Australia's Electricity Companies Will Fight Tesla Over Powerwall Batteries

Opinion: Tesla's Powerwall battery is coming to Australia later this year, and it promises to lower your power bills by charging from your house's solar panels or when off-peak energy generation tariffs are in effect. But it may face competition and obstruction from Australia's existing energy suppliers and retailers, whose current businesses are built around power generation and consumption, not storage.

This post was originally published on September 21 at 10:30AM.

RenewEconomy says that in the end, consumers may suffer. The fundamental idea of Powerwall, and of residental or small-scale battery energy storage in general, runs counter to the way electricity is generated and used around Australia. In Australia, as in any country around the world, large-scale power is generated relatively consistently from baseline generators like coal- and gas-fired power plants, with supplementary power and peak boost coming from sources like wind, industrial solar and hydroelectric. Power demands fluctuate based on industrial and residential requirements.

In the merit order, nuclear (of which Australia has none) and coal-fired power plants are relatively cheap to run due to low fuel costs, but take a long time to heat up and reach operating temperature — they are therefore suitable for generating a pre-set, fixed amount of power but are not able to adjust dynamically to daily fluctuations in consumer demand. Wind power contributes to baseload, but only at a proportion of its maximum power — it is changeable with regional weather.

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Mid-merit generation plants like hydroelectric, diesel and gas turbines are more responsive to demand, but comparatively more expensive. In a traditional energy generation system, there's a baseload and a peak for production, and largely similar peaks and troughs that coincide in consumption. That means, thanks to the principles of supply and demand, that there are expensive times to buy electricity — these are the peak and off-peak tariffs we're all aware of on our quarterly energy bills.

In the scheme of things, solar — especially on a distributed, rooftop-scale model — is surprisingly close to a baseline level of power generation, although only during daylight hours (and especially peak daylight hours). Australia has excellent rooftop solar penetration — over 4400MW on 1.4 million homes — and generally excellent sun (thanks, giant hole in the ozone layer), as well an existing time-of-use tariff system from electricity companies.

It's those three things that make Australia attractive to Tesla Energy and the Powerwall. There's a huge market of people with solar energy generation already installed on their rooftops, and a population open to the idea of rooftop solar, as well as a traditional energy generation infrastructure and retailers that charge users based on when they use their electricity. Battery energy storage — through a device like the Powerwall, which has the Tesla factor even though BES has been available for some time already through — means that houses with solar can store that midday energy rather than feeding it back into the grid.

Image via Shutterstock

And that solar energy, generated from peak sun at the rooftop level and stored for later use, can be fed out from the Powerwall in evenings and mornings — the demand periods where electricity purchasing from the grid, from those baseline and mid-merit sources, is expensive. The Powerwall can even charge itself during off-peak tariff periods if you don't have on-roof solar, leveling out grid usage and reducing the need for peak tariff consumption.

And that is why it's perceived as a threat to energy companies' traditional business models.

In some places, under some tariffs, solar plus battery storage is already cheaper than grid power. Australians are on track to install 55,000 battery energy storage systems per year in the next 10 years. UBS predicts that a battery solar system may pay for itself after as little as five years of regular usage.

But it seems like Australia's incumbent electricity companies — generators, suppliers, retailers — are unprepared for what seems like an inevitable transition to battery energy storage. Queensland's government pushed through backdoor changes that massively increased fixed prices for electricity while publicising lower energy tariffs, making baseload and grid power more attractive but removing an incentive to install rooftop solar. WA's government-owned Synergy power provider banned battery storage from any new rooftop solar installations. These moves are anticompetitive and are a kneejerk reaction to the supposed threat of Powerwall and BES more generally.

