Tesla Energy and utility scale projects

[EinSV]

Following up on the post above, another media outlet has reported that South Australian Energy Minister Dan van Holst Pellekaan confirmed that the new administration planned to go forward with the full 50,000 household Tesla virtual power plant plan (subject to successful completion of the initial trial stages), which had been up in the air after the recent election:

"It's very important to be clear about this — we are honouring the existing commitments around the Tesla virtual power plant (VPP)," he said.

"The VPP project is currently proceeding with the two trial phases as planned. The trial phases involve installation of home energy systems on 1,100 Housing SA homes.

"These are supported by a $2 million grant and a $30 million loan from the State Government.

"Subject to private finance, and the first two phases' success, the third phase could grow to up to 50,000 home batteries connected to new solar installations, and this is in addition to our government's 40,000 home election commitment."

Mr van Holst Pellekaan said his first meeting after being sworn in was with Tesla, and wants the state to become a world leader in home battery installation.

"Very simply, a Liberal Government in South Australia means more, not fewer, batteries," he said.

"We'll show the world how the mass adoption of home batteries can and will work.

"This is a complicated task — I don't think that anyone has attempted to do what we're about to do at this scale relative to population and market size."

Tesla household batteries in SA get green light as Sanjeev Gupta reveals electric car factory plan - ABC News (Australian Broadcasting Corporation)​

 

[jhm]

Tesla leads charge against generators over market access

Curious polarization in Aussie power markets. It's all about who gets to profit from peak power prices that can reach 13,000AUD/MWh.

Snowy 2 looks to be the behemoth that really needs such prices. Consider the scale. This pumped hydro facility would store up to 365GWh with 800MW of power for AUD 6.5 B or USD 4.88 B. This may look cheap on an energy storage basis, just $13,370/MWh. But realistically the cycle frequency at this facility would be quite limited. In a typical 24 hour period it could charge for 8 hours and discharge for 8 hours. At 800MW, this implies an out put of 6.4 GWh per day or 2336GWh/year. On 365GWh capacity this is a mere 6.4 cycles per year. Imagine just paying 10% interest on this in a year. That is a financing cost of USD 488M to deliver some 2336GWh of peak power, which is a cost of 209USD/MWh. This excludes all opex cost which notably would include the cost of buying some 2920GWh of power to charge up a storage facility with some 80% roundtrip efficiency. Let's suppose this could be sourced at an average 32USD/MWh cost, that added 40USD/MWh to the cost of delivered power. So easily the cost of deliveries power is around $250USD/MWh for the most expensive third of the year.

The fundamental problem is that batteries can nimbly sick cream off the top end of price distribution. It can deliver short busts of peak power for half the cost of Snowy 2. So with sufficient battery storage, the average of the most pricey 8hours of each day can be held below $150USD/MWh, perhaps even lower than $100USD/MWh. So Snowy may never be able to get the $250/MWh it needs just to pay for interest on capex plus charging.

So if your heart is set on a $6.5B boondoggle that will struggle to be worth half of what was put into it, what do you do? Well, you get political friends to shut out the competition for you and force ratepayers to recover your costs plus 10% rate of return to you.

 

[generalenthu]

Damn, we need an intelligent publication like reneweconomy for the US.

 

[mspohr]

Tesla leads charge against generators over market access

Curious polarization in Aussie power markets. It's all about who gets to profit from peak power prices that can reach 13,000AUD/MWh.

Snowy 2 looks to be the behemoth that really needs such prices. Consider the scale. This pumped hydro facility would store up to 365GWh with 800MW of power for AUD 6.5 B or USD 4.88 B. This may look cheap on an energy storage basis, just $13,370/MWh. But realistically the cycle frequency at this facility would be quite limited. In a typical 24 hour period it could charge for 8 hours and discharge for 8 hours. At 800MW, this implies an out put of 6.4 GWh per day or 2336GWh/year. On 365GWh capacity this is a mere 6.4 cycles per year. Imagine just paying 10% interest on this in a year. That is a financing cost of USD 488M to deliver some 2336GWh of peak power, which is a cost of 209USD/MWh. This excludes all opex cost which notably would include the cost of buying some 2920GWh of power to charge up a storage facility with some 80% roundtrip efficiency. Let's suppose this could be sourced at an average 32USD/MWh cost, that added 40USD/MWh to the cost of delivered power. So easily the cost of deliveries power is around $250USD/MWh for the most expensive third of the year.

