Tesla Energy and utility scale projects

[mongo]

Apologies for the late reply...

Possibly this just relates to grid regulations in my country if a battery is connected on the AC side it requires its own grid connection and additional network charges apply.

Currently regulations do not permit behind-the-meter batteries on solar farms but everyone expects that rule to change.

I suppose the main point is solar+batteries is a powerful combination, that has the potential to solve many problems.

Some of those problems are caused by sharing the grid with other solar farms in the area...

It is also the case that no matter how up pay for them transmission upgrades are expensive, so avoiding them is a major saving.

Ah, transmission charges should be based on peak use/output. It seems like those issues could be avoided by shifting the grid connection to the the point after solar and storage are joined. (We're gonna need a bigger meter)
Or, allowing a virtual connection if the solar and battery control are linked. Similar to a powerwall solar setup with AC joined before the utility.

 

[MC3OZ]

I wonder what Tesla energy could do with something like this:-

Either working with Dandelion or developing a similar system.,

There are actually 3 or more useful heat sources potentially at different temperatures in a domestic environment:-

• Air (inside, outside, roof cavity)
• Ground
• Water Supply (Cold tap)

If an Octovalue like solution could efficiently move heat around in a domestic situation there are a number of potential applications:-

• Home heating/cooling
• Hot water
• Clothes drying
• Refrigeration
• Clothes washing (hot water)
• Dish washing (hot water)
• Cooking?

Of these areas the only one where I think heat pump may not be able to be the total solution is Cooking... but heat pump could make a contribution particularly to an oven, and may regulate oven temp better than more traditional methods.

With this kind of solution the trade off is capital investment Vs savings in electricity usage, the biggest savings are at the top of the list, Home Heating/Cooling, Hot Water.

So generally start at the top of the list, and work down.

Apart from the cost of the appliances themselves the main capital costs are the in ground geothermal loop and pipework for temperature transfer...

When we consider the temp transfer loop, many of the appliances can be located in the kitchen/laundry area in many houses these are located close by, and in some cases existing water plumbing may be able to be used.

So the bottom line is any higher up front costs for a Tesla home energy solution and Tesla Appliances would need to be offset by energy cost savings. This kind of solution would increase the chances that a home could be largely self-sufficient with home solar and batteries for a greater portion of the year, particularly in summer when solar generation is typically good.

In particular home heating and cooling bills and the resulting seasonal variation in energy demand could be slashed.
Combined with Autobidder and a VPP, savings to the household are even more significant.

 

[csummers]

Tesla Energy should apply to the RFP! Great next step into the Caribbean market!! The 43M people who live in the region really need solar.
Re-launch Request for Expression of Interest- Design of a 200 kWp Photovoltaic System for Carriacou, Grenada. - CARICOM

 

[jhm]

Hawaiian Electric to quit coal power and add solar and battery storage | RenewEconomy
Solar plus battery will enable Hawaii to kiss baseload coal good bye. The system will have 300 MW of solar and 2GWh storage. This will enable the utility to shut down its last 180MW coal capacity.

To my knowledge, this is the first clear case of solar+batteries replacing baseload power. The article does not say, but I suspect the utility will still have lots of diesel capacity. But increasingly this is just for backup. Batteries should already cover most need for peak power.

It's not clear if Tesla will be part of the winning bid for the 2 GWh battery. But clearly this is a good indication that the market for grid storage is growing.

 

[MP3Mike]

To my knowledge, this is the first clear case of solar+batteries replacing baseload power. The article does not say, but I suspect the utility will still have lots of diesel capacity. But increasingly this is just for backup. Batteries should already cover most need for peak power.

From 2016: Tesla runs an entire island on solar power
From 2017: Tesla battery packs power the Hawaiian island of Kauai after dark

 

[jhm]

From 2016: Tesla runs an entire island on solar power
From 2017: Tesla battery packs power the Hawaiian island of Kauai after dark

Yes, I've been aware of those projects from the beginning, but I don't think they were replacing a coal plant, just diesel gensets. There is a pretty substantial price gap between diesel power and coal power.

 

[MP3Mike]

Yes, I've been aware of those projects from the beginning, but I don't think they were replacing a coal plant, just diesel gensets. There is a pretty substantial price gap between diesel power and coal power.