This fight is already happening. But battery energy storage systems are not at all a threat to the nation's established power generation infrastructure. All they do is provide the potential for users to monitor, adjust and level out their power consumption, reducing the need for peak power generation on hot summer's days and cold winter's days. In conjunction with rooftop solar, Powerwall will reduce any given house's reliance on grid power, especially during peak periods. But a Powerwall and solar panel will never be enough to take a house entirely off the grid, and that means retailers and generators will still draw their fixed fee — all while having to produce less power.

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Energy companies will have to adapt to a country where partly decentralised power production and completely decentralised power storage is commonplace. That's inevitable, from the uptake Australia has already had for solar and from the likely uptake of Powerwall and its competitors. What Powerwall offers is the opportunity for an average household to lower its grid energy reliance during those morning and evening peaks when the grid is busy and expensive and the sun isn't out. It just means that one day, we won't have to run expensive gas turbines to meet peak demand, because there won't be any peaks.

Maybe when that happens, the extortionate fixed prices to stay connected to the grid might go down.



    dosent this always happen when something newer, better, cheaper ect comes along and the industry dinosaurs try their hardest to sweep it under the rug?

      Youd think they would look into beating others to the punch instead of resting on their laurels... But I guess its easier to bribelobby and protect one's stranglehold instead

        "beating others to the punch" would be the smart move however, these polluting dinosaur energy companies like their oil/automotive cousins will fight tooth and nail but will succumb very quickly in giving way to obvious good common sense. Let's bring it on now.

      Eg. Uber vs Taxis.
      It's just another example of an old industry trying to do everything it can to hold on to power except improve, innovate and compete.

        It's a no-brainer – sun shine (solar energy) literally falls on our planet (and roof tops) every day for free. Having the tech now and failing to harness and effectively store and use this "free energy" for our needs rather than being forced to use energy from polluting fossil fuels is just plain insanity.

        Last edited 24/09/15 7:34 am

      Unless it's something that allows them to replace workers. Then it is progress and we must accept being replaced by machines and moving on.

        Nice put. Move forward, adapt and share – all equally as important.

      We have had a solar system for over a year which works just like the Tesla system; they only difference is that it was a little cheaper than Tesla's. Manufactured by a Dutch company named Nedap. Like Tesla's, our system charges the batteries from the grid but it can be reprogrammed to work in other ways too. The only change we are intending to make in the future is to allow it to automatically switch on the battery system as a backup in case of a blackout. The required switch is not yet approved by our local electricity authority.

        that system sounds very interesting! are the Nedap batteries the same size as Tesla ones?

          Coffee_boss, you get the choice of type of battery, smaller electric car type a battery like Tesla or the other about the same size as a 12 V car battery. The batteries are actually housed in an attractive purpose designed box. The battery box has to be installed outside, of course.

    Nice article, though many retailers and even some network operators are offering competing products to the Powerwall. See Origin, AGL and Citipower as a start.

      Absolutely. It makes sense!

        Hi I have 14 Kw of solar on my holiday house and have completed expression of interest for 2 Tesla Powerwall units .

        No feedback yet from Tesla so unsure as to when delivery to Australia will happen . Do you have any more knowledge ?


      I hope this is the worst of the options they go with. I'll be really pissed off if the government helped these companies block Tesla from providing Powerwall

    Remember this Giz Aus article that said the Powerball numbers don't stack up to justify buying one? -

      Yep! That's actually from friend of Giz and noted iPhone 6S camper Lindsay Handmer. He doesn't have solar already installed, so he'd be about $20-25,000 extra out of pocket. From that position it's definitely untenable. At a lower upfront cost, and with higher tariffs and usage (he's actually really efficient already) it's much more viable.

        I think that solar and battery storage is the future.

        But like Cam says, it absolutely depends on your install cost and power cost.

        The problem is that electricity is currently pretty cheap. With (my) current prices, and assuming I have solar already, the most I can offset is about $1.50 per unit per day. That would be off grid use, so in practice it would be a lot less - more like $1 a day.

        Check your electricity cost - how much does 7kW hours cost you?