The fundamental problem is that batteries can nimbly sick cream off the top end of price distribution. It can deliver short busts of peak power for half the cost of Snowy 2. So with sufficient battery storage, the average of the most pricey 8hours of each day can be held below $150USD/MWh, perhaps even lower than $100USD/MWh. So Snowy may never be able to get the $250/MWh it needs just to pay for interest on capex plus charging.

So if your heart is set on a $6.5B boondoggle that will struggle to be worth half of what was put into it, what do you do? Well, you get political friends to shut out the competition for you and force ratepayers to recover your costs plus 10% rate of return to you.

I like this quote
“Snowy Hydro is increasingly concerned by claims that any action that reduces short term high spot prices must be in the overall interest of consumers,” it says in its submission to the market rule maker, the Australian Energy Markets Commission.

 

[neroden]

Wow, I'm enjoying the JuiceMedia takedowns of the (right-wing) Australian Government.

thejuicemedia

 

[adiggs]

Wow, I'm enjoying the JuiceMedia takedowns of the (right-wing) Australian Government.

thejuicemedia

OMG - thank you for the link. I think you've killed my productivity for the day, and maybe longer

 

[GleanerC]

No mention here of Tesla specifically here but large amounts of storage are being proposed by Colorado's Xcel Energy.

"Xcel Energy’s 120-day report to Colorado regulators includes an additional 1.1 GW of wind at 1.1-1.8¢/kWh. Solar power bids have come in at 2.2-2.7¢/kWh, and solar+storage at 3.0-3.2¢/kWh."

"The total solar to be deployed under this plan would be 707 MW-AC, with 275 WM/1,000 MWh of energy storage."

https://pv-magazine-usa.com/2018/06...h-solarpower-xcel-energy-colorado-wind-power/

 

[SW2Fiddler]

Most, if not all of US has a capacity market except ERCOT, where the grid operators pay for MW capacity. You get paid whether or not the capacity is utilized. And then there are payments for MWh generated.

In this regime that was created before batteries on the grid were a thing, batteries don't get compensated because they are not "generation" resources. This is why you don't hear about grid scale installations in the US outside of California, where they actively promote batteries even though they are capacity market.

ERCOT and Australia are famously energy only markets with volatile prices, that provide good arbitrage opportunity.

In which context I find it funny that a recent project in Texas to install batteries by a grid operator was denied because "batteries are considered Generators" under current rules:

But the PUC and merchant power companies worried that AEP's plan to use the batteries would violate a fundamental regulation in Texas that prevents most utilities from delivering as well as generating power.

 

[EinSV]

An interesting fight appears to be brewing in New Hampshire over Liberty Utility's proposal for a pilot project to install 1000 Tesla Powerwalls with customers. Here is a description of the proposed project:

Liberty Utilities wants to own and install 1,000 Powerwalls from Tesla — the vendor selected by an outside consultant based on the needs of the program — in the homes of its customers. Those residents would switch to the state’s first modern residential time-of-use rate.

The host customers would pay a monthly fee or an upfront sum for backup power and the ability to toggle their consumption to optimize the rate structure.

When the utility predicts a period of peak demand for the next day, it takes control of the batteries. Collectively, 5 megawatts of aggregated battery capacity would allow the utility to reduce its coincident peak, saving an estimated $693,000 a year in transmission costs and potentially offsetting traditional wires upgrades.

The company thinks the pilot will “save costs and simultaneously build a more resilient and modern distribution system” for its 44,000 customers. It asked regulators for permission to put the costs of the program in the rate base. The Controversy Surrounding Liberty Utilities’ Home Storage Pilot​

In one of the other threads some TMC members were puzzling over who is paying for the 11,000 projects underway in Puerto Rico. Since distributed resources in Puerto Rico may eventually be used as part of a virtual power plant, another interesting question is what financial arrangements have been or will be made with customers for use of Powerwalls and Powerpacks for load shifting, grid stabilization, and whatever other grid services are needed.

I am not sure there is a one size fits all solution for this right now so will be interesting to see how Tesla solves this problem in Puerto Rico and other venues where virtual power plant projects may be developed. But just having the individual Powerwall and Powerpack exclusively controlled by the customer leaves a lot of valuable capabilities untapped so there should be an opportunity for win/win solutions for Tesla, customers and local utilities.

