On-grid domestic battery storage

Martyn1981 · 3 November 2018 at 7:21PM

TrevorL wrote: »

I have seen this argument before and don't find it useful. Certainly our products are warrantied for 10 years, and they have a specification of 6000 cycles, but they are not warrantied for 6000 cycles in 10 years. I think that's just a misunderstanding. 6000 cycles is obviously nearly 20 years of daily use so calculating the cost of a cycle assuming that they will do 6000 cycles in the warranty period and then be unusable is a blind alley.

By all means if you need a product to payback within its warranty period then you may find a battery doesn't. But most people don't expect require that of other things, like a car. A better approach, in my opinion, is to model the degradation of the battery capacity over its lifetime. Our model does this, assuming 2% degradation per year, and uses that to calculate how much energy you will actually cycle through the system over time. Payback periods we quote to customers take this capacity loss into account.

Bottom line, given that we know battery paybacks are typically 8 to 14 years or so, requiring them to payback within a 10 year warranty gives them an impossible task. Myself I'm expecting, in broad terms, good capacity for the first 10 years, somewhat lower capacity for the second 10 years, and lower but still usable capacity (perhaps just 40-50%) after that. Anything after payback is a bonus. It's not that dissimilar to solar where we know inverters are typically only warrantied for 10 years but the system won't just die on the first day of the 11th year.

That doesn't mean you're wrong if you require payback within the warranty period, just that that isn't a requirement for most of our customers.

Our model uses the inverter manufacturer's specs of Charging efficiency of 94.5% and discharging efficiency 94%, so a round trip efficiency of 89%, but I'd be the first to concede we don't know how well this matches real-life usage.

Some general thoughts:

I'm sorry but you misunderstand my position on cycles, life expectancy and warranty. What I'm saying is that the product is too expensive and new for most of us to rely on value post warranty.

I'm sure it will last longer, but that doesn't make it a fact. If you are certain it will last longer, then extend the warranty, and by all means apply capacity limitations, but I can't make such a large investment on hope.

Regarding the 6,000 cycles, I totally agree that it will in reality take longer than 10yrs, but that is irrelevant, 6,000 cycles is 6,000 cycles regardless of the number of years. You can say 10yrs, 20yrs or 30yrs, but even assuming no loss of capacity and 100% DoD, it still comes to 60,000kWh's any way you spin it. So the cost per cycle is still £5k/60,000.

You can add more years, but then cost of capital is against you (cake and eat it?)

BTW, you can't suggest an 8-14yr typical payback, then in the very same sentence state that a 10yr payback is impossible.

Coming from a green angle on this issue, I also feel that "Anything after payback is a bonus." however that is also contradictory as you have been arguing for a solid payback, then switch to a weak argument suggesting a bonus ....... or luck?

Batt efficiency of 89% (round cycle) sounds perfectly fair, but you just increased the E7 input cost by ~12%.

Comparing the inverter warranty to a battery warranty doesn't work. Putting aside the fact that my inverters have 20yr warranties, the issue here is that if the inverter(s) fail, you replace them as they only represent a minority of the PV system costs, but if the batts fail (out of warranty) you are looking at replacing a majority part of the system.

Edit- for simplicity, and based on your 8.4% inflation claim, are you happy to state that in 10yrs time you predict a leccy unit price of approx 34p/kWh?

Martyn1981 · 4 November 2018 at 9:35AM

TrevorL wrote: »

I have seen this argument before and don't find it useful. Certainly our products are warrantied for 10 years, and they have a specification of 6000 cycles, but they are not warrantied for 6000 cycles in 10 years. I think that's just a misunderstanding. 6000 cycles is obviously nearly 20 years of daily use so calculating the cost of a cycle assuming that they will do 6000 cycles in the warranty period and then be unusable is a blind alley.

By all means if you need a product to payback within its warranty period then you may find a battery doesn't. But most people don't expect require that of other things, like a car. A better approach, in my opinion, is to model the degradation of the battery capacity over its lifetime. Our model does this, assuming 2% degradation per year, and uses that to calculate how much energy you will actually cycle through the system over time. Payback periods we quote to customers take this capacity loss into account.

Bottom line, given that we know battery paybacks are typically 8 to 14 years or so, requiring them to payback within a 10 year warranty gives them an impossible task. Myself I'm expecting, in broad terms, good capacity for the first 10 years, somewhat lower capacity for the second 10 years, and lower but still usable capacity (perhaps just 40-50%) after that. Anything after payback is a bonus. It's not that dissimilar to solar where we know inverters are typically only warrantied for 10 years but the system won't just die on the first day of the 11th year.

I've been thinking about your comment that you've seen my argument before but not found it useful, plus your statements about cycles, life in years and degradation.