        At (my) current tarrifs, the Powerwall needs to be $4000 - $6000 (aus), fully installed, just to break even in 10 years (the warranty period). Higher power use does not help, as more battery units are needed.

        For now, I could get a much better return on investment simply putting the money into my offset account.

        In the future as electricity prices increase and battery prices decrease, the numbers will be a lot more favorable.

          A lot of people will get batteries because it's a statement. In the the same way people who buy electric cars to say "i care about climate change" There will be early adopters who don't mind not seeing a saving who will kick start the revolution and costs will come down. Power companies will react and we will hate them for it and this will encourage more people to buy batteries. I'll happily splash some cash on the smaller enphase battery just to see what the benefits are like.

            Yeah for sure - the more uptake the better, whether or not it's actually better financially (on a personal level) in the short term.

              Don't forget that the environmental cost of making said electric car and it's batteries (as well as disposal cost) is more than a ICE car.
              All this "green" stuff isn't really many better for the environment. It will be eventually, in the future. But right now it's still very early stages for all of this technology.

                Yep but it's a step in the right direction but not the final destination.

            Along with being a statement, if you break even it probably makes sense as well as long as you can afford the up front cost. You're effectively adding UPS capabilities to your home for those rare occasions where you need it, and particularly if you have solar you're lowering your environmental impact over time which is a great thing. It won't hurt the properties resale value either.

              How is installing batteries made in the US, from materials mined all over the world and shipped there, lowering your environmental footprint? You'd be much better off installing locally made Century lead-acid batteries if you are really serious about your environmental footprint. Lead-acid batteries are much more recyclable, too.

                Maybe I'm wrong there, I don't know. If coupled with solar as I stated it should heavily reduce your individual requirement to source power from coal burning for at least a decade, maybe longer depending how well the batteries hold up.

                In theory these will last a lot longer, so it should negate some of the impact from recycling and distribution. And with economies of scale and a big company like Tesla involved who are making a lot of projects already, hopefully the distributing and material sourcing can be somewhat efficient

                Last edited 22/09/15 1:36 pm

                Hopefully someone will take up those Open Source plans for a giga factory here in Australia. Now that idiot Abbott has been booted out we might start investing in renewables and stop subsidising fossil fuels.

              Not too sure about UPS capabilities, most Solar power systems cut-off if they don't detect a supply. See the following article (great site BTW)...

                Didn't read your link, so apologies if I'm completely wrong here.
                But I'm pretty sure those solar systems that are currently employed in Australia work by generating power from the sun and sending that straight back to the power grid to be distributed amoung the population. The Electricity company tracks how much you generate and put back into the grid, and gives you a discount on your electricity bill.
                Now in that system, the panels would obviously turn off when there is no connection to the grid, cause where is it going to put the power it generates??

                Now with the Tesla system, instead the power you generate goes into a battery in your house for storage, and later when you get home and turn on appliances, they draw directly from the battery first. That way if there was a blackout, the battery that is attached to your house is still there to keep things running for a period of time; thus UPS.

            "A lot of people will get batteries because it's a statement." Why now? Why not 10, 20, even 50 years ago? This is hardly something new and what's being discussed aren't even the best options. Why solar, why not wind? Or wind and solar? Why waste money on Li-Ion batteries when you could do it for a third of the price with lead-acid? The technology has been around for decades and more than up to the job so why now, because Tesla need you to buy up batteries to justify their gigafactory? Because that's what this is all about.

              Probably because a lead acid battery for the same power storage capabilities is about 3x bigger and 5x heavier than a Li-ion battery

              Li-ion also have:
              2-3x more charge cycles
              4x faster charge time
              3-4x the energy density

              So while lead acid is 4x cheaper, the cost per cycle for Li-ion is only 40% higher

              the technology has been around for decades and more than up to the job
              I think you will find you were correct in the first half of that statement, but incorrect in the second.

