Tesla Big Battery cutting energy costs


#1

Thoughts?


#2

I don’t quite get what that means. It’s outselling the competition, and volume sales are lowering prices? What’s it competing against? And what are “ancillary services” in South Australia?


#3

Thermal generators; electrical power.


#4

How is storage competing against production? I think there is probably some missing context here that would paint a less favorable picture were it presented.

I’m not saying the project is a boondoggle or a bad investment. I’m saying that 2% of capacity “grabbed a 55% market share” is economically rather far-fetched.

What the man actually said was "“In the first four months of operations of the Hornsdale Power Reserve (the official name of the Tesla big battery, owned and operated by Neoen), the frequency ancillary services prices went down by 90 per cent, so that’s 9-0 per cent.

“And the 100MW battery has achieved over 55 per cent of the FCAS revenues in South Australia. So it’s 2 per cent of the capacity in South Australia achieving 55 per cent of the revenues in South Australia."

He did not claim the battery was the sole reason or even a reason (correlation does not mean causation) for the price drop. He did not say ‘market share’. SO i suspect that looking at the raw numbers critically would show something less magnificent that this has been presented.

Rafael Belliard could claim to have been “a home run hitter” and it would technically be true. He was dang sure a great player.


#5

Good grief, if 2% of capacity is even capable of 55% market share, how much excess capacity has been built in South Australia? That would have to mean that capacity is something like 25 times the size of the market, wouldn’t it?


#6

From the comments, perhaps a partial explanation:

"That’s it, there is money to be made in the FCAS, initially a lot of money, considering that, apparently, this service was used to extract vast sums of money from consumers by holding the wider grid to ransom. How many Hornsdale type batteries will it take to make FCAS par for the course and attract very little money?

Reading these articles and people’s comments my understanding is that the value in FCAS lies in the ability of generators to withhold support until the price suits them. ie, demand a huge ransom. If that’s the case then the size of the battery fleet may not be directly proportional to the earnings additional battery owners may expect. One or two more players may collapse this market. "
(emphasis mine)

So if Tesla is disrupting an anti free-market price fixing scheme, then good on them. Or even if they are just out competing other producers with superior load management to drive the price down. If they’re doing it with subsidies, though, those cost savings won’t hold up, other producers will be driven out of the market, and electrical service will be negatively impacted across the board.


#7

They generate a portion of their power through windmills located on-site; another portion is collected off the grid when demand is low ( and so are prices), then it’s discharged during peak times at higher prices.


#8

That whole nonsense about changing the COST of electricity during non-peak hours is BS. It costs the electricity PRODUCERS precisely the same to generate power during non-peak hours as it does during PEAK-use hours.


#9

Dave, the price fluctuations are driven more by demand than production costs.

I’m gonna try posting this link from my phone, it gives a much better explanation of the markets and the function of the battery. http://theconversation.com/a-month-in-teslas-sa-battery-is-surpassing-expectations-89770

(WOOT! GO ME! URL copied and pasted like a boss! )

It took me some digging to get this, but I think I got a pretty solid general idea of how it fits together. “Ancillary services” here refers to the spare load capacity that is available to make up shortfalls caused by either sudden loss of generating capacity or unexpected rises in load demand. That capacity is traded (best i can tell) much like gasoline futures, but in a much shorter time frame. What the battery does is bridge the gap between loss of generation capacity and bringing another generator on stream, and because there is no “spin up” time for a battery, it can respond to changing loads nearly in real time. So it’s really a fairly remarkable achievement.

However, there are a few things to consider:

Australia tried to regulate coal away in favor of renewables before renewables were ready and with insufficient NG backups. The variability of output in solar and wind cause frequency instability in the grid, requiring ‘synchronous generation’ capacity. Natural Gas operator gleefully gang raped the energy market that was bound and gagged by the government.

https://www.pv-magazine-australia.com/2018/02/06/neoen-australia-urges-caution-over-hornsdale-battery-profitability/

The government paid Aus.$55 million towards the construction of the Hornsdale Wind Farm and/ or Power Reserve (can’t find the total cost). The Australian Energy Market Operator pays Neoen (owner/operator of Hornsdale) up to Aus.$1000/MWH to absorb excess electricity from the grid (charging the battery) and, thus far upto Aus$14,000/MWH to discharge! Who is the AEMO? “AEMO is incorporated as a company limited by guarantee under the Corporations Act. The ownership of AEMO is comprised of 60% by government members and 40% by industry members.” It’s a government run cartel! Gee, I wonder why Australia has the highest energy prices in the world?

Brown’s article says $35 million in saving on the FCAS market (paid by AEMO, as I understand it), but how much savings are the end consumers seeing?


#10

Not cost, prices. Cost may impact when a particular thermal plant decides to spin up and offer its capacity to the grid, and it may also be impacting how Tesla can undercut them.

But none of that is to suggest that the cost for the Plants or Tesla to operate changes depending on time of day; only the price they’ll charge.

@qixlqatl Nice man, I heard it was a government project, but I had no idea how absurd prices were down there. Makes me wonder if that’s what made the battery feasible.


