Last updated: March 20, 2017
Tesla-Solar City CEO Elon Musk this past week once again displayed attributes that distinguish him as an innovative engineer, high-tech entrepreneur and celebrity billionaire: the ability to zoom in on current events and synthesize solutions that others might deem unwise, if not foolhardy, coupled with a flare for commercial showmanship.
Visiting Australia with his cousin, SolarCity CEO Lyndon Rive, to launch Tesla’s Powerpack and Powerwall 2 lithium-ion battery storage solutions (LiB), Musk’s stopover coincided with a power crisis in South Australia that precipitated tumultuous debates regarding the impacts of solar and distributed renewable energy resources on Australia’s power grids.
Taking to Twitter, Musk trumpeted that Tesla would install 100-300 MWs of power storage capacity and alleviate grid performance issues within 100 days or do the work for free. The bold offer sparked a tempest within industry and government, as well as more broadly across mainstream Australian society.
An Australian Twitter storm
As the media storm progressed, Musk took up an offer from Mike Cannon-Brookes, the founder of Australian software company Atlassian, who “tweeted” his interest in joining Musk’s initiative for advantageous “mate’s rates,” as well as accepted an invitation to meet with Australian Prime Minister Malcolm Turnbull.
Musk’s bold offer also prompted strong reactions from other LiB energy storage companies vying for a share of Australia’s solar and grid energy storage markets, who have been lobbying politicians and publicly advocating for instituting new and reforming existing regulatory frameworks so as to foster faster, greater deployment of battery-based energy storage capacity from the residential to utility scales.
“Elon stating that ‘we have a company that can accomplish this’ had an incredible effect in that created the opening that allows ‘champions’ of advanced technologies, such as lithium-ion battery storage, to directly address those that have been saying this couldn’t be done,” Mark Higgins, chief operating officer at California-based Strategen Consulting and a member of the Australian Energy Alliance’s steering committee, told Solar Magazine while attending the Energy Storage Europe exhibition and conference in Dusseldorf, Germany.
“Australia is one of the strongest markets for solar-plus storage projects at the moment,” explained Tyler Ogden, who leads solar energy research at Lux Research. “Electricity rates have been sky-rocketing while feed-in tariff have been plummeting, providing storage a strong opportunity to provide value to photovoltaic installations.”
“This can be done simply by storing solar generated electricity for self-consumption, or through more complicated means such as the provision of grid services or virtual power plant aggregation. Sunverge, LG Chem, and Tesla are all major players.”
And it didn’t take long for two Australian states to launch new energy storage initiatives, for instance. They must have been preparing them for some time, but the coincidence with Musk’s offer suggest some causal link.
According to the past week’s news reports, the government of South Australia will conduct a competitive solicitation for a 100-MW battery storage installation and a 250-MW natural gas-fired power plant. Victoria’s state government announced it will invest $20 million to boost state-wide energy storage to 100-MW by year-end 2018.
Solar-energy and storage parallels in Australia and California
The failure of Australia’s newly privatized national power market invokes recollections of California’s experience when it initially moved to privatize electricity markets in the late 1990’s and first years of the new millennium.
In 2002, a trader at Enron, which was then flying high and lauded as one of the most innovative and sharpest energy services companies on the planet, attempted to “rig” the market by instructing one of the company’s power plants to withhold power at a critical juncture of high, persistent demand. California power market prices did spike, yielding tremendous paper profits for Enron, until the scheme was revealed and the company held to account, a pivotal event in the ensuing scandal that led to Enron’s ignominious demise.
“There has been some pretty unfair, inaccurate characterization of the role renewables played in the crisis,” Higgins said. “The power crisis was the result of a national market failure. The actuality is that we can have a zero greenhouse gas emissions or zero carbon emissions solution that provides equivalent or greater energy security.”
Also akin to events that transpired during California’s energy crisis in the early 2000’s, Australians have been installing solar PV systems – and more recently, battery energy storage systems – as fast, or faster, and to a greater degree than residents of other nations.
“Australia actually has the highest rate of rooftop PV in the world -- and leads by a massive amount -- more than double (per capita) the country with the second highest rate, Belgium (7%).”
Rapidly growing solar and renewable power generation sparked an ongoing debate regarding the costs and benefits, risks and rewards associated with growing use of solar, wind, advanced battery-based energy storage and other types of distributed energy resources in both California and Australia.
“The main difference between California and Australia in response to these types of crisis events was that in California you had an external board of regulators who said we can address this with storage, and the renewable energy industry stepped up and met that challenge.”
“In Australia you have external regulators at the federal level that have put regulations that are anti new technology in an attempt to prop up conventional, existing market participants. Australia had to have that ‘cathartic’ moment, and someone with the talent, capacity and personality of an Elon Musk to come out and state ‘we can do it better and cheaper.’”
Opposition appears to have evaporated in light of Musk’s offer, Higgins said. “A consensus was starting to form in Australia, and Elon was able to shed some light on this issue, which just goes to show the power of Twitter in the modern era.”
“All opposing viewpoints just dissolved after he made that offer and stated that advanced battery storage technology can not only solve the problem cheaper and faster, but make the entire system more reliable, and Tesla is just one company capable of accomplishing that.”
A distributed grid takes shape organically
“Conventional power technologies and centralized, fossil-fuel grid technology and systems are very inflexible and inefficient, and they are ill-suited for the grid that is taking shape organically today.”
Though still in an early phase of evolution, “the energy system of the near future will be much more bidirectional,” Higgins continued, “where longer distance power grids might simply serve as balancing vehicles with system distribution operators managing specific regions.”
Filling out the emerging framework are the growing ranks of energy “prosumers” who produce, consume, and will be buying and selling power amongst themselves in open, online power and energy marketplaces.
“That’s a big change as compared to the way the grid works today, and the reasons for doing it include improved reliability and resiliency, more clean energy at reduced cost,” Higgins pointed out. “These are all things that we can accomplish with distributed energy resources – be it solar, wind, energy storage and/or electric vehicles – if we do it right.”
“The high penetration of rooftop solar in certain areas of Australia can provide the framework for the development of novel business models, similar to what we are seeing in the U.S. particularly in the area of aggregation of resources to provide grid services such as frequency and voltage regulation,” Lux’s Ogden added.
“Much of the focus in the distributed context will be in outfitting existing installations with storage while utility-scale will emphasize integrating storage from the outset. First Solar may be one of the next large players here as it has recently demonstrated capabilities of operating a photovoltaic system like a traditional power plant with advanced power electronics.”
“One emerging business model opportunity for distributed solar-plus-storage systems is peer-to-peer energy trading, in each homeowners generating excess electricity sell to homeowners with net demand over local distributed network. Australia is one of the only markets where it is economically feasible at the moment.”
Indeed, distributed energy tech start-up GreenSync on Feb. 23 announced it and partners would launch the world’s first digital distributed energy marketplace. “DeX” (Digital Electricity Exchange) for the first time will allow Australian home and business owners, communities and power utilities to buy and sell electricity produced by solar panels and stored in battery packs on an open, online marketplace. comment↓
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