        I'm really curious how Lindsay gets food, poop, pee and shower during the campout

          24 hour McDonalds + it's bathroom answers three of those. And Fitness First hooked me up with gym access.

          I will be helping out on Giz in early October, so expect some sort of "what I learnt from lining up for an excessive time for an iPhone" type story.

            Ohh that doesn't sound too bad, gym would have showers too, so during away time you just leave a tent there with a BRB sign?

    Although battery storage could be useful to power generators in the right business model, it is too late for those in Australia, who have spent countless billions upgrading network infrastructure over the last 10 years. This upgrade was approved by state governments to meet future demand modelled by the power industry, unfortunately the models were not particularly accurate and we have had falling demand for the last few years, contrary to the industry projections.

    Reportedly, the many billions of dollars were sought out of greed as the profit of the generators/network companies were restricted and dependent on the overall value of the assets held by the network operators. The greater the total value of assets, the greater the profit these companies were allowed to make. The reports predicting large increases in demand were sent to government along with the required infrastructure upgrades to meet the requirements.... gold plating ensued.

    Although the battery storage is an excellent idea and would possibly be a core feature of any newly designed networks, our existing systems and investments in Australia's established network means that Tesla will be seen only as a threat.

      Don't forget that the State Governments (NSW at least) want to flog off the polls and wires, as fast way of balancing the budget. So the more pre-sale investment and guaranteed income the higher the price.

      hear hear, the electricity companies really screwed the pooch (marvellous experession) together with wimpy regulators jacking up costs and making these things viable.
      Eventually it will be cheaper to use petrol driven generators.

    Let them fight. Just like with the motion picture studios, Aussies will find a way to get these units and install them.

    Power companies have two options:
    1. Cut their losses and adapt to this (in their view) unexpected, disruptive tech, or
    2. Be wiped out.

      unfortunately not if they are lobbied legislate them as illegal for sparkies to install, then sparkies will be liable to loose their license if found out.

    Reason not to sell off some shit. Sell the power stations? Yes sell the power lines? Hell no!
    Some things have and should be held by government. In the UK they sold off power stations, but the grid is covered by the war act. As it is in Australia.
    The power companies will wake up one morning with Elon Musk as their boss.
    Every KW they don't have to pay of could've been savings, and savings in business = profit!

    I'm surprised they aren't rubbing their greedy hands together and just thinking of how much more they can jack up the price of power then claim it's "justifiable" because of the new tech emerging in this field.

    It appears that New Zealand is ahead of Australia here. The Tesla Powerwall is being distributed in NZ by Vector, one of our major power companies. They have negotiated a preferred distributor deal directly with Tesla. I guess if you can't beat em, you join em

    Last edited 21/09/15 3:38 pm

      Any idea how much for (in NZD) as it would be a great indicator for pricing here.

    Distribution businesses (owners of poles/wires/substations) are also trialing large scale storage at substations, presumably for peak-load shifting. I'm not an expert but it seems it should lead to lower network costs in the long term, and possibly a way out of the much-touted death spiral.

    hole in ozone layer has little if any benefit to solar power generation. Solar cell use visible light to generate electricity, ozone layer blocks UV light, so with a hole in ozone layer more useless (to solar power generation) UV is admitted. Hole in ozone layer is over Antarctic not Australia.

      the ozone only blocks certain types of UV depending on the sun's zenith angle (season, time of day) all matter here.
      at midday the sun produces the most radiation and UV as its angle is wide enough (higher in the sky)
      in the morning or winter time. THe sun stays closer to the horizon more, making the angle to narrow.
      in Australia its a little bit easier because of our position to the equator the sun stays quite high in its arc. middle of winter sure we get a lower angle but much less than other countries

    Hi, I'm on contract to get 44 cents per kw fed back, but am restricted from expanding my current solar system in that I can't have a bigger inverter (2kw) than originally contracted. Could I install a new separate system to charge the battery during the day, then use a timer to feed it back to the grid through my existing inverter at night?