That isn't what you said: "To my knowledge, this is the first clear case of solar+batteries replacing baseload power." Those islands were using diesel for their baseload energy generation. (Which is very expensive.)

 

[Doggydogworld]

It's not clear if Tesla will be part of the winning bid for the 2 GWh battery.

Here are the 16 projects and winning bidders. No mention of Tesla, though that doesn't rule out their participation as a subcontractor. They don't really bring much to the table in that role, though, branding has little value so it's usually best to deal directly with the battery manufacturer. I'd expect these to be mostly LFP which is safer, costs less and has longer cycle life.

 

[jhm]

That isn't what you said: "To my knowledge, this is the first clear case of solar+batteries replacing baseload power." Those islands were using diesel for their baseload energy generation. (Which is very expensive.)

Yes, pardon my imprecision. The point that I'm trying to get to is that coal plants and other "cheap" baseload is becoming at risk anywhere, not just on islands that are reliant on expensive diesel. For example, on the main land, we've been seeing batteries compete with peaker plant. That's one level of competition. Peaker power is the most expensive power in large grids. A much tougher level of competition is for batteries+RE to shut down baseload coal and combined cycle gas plants, which are amongst the cheapest power sources in a large grid.

So how is it that Hawaii has gotten to a point where it does not need even 180 MW of coal? Clearly, the coal power is cheaper than diesel. The diesel is easy to ramp up and down as needed. Apparently, the capacity factor of the coal plant must be getting pretty low. There's a lot of solar on the islands. So the coal plant is probably not needed so much during the day. Batteries must be cutting into peak power prices when solar is not generating. This probably erodes the profitability of the coal plant at night to. So batteries are getting cheap enough that another 2GWh of storage eliminates need for 180MW of coal. That is, the battery can replace the 11 or so hour a day (2000MWh/180MW) when the coal generation is most valuable. This implies the coal plant only is needed for about a 46% capacity factor. If the coal plant is need of fresh capex to keep it in good repair, then batteries+solar could come in as price competitive.

Electric Power Monthly - U.S. Energy Information Administration (EIA)
Looking more broadly at coal capacity factors averaged over the whole nation, we see that coal has been declining from 67.1.% in 2010 to 47.5% in 2019. As CF declines, it becomes the fleet becomes less economical to maintain at a given capacity. So the capacity of the coal fleet has declined about 25% over these 9 years. Meanwhile, the combined cycle gas fleet has grown in both capacity and capacity factor, from 44.3% to 56.8%. This suggest that gas has gained market share of the baseload market. (Hawaii does not import LNG, so it does not have gas generators. So coal vs gas competition doesn't matter in Hawaii.) The combined 502.6 GW capacity of coal and CC gas has declined a mere 2.5% from 2010 to 2019. For me the interesting question here is whether batteries+RE are poised to start driving down this combined baseload capacity. Coal has most of the marginal capacity to lose first. So at 47.5% capacity factor to replace 1 GW of coal with batteries could require as much as an 11.4GWh battery. Of course, you begin with the lowest hanging fruit, the plants with the lowest CFs and biggest maintenance costs. To replace the whole 235.5GW coal fleet could create demand for around 2.7TWh of batteries. This is a very crude estimate. It does not consider, for example, how the combination of wind and solar might enable batteries to replace baseload with fewer GWh of storage capacity. But in a way the combination of all renewable generation is eroding CFs for baseload. As CF declines, it becomes more economically favorable for batteries to replace the capacity. I hope we are at the tipping point on this.

 

[MP3Mike]

For example, on the main land, we've been seeing batteries compete with peaker plant. That's one level of competition. Peaker power is the most expensive power in large grids. A much tougher level of competition is for batteries+RE to shut down baseload coal and combined cycle gas plants, which are amongst the cheapest power sources in a large grid.

So how is it that Hawaii has gotten to a point where it does not need even 180 MW of coal? Clearly, the coal power is cheaper than diesel. The diesel is easy to ramp up and down as needed.

It could be cheaper but Hawaii is still an island and has to have the coal brought in via ship, so it is likely almost as expensive as diesel.

 

[MC3OZ]

Following on form a discussion in the main thread about Boring Co being used to underground electricity, this is relevant:-
AC versus DC: Why Australia should re-think its network plans

In countries like Australia that are prone to bushfires, Underground HVDC Interconnectors offer at least two key benefits.

(i) Underground Transmission lines can never be accused of being the cause of a bushfire.

