{"id":41425,"date":"2020-07-27T14:14:07","date_gmt":"2020-07-27T03:44:07","guid":{"rendered":"https:\/\/www.solarquotes.com.au\/blog\/?p=41425"},"modified":"2024-10-01T14:07:26","modified_gmt":"2024-10-01T04:37:26","slug":"big-vs-home-batteries","status":"publish","type":"post","link":"https:\/\/www.solarquotes.com.au\/blog\/big-vs-home-batteries\/","title":{"rendered":"Will The Rise Of Big Grid Batteries Make Home Batteries Pointless?"},"content":{"rendered":"
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Image: Tesla<\/p><\/div>\r\n

Long ago, when the internet was made of nothing but\u00a0stone knives and bearskins,<\/a>\u00a0it sounded like this<\/a>, and looked rubbish:<\/p>\r\n

\"SolarQuotes

A long time ago on an internet far, far away Finn paid a Romanian $60 to design a website.<\/p><\/div>\r\n

Around the same time, some commentators claimed residential solar power made no financial sense because large solar farms were cheaper.\u00a0 Sometimes they would go into a rant about how rooftop solar only existed because of subsidies. \u00a0I never bothered to reply. I didn’t think it was worth the trouble, as the Australian internet was particularly primitive at the time. Our bearskins were still wrapped around live bears.<\/p>\r\n

While these people seem to have disappeared from Australia,1<\/a><\/sup> every now and then an American pipes up to tell us we’re doing it wrong.\u00a0<\/p>\r\n

And now some Australians are claiming the same about batteries. They insist home batteries make no sense because big-ass batteries, like the Tesla Big Battery<\/a> in SA, are so much cheaper per-installed-kWh they’ll drive home batteries out of existence.\u00a0<\/p>\r\n

While it’s true big batteries can be built and maintained for less per-kWh, it is not true that they will out-compete home batteries forcing them out of the market.\u00a0 We will end up with a mix of large and small batteries and I predict, in the medium-term, most battery storage will be in homes, businesses, and vehicles.\u00a0<\/p>\r\n

There are two big reasons why big batteries won’t dominate:<\/p>\r\n

    \r\n
  1. The difference between retail and wholesale electricity prices. Small-scale batteries are ‘Behind The Meter’, just like rooftop solar panels2<\/a><\/sup>. So when a building uses energy from its own battery it saves the retail<\/em> price of electricity. \u00a0Retail prices are, on average, much higher than the wholesale price of electricity. Big batteries can only earn wholesale prices for selling kilowatt-hours into the grid.<\/li>\r\n
  2. A Behind The Meter battery can provide backup power to the property that is behind the same meter.\u00a0 If the grid goes down, having a big battery on the other end of the grid won’t help your home.\u00a0<\/li>\r\n<\/ol>\r\n

    Because the Australian internet is now so advanced3<\/a><\/sup> and capable of downloading dozens of cat pictures every day, I am now taking the opportunity to officially reply to people who insist big batteries will beat home batteries. As a bonus, my arguments will also apply just in case there is anyone still around who says rooftop solar power makes no sense because of large solar farms.\u00a0<\/p>\r\n

    Wholesale Vs Retail<\/h2>\r\n

    There are two4<\/a><\/sup> ways solar farms can sell their electricity:<\/p>\r\n

      \r\n
    1. Sell on the wholesale electricity market and receive whatever the market price is at the time.<\/li>\r\n
    2. Have a Power Purchase Agreement (PPA) that pays a fixed price.\u00a0 Most solar farms have these.\u00a0 The amount is based on what wholesale prices are expected to be – weighted by expected output.\u00a0 This should be similar to the average price the solar farm would receive if it sold its output on the wholesale market, but without the uncertainty.\u00a0<\/li>\r\n<\/ol>\r\n

      The average wholesale electricity price is far less than the retail price charged on your power bills:<\/p>\r\n

      \"2020

      Sources: SolarQuotes Retail Electricity Plan Comparison Tool<\/a>\u00a0(after any discounts, include GST, and are for standard tariffs),\u00a0AEMO<\/p><\/div>\r\n

      The reason the retail price is much higher than the wholesale price is that it includes the wholesale price plus a heap of other costs.\u00a0 Here are the components of your electricity bill:<\/p>\r\n