      Sounds feasible, but messy. I'd attempt to renegotiate that contract...

      Just wait until your contract expires in 2017, and then you can do as you please (within the law).

      PS, they "can't" just BAN Uninterruptible power supply (UPS) as they are a vital piece of entrenched IT infrastructure. Regardless if it is for a single computer or a whole house. (It MAY have to be plugged into a power-point (Several power wall equivalents, for various power and lighting circuits could be workable, they aren't big enough for a whole house anyhow)), and not hardwired, but that is the extent of what it is likely they can do.

      Storm in a teacup.

    Since the power companies are acting like PowerWall is as much of a threat to them as Uber is to taxi companies, I only want one more.

      Ha yeah. The power companies lobbying against Tesla would only legitimise the product's efficiency in the consumer's eyes.

    isn't your contract coming to an end soon anyway? weren't they only 8 year contracts? in WA they were. I'd just wait it out and then upgrade.

    Battery energy storage — through a device like the Powerwall, which has the Tesla factor even though BES has been available for some time already through — means that houses with solar can store that midday energy rather than feeding it back into the grid.

    For some time already through....?

    I am not quite sure if your electricity industry assumptions are accurate. The electricity industry is currently under increased pressure (from The Energy Regulators) to manage the voltage and line rating requirements brought about by the influx of power generated onto the local networks by the uptake of residential solar installations. There is currently large issues with over-voltage and under-voltage complaints. With regards to 44c/kw users, everyone is maximizing their power being generated and sold into the grid during the day (over-voltage issues) and then the increased power drawn as they utilize all their appliances during the night. This consumption pattern is similar for late adopters. A "peaky" consumption pattern means you are not able to maximize the utilization of the assets installed and therefore you have to overspec your assets with regards to the average consumption rate. The electricity industry would rather a flatter consumption rate and has introduced measure to try to enforce this (ie on-peak and off-peak tariffs). The addition of any technology that will lower the peaks and more uniformly consume power will not be actively blocked by the energy industry as it is doing the all the work they were trying to achieve anyway.

    Every house should be forced to install a line conditioning UPS, then the power companies won't have to foot-the-bill. Then there wouldn't be any problem with transmission line voltage levels as each user would regulate their own levels.
    Think of the outcry if each house was required to pay $5000 for a line conditioner (and the claims of gouging by the power companies, when they install them for no up-front cost and amortise the cost in your power bill over 10 years (plus interest)) Bring it on.

    I am more curious about what happens in the future when solar and battery storage gets serious penetration in the market. How much power demand are the utilities companies expected to maintain. If, there is a period of weather where solar capture is significantly reduced, will the utilities be required to generate the gap in power. If so, they have to maintain generation capability that is for the most part not used. Thermal generating plants require serious maintenance, if not used often, in particular water chemistry for the creation of steam. An expensive exercise i imagine the user will have to pay for if they wish to remain on the network.

    If I renegotiate the contract I lose the 44 cents feedback rate and renegotiate at about 8 cents! The Qld scheme runs out in 2028, at which point I'll go off grid. Having checked with the Qld govt web site my plans are legal and doable, just have to check the financial facts when prices are available. This would not be a UPS in any way at present, as part of our contract insists that the solar inverter shuts down when the mains goes off (to prevent power feeding back and frying Ergon technicians who think there is no power). In 2028 and off grid then it will be.

      In the meantime there is some things you can do. Try installing 3kW of panels on your 2kW inverter. It won't necessarily give you 3kW to the grid, but it will get you the full 2kW for a larger part of the day. This also helps greatly in overcast conditions.

      Make the most of your 44c while it lasts, you lucky bugger.