 

[TheTalkingMule]

Opening up these pr/usvi markets is worth giving out super cheap Powerwall in the PR recovery effort.

 

[Rarity]

Distribution/installation deal for Powerwalls with Holaluz in Spain. Non-exclusive. 1,000 installations expected through the end of the year.

Tesla despliega sus baterías de autoconsumo en España de la mano de Holaluz. Noticias de Empresas

 

[jhm]

No mention here of Tesla specifically here but large amounts of storage are being proposed by Colorado's Xcel Energy.

"Xcel Energy’s 120-day report to Colorado regulators includes an additional 1.1 GW of wind at 1.1-1.8¢/kWh. Solar power bids have come in at 2.2-2.7¢/kWh, and solar+storage at 3.0-3.2¢/kWh."

"The total solar to be deployed under this plan would be 707 MW-AC, with 275 WM/1,000 MWh of energy storage."

World’s largest li-ion battery and 707 MW of solar power in Colorado proposal

I wish I understood the pricing models these developers are using to integrate storage into their solar bids. At a high level, 1000MWh storage on 707 MW AC solar is the capacity to store 1.4 hours at peak solar generation. The DC/AC ratio may be at work here. DC has to do with the output of the panels at peak generation, while AC is the output of the inverters at peak generation. These ratios are typically 1.1 to 1.3. When panels are generating DC in excess excess of what the inverter can process it is wasted. The result is that AC output is flatter over the hours of daylight and the DC peaks are trimmed. Capacity factors are determine based on peak AC, which is how the average solar CF for US solar is about 26%. So what I wonder about is how the solar+storage systems are designed to work with excess DC. Are they actually storing the DC in excess of AC in batteries? It seems like this means the inverters could be better utilized, sometimes converting solar DC onto AC and other times converting battery DC into AC. If this is what is going on the hardware cost of solar+storage could be lower than the sum of solar plus an isolated battery storage system. Moreover, a high DC/AC ratio need not mean wasted excess DC power. This would explain why storing about 20% of the solar power generated only moves the cost from about $25/MWh to $30/MWh. The extra $5 to store 0.2 MWh is a storage cost of just $25/MWh. This is crazy low cost if storage for a stand alone BES, even adjusting for solar ITC 30% tax credit. There seem to be some clever synergies between solar and batteries that make this storage so cheap.

If anyone knows how this actually works, I'd like to know. I can only surmise that there are synergies here, but can only guess about how they actually arise.

 

[jhm]

I asked Jigar Shah about these low solar+storage PPAs. His reaction is that developers anticipate selling other services from the batteries. So that the $25/MWh storage price is just a fraction of the revenue anticipated. He did not seem to be aware of the design efficiencies that I was curious about, but did not contradict the suggestion. Regardless how developers are getting to these PPA prices, they are damn competitive with any sort of thermal generation. I think this shows that solar will not destroy the value of solar. It is simply too cheap to add a little storage and thereby gain access to higher value opportunities. I think batteries and eventually power to gas technology prevents solar saturation short of full decarbonization.

https://twitter.com/JHildenMinton/status/1005617976064839680?s=19

 

[generalenthu]

I asked Jigar Shah about these low solar+storage PPAs. His reaction is that developers anticipate selling other services from the batteries. So that the $25/MWh storage price is just a fraction of the revenue anticipated. He did not seem to be aware of the design efficiencies that I was curious about, but did not contradict the suggestion. Regardless how developers are getting to these PPA prices, they are damn competitive with any sort of thermal generation. I think this shows that solar will not destroy the value of solar. It is simply too cheap to add a little storage and thereby gain access to higher value opportunities. I think batteries and eventually power to gas technology prevents solar saturation short of full decarbonization.

James Hilden-Minton on Twitter

Napkin math warning:

1 kWh of battery can deliver 5 MWh of energy over a 5000 cycle lifetime. So, assuming this is the only source, the effective cost needs to be $125 per kWh for breakeven.

Some ancillary services should do the trick.

Edit: Worth noting bids are for 2023 deployment.

 

[jhm]

Let's get a bigger napkin. For simplicity, I'll be ignoring inverter and battery efficiency which only rescales the numbers a bit.

