ECONOMICS OF END- USER ENERGY STORAGE IN AUSTRALIA

Transcription

1 12 March 2015 ECONOMICS OF END- USER ENERGY STORAGE IN AUSTRALIA Kobad Bhavnagri

2 200 EXPERTS ACROSS SIX CONTINENTS 90 Europe 40 San Francisco North America New York Washington DC London Munich Zurich New Delhi 35 Beijing Hong Kong Asia Pacific Seoul Tokyo 30 Africa Singapore 5 South America Sao Paulo Cape Town Sydney 1

3 2,500 CLIENTS IN OVER 50 COUNTRIES Public Sector & NGOs Supply Chain &Technology Finance & Investment Utilities & Energy The logos listed do not represent a full client list. They are illustrative of the organizations we have worked with in the past. 2

4 WHAT IS END-USER ENERGY STORAGE? SOLAR HOUSEHOLD SOLAR + STORAGE HOUSEHOLD 37-74% 20-30% 26-63% 70-80% See: Australian end-user storage: behind the battery pack, Research Note, 19 November 2014 Source: Bloomberg New Energy Finance 3

5 QUOTED COST VERSUS SIZE OF AVAILABLE LITHIUM-ION ENERGY STORAGE SYSTEMS (AUD/kWh) 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, ,000 Bosch SunSink BYD AU Optronics Corp. 5kWh usable Nominal capacity See: Australian end-user storage: behind the battery pack, Research Note, 19 November 2014 Note: Cost is displayed per unit of usable capacity Source: Bloomberg New Energy Finance, various wholesalers, vendors and manufactures 4

6 KEY END-USER STORAGE ENABLING POLICIES Region Guaranteed network access Feed-in Tariff Export tariff Net energy metering TOU tariff structure ACT 8.5 NSW NT 25.6 QLD SA 7.6 TAS 5.6 VIC 8 WA In force Optional/voluntary Not in place Supportive Neutral Unsupportive See: Australian end-user storage: behind the battery pack, Research Note, 19 November 2014 Note: The South Australian FiT is not available to customers with energy storage. Source: Bloomberg New Energy Finance 5

7 FOUR SCENARIOS FOR TYPICAL RESIDENTIAL INSTALLATION IN NEW SOUTH WALES (REAL 2014) See: Australian end-user storage: behind the battery pack, Research Note, 19 November 2014 Note: This assumes a 5kW PV system, a battery nameplate capacity of 5kWh with a depth of discharge of 80% and a battery lifetime of 20 years. Solar CAPEX includes federal STC incentive. Both PV and storage O&M costs = 1%of capex per year. PV capacity factor = 16.3%. Battery efficiency = 85%. PV lifetime = 25 years. Discount rate of 5% (real) applied to NPV calculation. Assumes electricity prices remain constant in real terms (i.e. increase in line with inflation). Simple payback period is the capital cost of the system divided by the first year cashflows. System payback is the year in which cumulative cashflows from the investment become positive Source: Bloomberg New Energy Finance 6

8 LITHIUM-ION BATTERY EXPERIENCE CURVE (USD/KWH) 10,000 EV LI-ION BATTERYPACK PRICES HAVE FALLEN 43% SINCE , H H Cost-competitiveness (by total cost of ownership) Tesla s Gigafactory ,000 10, ,000 1,000,000 10,000,000 Consumer LiB experience curve Historic consumer LiB prices BNEF EV LiB cost forecast Historic EV battery pack prices Cumulative prod. capacity (MWh) Note: Battery pack prices in 2010 dollars. Source: Battery University, MIIT, IIT, Bloomberg New Energy Finance 7

9 PROJECTED RESIDENTIAL ELECTRICITY TARIFFS BY STATE, (AUD/kWh NOMINAL) ACT NT NSW QLD VIC TAS WA ACT NT NSW QLD VIC TAS WA See: Australian end-user storage: behind the battery pack, Research Note, 19 November Based on AEMC projections and price growth at CPI thereafter. Bloomberg New Energy Finance, Australian Energy Market Commission 8