    I don't understand the resistance. Unlike uber/netflix where local businesses are facing competition and people are losing jobs, this change actually benefits suppliers as much as it does consumers. Demand fluctuations is the biggest enemy within the energy industry in particular. These new batteries flatten down these fluctuations, allowing suppliers to reduce waste, lower their operating costs and investment, and higher return for each watt of electricity that they generate. What's not to like?
    All these cries just come across as pure greed. All news are bad news for our energy suppliers, they just always demand to gain more out of every situation, even when it's already a genuinely good situation.

      I don't understand the resistance.
      1. Energy companies don't care about local businesses.
      2. Demand fluctuation is pure gravy for those companies that actually generate power. In peaks of demand the generators can charge tens to hundreds of times the normal rate for energy on the market. This energy costs them no more to make, but is ridiculously profitable. Thus generators don't want technology like PowerWall and will try to legislate it out of existence lying that it 'threatens stability of the network' or other, equivalent, rubbish.
      3a. Energy retailers like PowerWall because it smooths out the peaks, and saves them from having to pay tens to hundreds of times the power to the generators in times of peak demand. Getting the public to pay for peak-shaving battery hardware that directly profits them is pure gold.
      3b. Energy retailers fear PowerWall because if the technology works like it should, then overall consumption of electricity will reduce. Over time, this will draw stark attention to the completely outrageous "supply charge". When folks have solar panels and batteries installed, and have adjusted their behaviour to minimise or even eliminate grid usage, the next logical step is for them to simply disconnect from the grid entirely. This PowerWall is Step 2 of a 4-step process which results in permanent withdrawal of a revenue unit (grid-tied household) from energy retailer's income streams.

      That's why you will find generators (e.g. SA Power networks) wanting to outright ban PowerWall, but retailers (e.g. AGL) scurrying to offer their own version of PowerWall so as to retain revenue units and avoid outright disconnects.

        "that means retailers and generators will still draw their fixed fee — all while having to produce less power."

        "attention to the completely outrageous "supply charge". "

        It is outrageous, but not in the way that you seem to think. Currently the big generators are generating power at around 6c/kWh. This is about 8c by the time it gets to you. You are charged somewhere in the order of about 30c/kWh (so including margin and transportation charges). Now the transportation charges are effectively the supply charge - which on the bill is around $1/day.

        The problem is that the real cost of the supply charge is closer to $2-3/day and the difference in this is hidden in the kWh rate. This has 2 effects - the first being that electricity is expensive -> people use less -> rates have to go up to cover the real supply charge cost. This is why power bills have remained pretty much the same even though usage has dropped over the last several years. This also means that solar has been given a cost effective leg up. It would not have been viable to install solar at a tariff of 8c/kWh and the industry never would have got started.

        If the supply authorities used a more realistic supply charge, then those with existing solar would be laughing and those without would be screwed. Effectively people would be subsidised $700-1k per year to install batteries, instead of the current $350. Not saying that they are altruistic though, because it would screw their viability if that many customers went off grid and that is what worries them.

    Australia is so pathetic and behind the times. Entrenched companies with the state and federal governments in their pockets just flex their muscles and legislate away innovation that may cause them to lose money. Powerwall seems to be no different.

    Last edited 22/09/15 8:26 pm

    Note that the WA energy minister has been cornered about the wording in the current supply contracts which ban EV's and battery storage and will likely change the wording when it is due for renewal in 2017. In the meantime as an EV owner they can go get stuffed.......

    I have a query though.

    Since you essentially have almost complete control of the power wall, is it possible to get paid more for the energy being reintroduced back into the system during peak times?

    Australia fending off overseas innovation like always.
    It's like they don't know Australia is so backward in technological advancement.

    Just take a look at our internet speed compared to Singapore, Hong Kong, Japan...

    Aussie government just has to Fuk things up.

    Criminal what the Queensland government has done. My electricity bill daily supply charge has increased 40% (83c to 116c). We have so many laws against monopolies yet that's all we seem to get and a token 'regulator committee' that approves anything. Cartel behavior that has defies logic and law

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