Suppose in a particular location 1MW solar produces 1600 MWh in a year. Suppose also that at 1.5 DC to AC ratio, the system can deliver 80%, 1600 MWh × 1.5 = 2400 MWh gross, 1920 MWh delivered solar direct energy. This leaves 480 MWh of excess energy to be stored in batteries and inverted later with no need for additional inversion or interconnection hardware.

Suppose that $25/MWh PPA covers the full cost of the system, excluding only the battery, wherein the 480MWh of surplus is simply curtailed. This means that the curtailed power is essentially free. If we add the cost of a battery, we can story this free power and sell it for $50/MWh. Over the 5000 cycle life of 1kWh battery, this is $250 revenue on 1kWh of battery. We can pretty much ignore discounting because the cost of replacement some 15 years latter will be much cheaper than current prices. In fact the PPA may be for a system to be built several years out, so it may well anticipate price reductions in batteries.

One more little thing, the ITC of 30% still applies. So the developer can afford to spend up to $357 = $250/0.70 per kWh of battery.

Certainly the PPA pricing model of a solar+storage developer would be much more intricate but I think this napkin math shows the essential moving parts. If the developer can price the battery at cost while retaining the right to use the battery to provide incremental services not under PPA, then the revenue from those services are pure profit accruing to the developer.

So the key thing here is recognizing that a high DC to AC ratio implies an opportunity for batteries to store free power without needing its own inverter. The developer has the opportunity to optimize that ratio of PV DC MW capacity, battery MWh capacity and inverter AC MW capacity. So the numbers I am playing with here are not based on trying to get the optimal mix. I only wanted show rough plausibility. But with optimization more favorable financially may be within reach. Even developers who are not including batteries in their PPA bids might actually be looking at including batteries so that they can reapnthr full value of those batteries selling into markets unencumbered by restrictions in the PPA. That is, the solar+storage PPA is locking in a price of $50/MWh on power discharged from the battery. If peak power prices within the market were reliably above that price, why lock it in? Let's you could count on peaks over $60/MWh for an hour or two nearly every day of the year. The developer may well want to retain some residual capacity to go after those prices, and thus will not sell that to an offtake PPA. This kind of opportunity can lead to PPAs that are priced lower for both solar direct and stored solar offtake. Imagine if you will a PPA structured so as to break even in the combined solar+storage system, but where the developer retains residual capacity that can be sold at top dollar for for pure profit. If I am on to something here, we could see batteries cause the price of solar PPAs to plummet.

 

[Paracelsus]

Interesting graph highlighting solar development opportunities posted by Jigar Shah on LinkedIn today: It would appear that no matter how hard the US tries to slow the implementation of residential solar/storage systems at home that the world is poised to move in a more progressive direction (which is of course more consistent with Elon's presentation at the solar roofing unveiling).

 

[jhm]

I have friends who are refugees from DRC. It's sad that DRC is so far down on this list. I suspect that the government problems that led to a refugee crisis may also contribute to being not well prepared for deployment of home solar systems, especially distribution & channels and business climate.

DRC is also where most of the cobalt supply is produced and most of the abuses associated with that supply exist.

 

[EinSV]

cleantechnica reports that Tesla is bidding on the large (1GWh) Xcel storage project -- no surprise but had not seen that confirmed. New PPA In Arizona Locks In Lowest Solar Prices In US As Demise Of Navajo Station Looms | CleanTechnica I wonder if this is the GWh scale plant Elon was referring to recently?

Also of interest, the article reports what they say is the lowest priced solar installation in the U.S. to date ($.0249/kWh) scheduled to go online in Arizona in 2020 as the huge coal generator in Page Arizona is scheduled to go off line in 2019.

I used to do a fair amount of hiking in the Grand Canyon and always hated that plant with a passion. Not only is it one of the largest CO2 emitters in the U.S. but it also generates a lot of air pollution that fouls the air of the Grand Canyon and is a massive eyesore for the northern Arizona skies. So I really enjoyed reading about this.

Clearing the Air in Our National Parks

 

[jhm]

Tesla is bidding on a plan by Colorado’s Xcel Energy to add grid-scale battery storage to an upcoming solar project in that state. The cost of electricity in that proposal from various preliminary bidders ranges from 2.3 to 2.7 cents per kWh. What is really interesting is that adding battery storage only increases those numbers between 0.5 and 0.8 cents per kWh — still less than the wholesale cost of electricity from the Navajo Generating Station [5 cents per kWh].