#11

If Tesla has anything to do with it, it is fake hype that will amount to nothing but a waste of time and money; I can’t believe this snake oil salesman Musk is still viewed as credible but the Enviro-Nazi religious adherents are not exactly known for their critical thinking skills.


#12

I was talking about the cost to the CONSUMER, so OK, PRICES. We once had a proposal to dam the Brazos river west of town and build a reservoir atop one of the nearby mesas. Their “plan” was to generate electricity from the falling water from the upper reservoir to the dammed up River during “peak-use” hours and then pumping water up to the upper reservoir during slack use hours. They insisted that this would be “cost-effective,” but we called BS and it wasn’t done.


#13

Based on what I was reading in the comments of some articles from ‘down under’, there are a fair number of Aussies who think it is, and definitely some Americans. If I’m remembering correctly, the government consolidated the energy markets under AEMO in 2009 (ish?, crap, there’s a lot to the issues down there, and it’s been going on for decades), and just generally tried to make the market behave the way they wanted to have more renewable energy. Though the exact nature of the resulting disaster might not have been foreseeable, that attempting to dictate market outcomes would be disastrous should have been.

As I read it from here in America from a few magazine, newspaper, and trade periodical articles, Hornsdale is the Australian government’s attempt to clean up the mess it made of it’s energy grid and markets when it loosed the predatory operators amongst hobbled game. It seems to me that for now, Neoen is contractually obligated to be…less predatory? But if Neoen winds up apex predator, then maybe not so much less, eh? They are already getting paid coming and going (to charge and discharge the battery). Absorbing excess power from the grid is a necessary and valuable service, and storing it against future need and getting paid for it again is just smart business. It won’t always work that way, but Neoen is being very close-mouthed about how often it does :smiley:

Anyway, the battery is a pretty nifty bit of energy technology, and it’s construction and operation is yielding boatloads of valuable data for the rest of the world to study and learn from, in both technology and policy. It is, first and foremost, a SHORT TERM load management tool.
Australia is not going to achieve it’s goal of 100% renewable electricity generation by 2050, or even getting off coal by 20…25, i think it was? How it plays out long term (for instance, I have found no mention of it’s expected service life) remains to be seen.

Brown’s originally linked article was not explicitly making the claims I had thought, although the way it’s presented makes me wonder if it wasn’t written that way to sort of… create certain assumptions in the minds of people who don’t know the ‘language’? It surely didn’t offer any explanations for the uninitiated, and it didn’t mention that the 90% savings are probably only possible because government interference distorted the maket.

I see this as a hugely expensive experiment the Aussie government has undertaken in the hopes of salvaging industry in S.A. which was being driven away by the grid’s inability to maintain reliable power delivery. It looks fairly hopeful, so long as Neoen doesn’t turn out to be more Danes!


#14

Because SpaceX, and the ridiculous things NASA does with its own SLS that makes it so damn easy to outperform them.

And Los Angeles and their inability to build infrastructure affordably.


#15

The article didn’t mention what technology the battery uses. Are they using lithium-ion batteries? I’m guessing they are. But Vanadium Flow Battery technology lasts at least twice as long and scales better.

spectrum.ieee.org/…/its-big-and-longlived-and-it-wont-catch-fire-the-vanadium-redoxflow-battery

Using a battery makes perfect sense to me since demand isn’t steady throughout the day and production from wind and solar also rises and falls. Having a battery smooths it all out.


#16

Yes, made by samsung. In not sure exactly what tesla leant the project, aside from it’s name?


#17

Wow, how absurd can you get? TANSTAAFL It takes more energy to pump water uphill than can be generated from it falling downhill. So, no, not cost effective.


#18

I first encountered that concept (I think somewhere in PA) when I was in grade school. I remember my adult family members scoffing at it for the same reason. But many years later I realized there could be another issue to consider–peak production capacity.

If demand approaches your peak production capacity during the peak demand hours, there’s a chance that some day it’ll spike over capacity. You may be able to purchase some power from neighboring plants, though they’re also at peak demand. If not, there will be a brown out and your customers and the politicians will passionately hate you and declare you incompetent.

The solution? Build a reservoir to store potential energy that can be converted back to electric energy during peak need. It’s just like a battery in that it takes more energy to charge than you get back. But if you need more energy for a few hours to avoid a brown out, you’re willing to pay it. And the setup will likely last longer than a battery.


#19

I have one of these projects 30 miles from my house, the Helms project.

In California’s San Joaquin Valley the summer Temps spike well over 100 for many months per year, this creates a massive power demand during daylight hours due to the use of A/C in businesses and homes.

This demand falls significantly in the evenings as businesses close and Temps moderate; there is plenty of excess grid power in the evenings to pump the water back up to the upper lake so it can be used to Hydro Generate again the next day during peak usage.

It is not “efficient” but it is “effective” if that makes sense.

Only nuclear power is both “efficient” and “effective” in such regions but it is way too safe and environmentally friendly for Kalifornia.


#20

Nuclear is being beaten back by LNG (the same as coal), as LNG costs less to both build and operate, and takes less time to build, so it’s easier to scale.