So, rather than my simple and 'flattering' use of £5k and 6,000 cycles, and a cost of batt use of 8.33p/kWh, I thought I'd try it your way:

So, a price of £5,027
A capacity of 9kWh
A useable capacity of 8.1kWh

You state that the 6,000 cycles will last more than 10yrs, I agree. I'd suggest approx 300 cycles pa (or less), so using your degradation figures of 2% pa, we get:
- a capacity of 100% falling to 80% in the first 10yrs (average 90%)
- a capacity of 80% falling to 60% in the second 10yrs (average 70%)
- a capacity of 60% falling to 40% in the third 10yrs (average 50%) and corresponding with your statement - "perhaps just 40-50%"

So, we get:
0-10yrs - 3,000 cycles @ 90% capacity @ 8.1kWh = 21,870kWh's
10-20yrs - 3,000 cycles @ 70% capacity @ 8.1kWh = 17,010kWh's
20-30yrs - 3,000 cycles @ 50% capacity @ 8.1kWh = 12,150kWh's

So instead of my suggested 8.33p/kWh cost of storage we have

£5,027 / 51,030kWh's = 9.85p/kWh

Once again, I'm not against battery use, I believe in it very strongly, and think it will be a major part of supply and demand side leccy use in the future, but the numbers are not good at the moment and I am more than willing (and hopefully capable) to address any misinformation that might get posted.

Special regard has to be given to over-hyped inflationary figures. As I have hopefully shown, there is no underlying issue anymore* that can support energy inflation being significantly different to 'normal' inflation.

*Previously there were fears, now unfounded, that a switch away from FF's would result in a massive rise in prices, but the fall in international gas prices, and the tumbling costs of RE generation have reversed this concern, as can be seen by the reports from the NAO suggesting a 35% reduction in peak price estimations from £85/MWh down to £55/MWh, whereas your suggested inflation rate (after stripping out a 2% nominal/target inflation rate), would when compounded mean a rise of £153/MWh (to £208/MWh) or an increase of 278% on the NAO revised estimates.

Exiled_Tyke · 4 November 2018 at 10:02AM

All trust and respect was lost with the first set of ridiculous assumptions. I'm actually quite surprised that indefensible is continuing to be defended. I've spoken to two very reputable installers recently, both obviously needing business (especially as their PV work is drying up) but both having the decency to back down very promptly and respectfully when I've explained why I don't think the numbers yet add up. I'm sure if there was a way for it to pay off they would have told me, like Martyn I am ready to be convinced.

ASavvyBuyer · 4 November 2018 at 11:05AM

Exiled_Tyke wrote: »

All trust and respect was lost with the first set of ridiculous assumptions. I'm actually quite surprised that indefensible is continuing to be defended. I've spoken to two very reputable installers recently, both obviously needing business (especially as their PV work is drying up) but both having the decency to back down very promptly and respectfully when I've explained why I don't think the numbers yet add up. I'm sure if there was a way for it to pay off they would have told me, like Martyn I am ready to be convinced.

I found the same with the companies I dealt with that installed our Solar PV system & ASHP. They were both honest and agreed that financially, for home batteries, it was not a good investment at the moment.

Also, IMHO it is greener (and cheaper) to import electric from a supplier that only uses renewable energy. For example; Octopus Go, which only charges 5p/kWh for 4 hours at night, and about 14p/kWh during the day (So not more expensive than the average of 15p/kWh).

That also helps them, as a company, being able to invest in more renewable energy.

When V2H becomes available, at a reasonable cost, it could be worthwhile, as the % use from a EV battery would be very small.

zeupater · 4 November 2018 at 2:40PM

TrevorL wrote: »

I agree generally with the initial statement - but not the conclusion. IMO the more time of use options and tariffs become available, the more benefit you get from a battery.

As well as the Tide tariff mentioned in another post, a very interesting example is the Octopus Agile tariff with 'Plunge Pricing' where you can actually get paid to take excess electricity off the grid. I think their implementation is a bit ropey, but it is hopefully a portend of more interesting options to come.

Hi

How can you agree with the initial statement but not the conclusion as they're inherently linked?

I totally understand your argument regarding 'plunge prices' as a currently available option, however any long-term justification based on either this form of supply agreement or E7 as a whole cannot be realistic. To explain why, we need to return to basic economic concepts ...

Energy prices, just like any product in any sector, are determined by supply & demand ... if the capacity to supply far outstrips demand prices are generally low & where demand approximates to capacity prices are generally high ...