10 FOUR SCENARIOS FOR TYPICAL RESIDENTIAL INSTALLATION IN NEW SOUTH WALES (REAL 2014) See: Australian end-user storage: behind the battery pack, Research Note, 19 November 2014 Note: This assumes a 5kW PV system, a battery nameplate capacity of 5kWh with a depth of discharge of 80% and a battery lifetime of 20 years. Solar CAPEX includes federal STC incentive. Both PV and storage O&M costs = 1%of capex per year. PV capacity factor = 16.3%. Battery efficiency = 85%. PV lifetime = 25 years. Discount rate of 5% (real) applied to NPV calculation. Assumes electricity prices remain constant in real terms (i.e. increase in line with inflation). Simple payback period is the capital cost of the system divided by the first year cashflows. System payback is the year in which cumulative cashflows from the investment become positive Source: Bloomberg New Energy Finance 9

11 RECIPE FOR A SUCCESSFUL ENERGY TECHNOLOGY TECHNOLOGY APPLICATION SUPPLY-CHAIN Vying set of suitable technologies Broad swath of concurrent applications No clear dominant market player Mixture of old and new Dominant technology is continually developed (does not come out of nowhere) Ability to scale product Not regional or market specific Technology must be accessible to new entrants Sufficient scale and return to attract diversified manufacturers Ability to scale resource or process by piggy-backing off other industry Low embedded commodity value Distributed technologies encourage greater competition through market fragmentation Often the dullest technologies are most scalable 10

12 NEW OR EXISTING TECHNOLOGY? PV MODULE PRODUCTION BY TECHNOLOGY (% OF CAPACITY) 100% 80% 60% 40% 20% 0% Thin Film non-silicon Production (MW) Thin Film Silicon Production (MW) C-Si Module Production (MW) ENERGY STORAGE DEPLOYMENT BY TECHNOLOGY (% OF PROJECTS) 100% 80% 60% 40% 20% 0% Flywheels Compressed Air Energy Storage Lead-based Batteries Flow Batteries Sodium Sulphur Batteries Other Rechargeable Batteries Lithium-ion Batteries Source: Bloomberg New Energy Finance 11

13 SPECIFIC OR SHARED APPLICATION? HIGH QUALITY SILICON CONSUMPTION BY SECTOR (% OF PRODUCTION) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 25% 56% 68% 85% 89% 0% Solar industry Semiconductor industry LITHIUM-ION BATTERY APPLICATION IN 2013 (% OF CAPACITY SOLD) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 13% 2013 Consumer electronics EVs and stationary energy Note: High quality silicon is of purity exceeding 6N ( %). Electric vehicles includes hybrid, plug-in-hybrid and fully electrified. Source: Bloomberg New Energy Finance 12

14 PURE-PLAY OR DIVERSIFIED PROVIDERS? TOP 10 PV MODULE MANUFACTURERS IN 2013 (MARKET SHARE) TOP 6 EV BATTERY PACK MANUFACTURERS IN 2014 (MARKET SHARE) Yingli 8% Panasonic 42% Trina Solar 6% AESC 22% Sharp 5% LG Chem 13% Canadian Solar 5% LEJ 6% Jinko Solar 4% BYD 6% Renesola 4% Samsung SDI 5% First Solar 4% Hanwha SolarOne JA Solar 3% 3% EV battery production is far more consolidated than PV Kyocera 3% International pure-play Chinese pure-play International diversified Note: Automotive Energy Supply Corporation (AESC) is a joint venture between NEC Corp (50%) and Nissan Motor Co Ltd (50%). Lithium Energy Japan (LEJ) a joint venture of GS Yuasa (51%), Mitsubishi Corporation (34%), and Mitsubishi Motors (15%). Source: Bloomberg New Energy Finance 13

15 RESIDENTIAL PV PENETRATION, % FY2014 Penetration 60% 50% 40% 30% 20% QLD WA NSW VIC SA Expiration date of feed-in tariff schemes State Date ACT 20 years ( ) NSW 31 Dec 2016 NT 90 days notice QLD 31 Dec 2028 SA 31 Dec 2028 TAS 31 Dec 2018 VIC 31 Dec 2024 WA 10 years ( ) 10% NT TAS 1m houses 0% AUD/KWh See: Australian end-user storage: behind the battery pack, Research Note, 19 November 2014 Note: penetration level is defined as the percentage of free-standing and semi-detached dwellings with a solar PV system. Source: Bloomberg New Energy Finance 14

16 RESIDENTIAL PV PENETRATION, % FY % 50% Penetration 40% 30% WA QLD SA 20% NSW 10% NT VIC TAS 1m houses 0% AUD/KWh See: Australian end-user storage: behind the battery pack, Research Note, 19 November 2014 Note: penetration level is defined as the percentage of free-standing and semi-detached dwellings with a solar PV system. Source: Bloomberg New Energy Finance 15