(ii) In the event of a bushfire within the vicinity of an Underground HVDC Interconnector, the Interconnector will continue to operate, as opposed to above ground interconnectors being required to switch off.

DC has a lot of advantages, but the main draw back is the cost of interconnection is higher, the equipment at each end of a line/segment is more expensive.

Electric power transmission - Wikipedia.

At the power stations, the power is produced at a relatively low voltage between about 2.3 kV and 30 kV, depending on the size of the unit. The generator terminal voltage is then stepped up by the power station transformer to a higher voltage (115 kV to 765 kV AC, varying by the transmission system and by the country) for transmission over long distances.

In the United States, power transmission is, variously, 230 kV to 500 kV, with less than 230 kV or more than 500 kV being local exceptions.

The cost of the equipment required for HVDC is trending down has more HVDC is deployed,
if Boring co gets the cost of tunneling down, we may eventually see an equation stack up for DC.

(Cost of Tunneling + DC interconnectors) < (cost of transmission towers + maintenance + additional copper + insurance + additional line losses)

Insurance costs and the cost of the copper wire may help drive a move toward more DC.
Insurance costs are the big unknown here...

Note: Apparently there are multiple reasons why HVAC does not work as well has HVDC underground, but I don't have a detailed list of those reasons, people gave me vague answers, which I took to mean it is complicated.

 

[jhm]

Following on form a discussion in the main thread about Boring Co being used to underground electricity, this is relevant:-
AC versus DC: Why Australia should re-think its network plans




DC has a lot of advantages, but the main draw back is the cost of interconnection is higher, the equipment at each end of a line/segment is more expensive.

Electric power transmission - Wikipedia.



The cost of the equipment required for HVDC is trending down has more HVDC is deployed,
if Boring co gets the cost of tunneling down, we may eventually see an equation stack up for DC.

(Cost of Tunneling + DC interconnectors) < (cost of transmission towers + maintenance + additional copper + insurance + additional line losses)

Insurance costs and the cost of the copper wire may help drive a move toward more DC.
Insurance costs are the big unknown here...

Note: Apparently there are multiple reasons why HVAC does not work as well has HVDC underground, but I don't have a detailed list of those reasons, people gave me vague answers, which I took to mean it is complicated.

It would be interesting to place massive batteries at hubs for HVAC lines. These hub batteries could trade excess charge. Inverting power would only be needed between the batteries and local distribution. This could be more efficient that converting power from the HVDC line to AC to transmit to a storage facility which then converts AC to DC to charge the battery and DC back to AC to discharge.

 

[TheTalkingMule]

All(ALL!) US electricity capacity additions in June/July/August were solar or wind. That's pretty amazing.

All new U.S. electricity generation capacity came from renewables this summer

 

[petit_bateau]

"[USA] Utility-scale battery storage costs decreased nearly 70% between 2015 and 2018"

Utility-scale battery storage costs decreased nearly 70% between 2015 and 2018 - Today in Energy - U.S. Energy Information Administration (EIA)

They show a capacity-weighted avge of $625/kWh installed for utility scale in 2018. Looks about right to me. The disconnect with the TSLA pack level cost (now, 2020) of $106 falling to $50 in 2025 is obvious. However at present a) BoS & softcosts are excessive in storage due to low volumes, and b) margins are currently maximised by putting constrained cell supply into vehicular applications. Over the next few years I expect some pretty significant changes in both factors. It looks obvious to me who will gain most from that

.

regards, dspp/pp

 

[EinSV]

"[USA] Utility-scale battery storage costs decreased nearly 70% between 2015 and 2018"

Utility-scale battery storage costs decreased nearly 70% between 2015 and 2018 - Today in Energy - U.S. Energy Information Administration (EIA)

They show a capacity-weighted avge of $625/kWh installed for utility scale in 2018. Looks about right to me. The disconnect with the TSLA pack level cost (now, 2020) of $106 falling to $50 in 2025 is obvious. However at present a) BoS & softcosts are excessive in storage due to low volumes, and b) margins are currently maximised by putting constrained cell supply into vehicular applications. Over the next few years I expect some pretty significant changes in both factors. It looks obvious to me who will gain most from that

.

regards, dspp/pp

That estimate is out of date and doesn’t reflect Tesla’s current utility scale storage costs with Megapack.