In terms of energy this would describe why E7 exists. Overnight there's relatively little demand so the competition to bid for energy sales to recover overheads, which is largely driven by high overhead/low incremental generating cost technologies (wind, hydro, nuclear etc) enables the sector to drive prices down & suppliers to offer substantial discounts to encourage consumer overnight purchases ...

The advent of smart-meters provides the industry a tool to vary prices during the day as demand fluctuates and that tool will be used to encourage a degree of demand shifting so that peak demand doesn't exceed supply .... the error employed by so many when looking into the effect of this is the assumption that demand moved from high unit price periods will be moved to periods where 'off-peak' prices remain at the heavily discounted levels which currently apply, whilst this cannot logically be the case ...

Think of what happens in straightforward economic terms ... the greater the difference between peak & trough demand levels, the greater the inverse differential in unit pricing, which when charted would approximate to mirrored curves, therefore the justification of a continuation of demand based unit price differentials fully depends on maintaining demand shortfalls ... however, the intent of government & supply industry policy is to encourage energy efficiency, shift parts of current demand, and fill the supply gap with automated appliance control & (/smart) charging wherever practical with the goal being to achieve as close to a fully balanced & smooth demand & supply relationship as possible ...

So, if the goal is to have no (/little) difference between supply & demand at any time of the day, then the logical implication is that the unit price will remain pretty consistent throughout any 24hour period. Having 'said', it's also relevant to conclude that there's a strong possibility that although tariffs may be consistent on a short-term basis, it's also likely that there will be a seasonal unit price variation which is purely related to energy mix ...

In summary, any operator has it's fixed & variable costs and those costs are currently recovered by levying a higher price than necessary at the standard daytime unit price rate and a discounted price on E7 .... as the overnight supply/demand gap is filled with developments such as home batteries or EV charging then the most likely outcome in a competitive market would be the combination of an increase in E7 unit pricing and a corresponding reduction in the cost of standard daytime units to a point where they are effectively the same, therefore any battery/storage 'investment' justification cannot be based on future pricing structures or overnight discounts remaining anywhere near what currently applies and therefore caution must be applied wherever this approach is employed ...

HTH
Z

TrevorL · 5 November 2018 at 2:03PM

Martyn1981 wrote: »

Old data - you mean reality?

You were quoting from 2015 and I was using data from 2017 for retail prices, that is all. I am yet to be convinced that we are seeing any evidence of retail prices actually dropping (doing anything other than going up significantly) to match projections of wholesale prices.

Martyn1981 wrote: »

The arguments you are trying to use are not new to us. They are near identical to those used by 'guestionable' PV salesmen at the start of this decade, and they are wrong, not an opinion, but fact, they are wrong, prices did not rise by the suggested amounts.

I thought we were having a useful and informative discussion but I strongly object to your tone and bluster here. I believe that prices will rise significsntly as do many other sources, such as the uk power forecast I mentioned before:

"The growth of sustainable energy sources has the potential to slow, and even eventually reverse the rise in gas prices, but it looks like nothing can stop a rise in electricity prices.

This is partly due to the fact that many of the UK’s electricity generation plants have closed down due to the EU’s Large Combustion Plant Directive, a ruling that has since been superseded by the Industrial Emissions Directive (as of January 1, 2016). Coal fire power stations are being targeted to help reduce emissions in energy generation.

Energy prices have been high since a 35% spike in 2008, and price rises have barely slowed down since. So it looks as though we’re set for steady increases in the cost of energy for the foreseeable future, with increases in demand, transportation costs, wholesale prices, and government legislation all set to keep costs high.

The cost of transporting gas and electricity is predicted to rise by around 5-6% and 8-15% respectively in the next few years. And consumers will undoubtedly bear the brunt of these increases as energy suppliers will compensate for any additional outgoings by raising their own prices."

My opinions are my opinions. If you are going to consider your opinions to be facts then we are not going to get far.

Martyn1981 · 5 November 2018 at 2:22PM

TrevorL wrote: »

You were quoting from 2015 and I was using data from 2017 for retail prices, that is all.

The NAO data is actually 2016, and the CfD info is 2018 (I will revise it in April 2019) and valid into the 2060's.

If you believe that the NAO cost estimates are wrong, then you need to provide a sound argument as to why wholesale prices will rise dramatically, and why a backstop max price of £100/MWh (new nuclear, RE is already cheaper) is wrong.

You are free to believe that prices will rise significantly, but you also need to provide a reason why. I have provided multiple corresponding reasons as to why prices simply can't rise as far as you claim.

But, again, I'll point out that the near hyper-inflation rates you are suggesting, in order to support the economics of batteries today, is a tactic used by 'questionable' PV firms at the start of this decade, and the rises did not happen.

So, I'll repeat the problem/question - putting aside 'normal' inflation that will impact all goods and services and hopefully wages, what reasons do you suggest there are for a far higher inflation rate on UK leccy prices?

