersome name on its first study of energy costs – the Levelised Cost of Energy Analysis, or LCOE, which has now reached its ninth refinement and been given the name of LCOE 9.0.

Once you cut through the mumbo jumbo you find that, in its LCOS 1.0 (the energy storage study), the New York office of the bank has produced a document that is the first stage of a roadmap for building a business selling electricity storage devices (batteries) to a huge and hungry market.

“Although in its formative stages, the energy storage industry appears to have reached an inflection point much like that experienced by the renewable energy industry around the time we created the LCOE (the energy cost study) eight years ago,” Lazard said in a statement.

That original cost-of-energy study predicted the rapid rise in renewable energy systems such as solar and wind of the sort popping up on rooftops across Perth, or in the form of wind turbines across the world.

“Based on our analysis of storage technologies and our experience with LCOE, we expect to see a rapid decline in the cost of energy storage,” Lazard said.

The head of Lazard North American Power Group, Jonathan Mir, said energy storage system makers and customers had told his research team that they expect to achieve significant price decreases over the next five-to-seven years.

If Lazard is correct with its prediction, a lot is about to change.

Power generation fueled by conventional energy such as coal and gas will find that there’s a new competitor eating into the market, because the price of storage batteries will fall to a point where they are competitive with fossil fuels.

Batteries that store solar, wind or tidal energy during peak periods of its production will take over from the largely gas-fired ‘peaking’ power plants, which cut in during periods of maximum power demand such as in the morning and afternoon.

Commercial users, such as shopping centres, hotels and the owners of office blocks, will be first to make the shift to battery storage as it becomes available.

But as the price of batteries falls in the way Lazard is predicting, every household will want a combination package of rooftop solar and garage battery storage – and then wave goodbye to the government grid.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options