Earlier this month Elon reported to Cleantechnica that Megapack cost <$200/kWh, or ~$300/kWh including power electronics and service over the life of the project.

So the current costs for Tesla utility scale projects are much lower than that report suggests, and as you mention should continue to fall rapidly.

Tesla Megapack, Powerpack, & Powerwall Battery Storage Prices Per kWh — Exclusive

 

[petit_bateau]

That estimate is out of date and doesn’t reflect Tesla’s current utility scale storage costs with Megapack.

Earlier this month Elon reported to Cleantechnica that Megapack cost <$200/kWh, or ~$300/kWh including power electronics and service over the life of the project.

So the current costs for Tesla utility scale projects are much lower than that report suggests, and as you mention should continue to fall rapidly.

Tesla Megapack, Powerpack, & Powerwall Battery Storage Prices Per kWh — Exclusive

Indeed. I expect some of the unduly expensive storage providers to fall by the wayside, and costs for the others to reduce considerably.

In the last 4 quarter Tesla have deployed 1,968 MWh of storage. I suspect, but I don't have firm data to show, this makes Tesla the leading storage provider globally at all scales, whether residential, commercial or utility scales. If anyone has firm data on that breakdown I'd like to see it.

The Q3 2020 data indicates a very significant uptick in storage deployed, basically doubled from previous highs of 477-530 MWh to 759 MWh. That indicates cell debottlenecking feeding through.

Using the Q3 2020 numbers storage and energy are running at a -ve GM% with $558 revenue vs $644 costs. Given that the storage is at the higher priced end of the spectrum (and still, justly, the market leader) that indicates that solar is very much dragging storage down. I think that solar is beginning to hit scale and may cross the breakeven threshold but personally I expect it to remain a low margin business that, whilst it is an enabler, is unlikely to be material in profit terms. However until Tesla give us greater insight into the nuts & guts of the storage and solar businesses we just have to guesstimate. Including the tantalising snippets we get on Autobidder, which can have several different revenue streams: software sales, software subscriptions (SaaS), and revenue share/co-share (it would be nice to get 4% subscription and 40% profits, or even 2&20), and maybe one day even as a independent merchant storage provider.

 

[TheTalkingMule]

Do we have any insight into cost savings from Battery Day announcements on the megapack side? Is the 56% cost cut equally applicable to storage products?

 

[Doggydogworld]

That estimate is out of date and doesn’t reflect Tesla’s current utility scale storage costs with Megapack.

Earlier this month Elon reported to Cleantechnica that Megapack cost <$200/kWh, or ~$300/kWh including power electronics and service over the life of the project.

So the current costs for Tesla utility scale projects are much lower than that report suggests, and as you mention should continue to fall rapidly.

Tesla Megapack, Powerpack, & Powerwall Battery Storage Prices Per kWh — Exclusive

Elon's prices are sometimes........ aspirational. Tesla deployed 340 additional MWh of storage in Q3 vs. Q2 and Energy Revenue increased 209m. That 209m includes more than just storage, e.g. they deployed 30 MW of additional solar. They stopped disclosing solar lease fraction when it began to increase again after the $50/month rental deal, but if 20 MW of Q3's increase was cash/loan we're talking about 40-50m of incremental revenue. That still puts storage close to 500/kWh. Of course deployment and revenue don't always match perfectly, but I've tracked quarterly numbers for years and 500/kwh has been pretty solid. The few individual projects which disclose pricing are also in that ballpark.

Tesla's switch to LFP for Megapacks should help a lot with pricing, though. I never could figure out why they were trying to sell NMC in that market. It's hard to see them adding much extra value to a LFP project, though.

In the last 4 quarter Tesla have deployed 1,968 MWh of storage. I suspect, but I don't have firm data to show, this makes Tesla the leading storage provider globally at all scales, whether residential, commercial or utility scales. If anyone has firm data on that breakdown I'd like to see it.

There are a bunch of $3-6k reports you can buy and a few free summary reports available for download. Quality is hit and miss. This IEA web page doesn't have 2020 data, but shows the storage market fell slightly in 2019 to 3 GW. Tesla deployed 1.6 GWh in 2019, assuming 4 hour average that'd be 0.4 GW or 13% market share.

IMHO Tesla dominates consumer storage except in Korea and possibly Japan. Utility-scale is pretty fragmented. AES is one name that came up regularly. Their storage efforts are now in a JV with Siemens called Fluence.