Notice that the prices here are in line with the Colorado bids. I hope reporters will dig into incremental cost of storage $5 to $8 per MWh. Per my posts above, I think that developers have figured out how to use batteries to optimize the whole system. The battery enables them get more value per MW of PV and per MW of inverter + interconnection, and this drives down the PPA price for solar and the incremental PPA price of storage.

Solar 2.0: PV and storage deals show signs of rapid energy transition

The bombshell delivered last week by Chinese authorities – thanks to an about-face on incentives for new generation (both renewables and fossil fuel, given that country’s over-supply – should make it obvious that more price falls are on the way.

Bloomberg New Energy Finance predicts that the cost in modules will plunge by one third – from just US37c/watt to US24c/watt, and the impact will be global. That should lead to price falls in Australia for a complete solar installation of at least 10 per cent – and balance of systems costs and financing costs are also falling.

So what are the implications that PV module costs fall another third? Let's also suppose that inverter costs are not falling that quickly as well. (If anyone knows, please post info.) So if ratio of the cost of PV MW to cost inverter MW, this has implications for the optimal DC to AC ratio in a system. Basically it means that developers want to optimize the value of the inverter. Battery storage enables the developer to use the inverter when the sun is not shining and enables them to throw more cheap panels into the mix.

On June 7, the directors of the Project signed a 20-year power purchase agreement with AZ Solar 1, a 30 megawatt (MW) solar power plant. The deal calls for the delivery of 83,500 megawatt-hours (MWh) of electricity at a the lowest price yet recorded in the US — 2.49 cents per kilowatt-hour (kWh). This would denote an AC capacity factor of 32%, and a DC capacity factor ranging of anywhere from 19-27% with DC:AC ratios of 1.7 and 1.2, respectively according to Green Tech Media.

Notice how high the AC (inverter) capacity factor is. Clearly there is an effort to economize around inverter cost. Throwing extra cheap modules at it is what the high DC to AC ratio would suggest. The cheaper the modules go, more excess module capacity there will be. This also firms up the solar supply. E.g., when panels are producing DC well above AC capacity, a passing cloud only dims the excess and does not limit the AC output.

Brian Perusse, a vice president with Fluence, the battery storage joint venture between global energy giant Siemens and storage specialist AES says gas cannot compete with solar and storage.

Fluence plans to build a series of “solar peaking” plants in Australia, that will compete head to head with gas peaking.

“This is the lowest cost source of energy,” Perusse tells RenewEconomy. “It is dispatchable, it is flexible, and it has no emissions.”

Peruse says solar prices are dropping under $A50/MWh, and batteries – at a cost of $A15-$A35/MWh – can provide three to four hours of storage. At those price, gas peaking plant cannot compete.

“No other resource can deliver that sort of pricing,” he says. (You can here his interview in our latest Energy Insiders podcast here).

And batteries, and other forms of storage, are going to be essential as more renewables enter the grid.

Giles is on the trail here, but he is not really challenging his source to explain how "batteries – at a cost of $A15-$A35/MWh" is possible given the prevailing cost of batteries themselves. So sure, it can beat gas peakers, but how exactly has that become possible?

I think solar 2.0 is here, but there is not yet clarity on how exactly are batteries making this all pencil out. I also suspect that those who are in the know are keep silent about how the magic work. Why? Because there is a huge competitive advantage to locking in solar PPA while prices are still high. That is, they may be locking in essentially a net free source to charge batteries from while PPA prices hold up.

 

[GleanerC]

@jhm I really appreciate how you are digging into the solar plus battery pricing. Thanks!

Came across another proposal by Nevada Power and Sierra Pacific Power to install solar including storage.

"Really incredible results from NV Energy IRP: 1001 MW of solar and 400 MWh of battery storage capacity. I think we have a new low-price record: Eagle Shadow Mountain 300 MW Solar, 25-year term flat price of $23.75/MWh"

Adam Browning on Twitter

And here's the link to the specific proposal being put before Nevada regulators.

http://pucweb1.state.nv.us/PDF/AxImages/DOCKETS_2015_THRU_PRESENT/2018-6/30452.pdf