17 RESIDENTIAL PV PENETRATION, % FY % 50% Penetration 40% 30% 20% WA NSW NT SA QLD VIC TAS 10% 1m houses 0% AUD/KWh See: Australian end-user storage: behind the battery pack, Research Note, 19 November 2014 Note: penetration level is defined as the percentage of free-standing and semi-detached dwellings with a solar PV system. Source: Bloomberg New Energy Finance 16

18 RESIDENTIAL PV PENETRATION, % FY % 50% SA Penetration 40% 30% WA NSW NT QLD 20% VIC TAS 10% 1m houses 0% AUD/KWh See: Australian end-user storage: behind the battery pack, Research Note, 19 November 2014 Note: penetration level is defined as the percentage of free-standing and semi-detached dwellings with a solar PV system. Source: Bloomberg New Energy Finance 17

19 RESIDENTIAL PV PENETRATION, % FY % 50% SA Penetration 40% 30% WA NSW NT QLD 20% VIC TAS 10% 1m houses 0% AUD/KWh See: Australian end-user storage: behind the battery pack, Research Note, 19 November 2014 Note: penetration level is defined as the percentage of free-standing and semi-detached dwellings with a solar PV system. Source: Bloomberg New Energy Finance 18

20 RESIDENTIAL PV PENETRATION, % FY % SA 50% QLD Penetration 40% 30% WA NSW NT 20% VIC TAS 10% 1m houses 0% AUD/KWh See: Australian end-user storage: behind the battery pack, Research Note, 19 November 2014 Note: penetration level is defined as the percentage of free-standing and semi-detached dwellings with a solar PV system. Source: Bloomberg New Energy Finance 19

21 RESIDENTIAL PV PENETRATION, % FY % SA 50% WA NT QLD Penetration 40% 30% NSW VIC TAS 20% 10% 1m houses 0% AUD/KWh See: Australian end-user storage: behind the battery pack, Research Note, 19 November 2014 Note: penetration level is defined as the percentage of free-standing and semi-detached dwellings with a solar PV system. Source: Bloomberg New Energy Finance 20

22 RESIDENTIAL PV PENETRATION, Penetration 70% 60% 50% 40% 30% 20% 10% NT FY2015 WA NSW QLD VIC WA TAS NSW SA 1m houses 0% AUD/KWh VIC See: Australian end-user storage: behind the battery pack, Research Note, 19 November 2014 NT TAS SA QLD Note: penetration level is defined as the percentage of free-standing and semi-detached dwellings with a solar PV system. FY2020 Expiration date of feed-in tariff schemes State Date ACT 20 years ( ) NSW 31 Dec 2016 NT 90 days notice QLD 31 Dec 2028 SA 31 Dec 2028 TAS 31 Dec 2018 VIC 31 Dec 2024 WA 10 years ( ) Source: Bloomberg New Energy Finance 21

23 SUMMARY OF DRIVERS AND BARRIERS OF END- USER ENERGY STORAGE ECONOMICS PRODUCTS AND SERVICES POLICY AND REGULATION The capital cost of the storage system remains the major barrier to deployment Lithium-ion systems offer great promise through future reductions Solar PV is already very affordable and set to become cheaper Energy tariffs are high by global standards and are likely to increase modestly Australia s end-user storage industry is less established than in Europe Most offers have been adapted from off-grid applications Some integrated Li-ion systems are available in the Australian market, but are difficult to source Li-ion is likely to emerge as the technology of choice Difficult economics may support third-party finance models The regulatory environment is generally conducive of supporting PV + energy storage Expiring feed-in tariffs may support a retrofit market in those states Long feed-in tariff contracts and energy buy-back schemes may impede uptake Tariff reform may dilute the benefits of being less reliant on the grid Source: Bloomberg New Energy Finance 22

24 DEMAND SIDE TECHNOLOGIES ARE EXPECTED TO HAVE THE GREATEST IMPACT What technology will have the greatest impact on the electricity system in 2025? Grid-scale wind power Something else Electric vehicles 1% 9% 3% Demand-side management 17% 42% Distribution gridconnected PV Grid-connected energy storage 28% Comment: The top three choices are all within the distribution network, and could be highly integrated with each other. Source: Bloomberg New Energy Finance 23

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