The Q3 2020 data indicates a very significant uptick in storage deployed, basically doubled from previous highs of 477-530 MWh to 759 MWh. That indicates cell debottlenecking feeding through.

I bet Moss Landing is LFP. GF1 stopped making storage cells a couple months ago.

Using the Q3 2020 numbers storage and energy are running at a -ve GM% with $558 revenue vs $644 costs.

That's Services/Other. Energy was 579/558 for a positive 4% gross margin. But solar leasing should be +30m or more by itself. I strongly doubt solar sales have negative GM, unless solar roof has catastrophically bad economics. So it does seem Energy Storage gross margin has dipped back into negative territory.

 

[EinSV]

Elon's prices are sometimes........ aspirational. Tesla deployed 340 additional MWh of storage in Q3 vs. Q2 and Energy Revenue increased 209m. That 209m includes more than just storage, e.g. they deployed 30 MW of additional solar. They stopped disclosing solar lease fraction when it began to increase again after the $50/month rental deal, but if 20 MW of Q3's increase was cash/loan we're talking about 40-50m of incremental revenue. That still puts storage close to 500/kWh. Of course deployment and revenue don't always match perfectly, but I've tracked quarterly numbers for years and 500/kwh has been pretty solid. The few individual projects which disclose pricing are also in that ballpark.

There are too many variables to draw the conclusion you are stretching for. For example, we don't know the mix of storage products (Powerwall, Powerpack, Megapack) from quarter-to-quarter, we don't know the extent of price reductions from quarter to quarter, we don't know the average price of solar from quarter to quarter and as you note we don't know the mix of solar lease v. sales.

I understand that short sellers like yourself are skeptical of everything Elon says (one of many reasons TSLA shorts have lost ridiculous amounts of money) but I'll go with his cost estimate unless there is firm evidence to the contrary.

 

[petit_bateau]

Elon's prices are sometimes........ aspirational. Tesla deployed 340 additional MWh of storage in Q3 vs. Q2 and Energy Revenue increased 209m. That 209m includes more than just storage, e.g. they deployed 30 MW of additional solar. They stopped disclosing solar lease fraction when it began to increase again after the $50/month rental deal, but if 20 MW of Q3's increase was cash/loan we're talking about 40-50m of incremental revenue. That still puts storage close to 500/kWh. Of course deployment and revenue don't always match perfectly, but I've tracked quarterly numbers for years and 500/kwh has been pretty solid. The few individual projects which disclose pricing are also in that ballpark.

Tesla's switch to LFP for Megapacks should help a lot with pricing, though. I never could figure out why they were trying to sell NMC in that market. It's hard to see them adding much extra value to a LFP project, though.

There are a bunch of $3-6k reports you can buy and a few free summary reports available for download. Quality is hit and miss. This IEA web page doesn't have 2020 data, but shows the storage market fell slightly in 2019 to 3 GW. Tesla deployed 1.6 GWh in 2019, assuming 4 hour average that'd be 0.4 GW or 13% market share.

IMHO Tesla dominates consumer storage except in Korea and possibly Japan. Utility-scale is pretty fragmented. AES is one name that came up regularly. Their storage efforts are now in a JV with Siemens called Fluence.

I bet Moss Landing is LFP. GF1 stopped making storage cells a couple months ago.

That's Services/Other. Energy was 579/558 for a positive 4% gross margin. But solar leasing should be +30m or more by itself. I strongly doubt solar sales have negative GM, unless solar roof has catastrophically bad economics. So it does seem Energy Storage gross margin has dipped back into negative territory.

Oops, thanks for showing me my error on -ve GM%, my eyes must have been struggling at that point.

Your $/kWh fully built are in line with my numbers over the years. Thank you for the various links - I won't be going to Navigant et al. I used to refuse to give them my own data on the basis that I had the best industry set and I was darned if I was going to give it to them for free to try to sell back to me.

I don't think there is a great deal of value at the cell level, but there are opportunities to improve margins on BoS/BoP and mfg as scale effects start to become meaningful. Plus of course software.

Utility scale is very fragmented at present, I think that will change. Consumer it already has, and will further consolidate, but imho Tesla need to up their game in WOUSA rather than just selling the left overs and last generation product.

Overall thank you. I think we are in general agreement on the trends.