TrevorL · 5 November 2018 at 2:35PM

Martyn1981 wrote: »

I'm sure it will last longer, but that doesn't make it a fact. If you are certain it will last longer, then extend the warranty, and by all means apply capacity limitations, but I can't make such a large investment on hope.

You are not being fair. You used the word 'fact' not me. It will last longer in my opinion and I'm sure you knew that is what I meant.

Martyn1981 wrote: »

Regarding the 6,000 cycles, I totally agree that it will in reality take longer than 10yrs, but that is irrelevant, 6,000 cycles is 6,000 cycles regardless of the number of years. You can say 10yrs, 20yrs or 30yrs, but even assuming no loss of capacity and 100% DoD, it still comes to 60,000kWh's any way you spin it. So the cost per cycle is still £5k/60,000.

No. In my opinion it will last longer than 6000 cycles. I'm not aware of any physical process that will mean it will stop working at 6001 cycles. I don't think it's a useful metric. I was suggesting that a better metric is to consider a lifetime over which the battery degrades continuously and there is no particular cutoff at 6000 cycles. I explained that that is what our model does.

Martyn1981 wrote: »

BTW, you can't suggest an 8-14yr typical payback, then in the very same sentence state that a 10yr payback is impossible.

I believe you are deliberately misquoting me.

Martyn1981 wrote: »

Batt efficiency of 89% (round cycle) sounds perfectly fair, but you just increased the E7 input cost by ~12%.

I explained that our model assumes a round trip efficiency of 89% when it calculates the payback for a customer. Obviously that takes into account the effective increased cost of E7. I'm not sure what your criticism is.

Martyn1981 wrote: »

Comparing the inverter warranty to a battery warranty doesn't work. Putting aside the fact that my inverters have 20yr warranties, the issue here is that if the inverter(s) fail, you replace them as they only represent a minority of the PV system costs, but if the batts fail (out of warranty) you are looking at replacing a majority part of the system.

I can see we're not going to see eye to eye on this. My point was simply that in £5k system perhaps £500 is installation, £500 is inverter, and the rest is multiple batteries. Having a battery fail outside warranty - depending on the system configuration - may not be a big deal, perhaps as easy as ordering another Pylontech battery and plugging it in yourself (it's just push-fit connectors). It's loads easier than replacing a solar inverter.

Martyn1981 wrote: »

Edit- for simplicity, and based on your 8.4% inflation claim, are you happy to state that in 10yrs time you predict a leccy unit price of approx 34p/kWh?

I had been about to say that I was persuaded in part by your arguments and would use a lower increase next time we model for a customer, and also run a test to see how sensitive the results were to differing increase rates. However given the tone of the comments here I feel now that an objective discussion was maybe never on the cards.

Dr Trevor Larkum
Chief Technical Officer, FI

Martyn1981 · 5 November 2018 at 2:36PM

TrevorL wrote: »

I am yet to be convinced that we are seeing any evidence of retail prices actually dropping (doing anything other than going up significantly) to match projections of wholesale prices.

If you could have another look at the NAO wholesale price predictions, you will see that they are not suggesting prices will fall - what they show is that their predictions of price rises have been dramatically reduced.

As I explained:

Martyn1981 wrote: »

4. But, as you say, you can't take my word for it, so I'd refer you to the NAO who in 2015 revised down their peak price for leccy in 2029 of £85/MWh to a 2027 peak of £70/MWh - please see page 40.

Then one year later, they further revised the peak down to £55/MWh through the 2020's, before dropping down towards £45/MWh and less in the 2030's - please see page 39.

If we are generous and stretch to a 1.5p/kWh rise in the wholesale price, then we will see an approximate rise (from 15p/kWh retail) of about 10% over 10yrs, so about 1% pa simple, or 0.95% pa compounded. Again, this is the rise above and beyond normal inflation, but that can simply be put against the lost interest invested in a PV or batt system (cost of capital).

So the NAO are suggesting a price rise (not fall) and I have openly acknowledged this. I even gave the increase (above normal inflation) as approx 1% pa.

Martyn1981 · 5 November 2018 at 2:43PM

I will simply respond to this statement to show why I am finding it harder and harder to trust what you are saying:

TrevorL wrote: »

I believe you are deliberately misquoting me.

TrevorL wrote: »

Bottom line, given that we know battery paybacks are typically 8 to 14 years or so, requiring them to payback within a 10 year warranty gives them an impossible task. Myself ......

I have not misquoted you. I have not deliberately misquoted you. Attempting to claim I have is I believe more revealing of your tactics, than my responses, all fact based.

On-grid domestic battery storage

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