{"id":39504,"date":"2020-06-01T12:19:01","date_gmt":"2020-06-01T01:49:01","guid":{"rendered":"https:\/\/www.solarquotes.com.au\/blog\/?p=39504"},"modified":"2020-06-01T12:19:01","modified_gmt":"2020-06-01T01:49:01","slug":"home-battery-forecasts-wrong","status":"publish","type":"post","link":"https:\/\/www.solarquotes.com.au\/blog\/home-battery-forecasts-wrong\/","title":{"rendered":"Why Have Home Battery Forecasts Been Staggeringly Wrong For Years?"},"content":{"rendered":"
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Honey, I shrunk the battery market<\/p><\/div>\n

When I was a kid, the past wrote checks for the future reality couldn’t cash.\u00a0 I never got a flying car, let alone a jetpack, and a picture book I had promised me the 2020 Olympics would be on the moon.\u00a0 Well, it’s 2020 now and we don’t even have an Olympics, let alone a moon colony to hold it in.<\/p>\n

But I’m not going to spend time complaining about childish dreams of a Buck Rogers future that never came to pass.\u00a0 Instead, I’m going to complain about adult predictions made just four years ago by financial analysts and other experts on how many home battery systems Australia would have by 2020.\u00a0 Some were so far off they were in Olympics-on-the-moon territory.<\/p>\n

Future-hype may have left me with the bitter taste of non-existent moondust in my mouth, but the failure of battery-hype has left me feeling drained of all energy.<\/p>\n

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As a kid this looked so cool, but as an adult, all I can think is this poor guy is being forced to increase his radiation count for a goddamn photo op. Also, why does he have tubes going from his backpack to his chest? Do his nipples require a constant flow of fresh oxygen?<\/p><\/div>\n

When predictions turn out to be twice as high as reality, that’s what I call optimistic, but many went way beyond that into crazy-mistic territory.\u00a0 Only four years ago, Morgan Stanley analysts made a middle-of-the road prediction<\/a> that, by this year, 1 in 10 Australian homes would have a battery.\u00a0 They also had an optimistic scenario where they said it would be 1 in 5.<\/p>\n

The actual number of home batteries installed at the start of this year was around 73,000.\u00a0 That’s 1 in 136 homes, so the prediction they thought was reasonable was around 14 times too high.\u00a0 To be fair, they did have a low uptake estimate of 210,000 home batteries.\u00a0 That’s only about three times too high.<\/p>\n

In October 2016, the Chief Technical Officer of Reposit<\/a>, a Canberra based battery focused biz, predicted<\/a> 250,000 home batteries by 2020.<\/p>\n

Using my awesome hindsight powers, these predictions seem ridiculous, but there are a number of good reasons why serious people thought they weren’t making fools of themselves.\u00a0 But there is one main reason why they were wrong and that is…<\/p>\n

Home batteries still don’t pay for themselves.
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If they were a clear money saver we’d see plenty of them being installed, but they’re not.\u00a0 Not at this time and not for normal households.\u00a0 For a typical home, they don’t pay even in South Australia<\/a> with its high electricity prices and sizable battery subsidy<\/a>.\u00a0 There may be unusual households where they currently pay and there are certainly people who find the backup power batteries can provide make them worthwhile.\u00a0 But as a money saver for most households, they’re not there yet.\u00a0 Virtual Power Plants<\/a> (VPPs) may make a difference to this, but they are only just getting off the ground.<\/p>\n

Obviously, the people making optimistic predictions must have thought batteries were on the cusp of paying for themselves back in 2016. That has not happened and the experts appear to have suffered from a bad case of premature prediction.\u00a0 Falling prices and payments from joining a Virtual Power Plant seem certain to make batteries eventually pay for themselves.\u00a0 It’s just a matter of when. And 2020 is not when.<\/p>\n

So why were these smart, serious people so far off the mark? \u00a0Firstly, I suspect their predictions were distorted from gulping down some delicious battery-hype flavoured kool-aid.<\/p>\n

The second, bigger reason I think they were so far off is they didn’t allow for the fact that, unlike solar PV and lithium battery cells, each modest decrease in price does not result in a significant expansion of the market.\u00a0 The huge expansion in the market they were expecting hasn’t happened yet and won’t occur until home batteries pass the threshold where they save normal households money.\u00a0 The lack of an expanding market means not enough battery systems have been installed to drive rapid cost reductions and quality improvements.\u00a0 The point at which the market will start to expand is still months to years away.<\/p>\n

Battery Uptake Graphs<\/h2>\n

Here’s a graph showing how many battery systems were installed in Australia by 2020 compared to 2016 estimates by Reposit and Morgan Stanley:<\/p>\n

\"actual<\/p>\n

When you look at the actual figure, you can see those were some pretty optimistic predictions.\u00a0 But the 73,000 value for systems installed at the start of the year is, in a way, worse than it seems.\u00a0 If I break it down into the number of home batteries installed per year using figures from Sunwiz Energy Consultants, I get the following:<\/p>\n

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Source: Sunwiz<\/p><\/div>\n

While home battery installations increased year on year until 2018, there was no increase in 2019.\u00a0 If installations level off at this rate, we won’t have Morgan Stanley’s mid-range estimate of one million installations until 2060.\u00a0 The zero increase was despite South Australia’s massive battery subsidy of up to $6,000 being in full swing throughout 2019.\u00a0 Without the subsidy, installations last year presumably would have been several thousand less, and installation numbers would be going backwards.<\/p>\n

Three Types Of Hype<\/h2>\n

As I see it, the battery hype that seeped into analysts brains and potentially affected predictions came from three primary sources:<\/p>\n

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  1. Techno optimism.<\/li>\n
  2. Reaction to anti-renewable sentiment.<\/li>\n
  3. Deliberate market strategy.<\/li>\n<\/ol>\n

    1. Techno Optimism Hype:\u00a0 <\/strong>Most people like the idea of cheap batteries, cool electric cars and other stuff they make possible. \u00a0Thus they view the prospects of home batteries through rose-tinted glasses.<\/p>\n

    I’m okay with this. Optimism about the future is better than pessimism.\u00a0 Sure, you may still be screwed when you get there, but at least you’ll enjoy the trip.\u00a0 This type of hype only becomes a problem when people in charge of other people’s money get sucked into it.\u00a0 For example, the South Australian government.1<\/a><\/sup><\/p>\n

    2.\u00a0 Reaction to anti-renewable sentiment hype:<\/strong>\u00a0 If you’ve learned a little about how energy markets work — or don’t work — then you’ll know that it’s not necessary to have any energy storage at all for renewables to supply the majority of a nation’s electricity.\u00a0 While low-cost battery storage would be great, it’s not required.<\/p>\n

    However, most people don’t even spend a single week of their lives studying energy markets.\u00a0 As a result, for the past 20 years, whenever a certain type of grumpy old fart has woken up with a burning desire to make the world a worse place…<\/p>\n