The rollout of home battery storage could revolutionise renewable energy in the future. More than that, it’s primed to transform the way Aussie households power their homes.
We can’t understate what a game changer this is. Home battery storage isn’t new technology, but it’s yet to hit the mainstream. It’s now at the stage that solar power was 10–15 years ago. Yet unlike solar, batteries complement existing technology. It’s not starting from scratch, as solar power had to. That opens it up to an already sizeable market.
Battery storage can help elevate renewable energy, like solar, to new heights. And it can help win over the cynics, myself included.
Personally, I never understood the hype over solar. It seemed like nothing more than a luxury for the rich. Households taking it up didn’t seem to pay much notice to electricity bills in the first place. Or they were really passionate about eco friendliness…but with enough money to finance such altruism.
For the rest of us on electricity and gas, solar was expensive. It’s still expensive. Worse than that, it’s half baked. It works when conditions are suitable. And when they aren’t, well, it doesn’t. For a system that costs thousands to install, electricity bills didn’t seem so bad.
And then I heard about home batteries.
Truth to be told, I became an instant convert. Not one ready to devote thousands to the cause mind you. But the tech was intriguing and exciting. For the first time, solar power started to make sense. Here was a technology that could bottle solar power. And it’d give you the freedom to use that power whenever you wanted.
It’s the kind of practicality solar needs. These batteries give solar a selling point that we can all relate to. We’re all looking for cheaper energy. Especially with electricity bills on the rise. But we need accessibility just as much.
Feeding solar energy back into the grid is fine. And many households have benefitted from doing just that. But you can’t store solar to power your home when the sun isn’t shining. And that was always the biggest stumbling block from my point of view. What do you do when you come back from work just as the sun is going down?
Batteries remove that stumbling block. They allow households to store the energy they generate. And, more importantly, to access it whenever they want.
That’s what makes battery storage so exciting. They solve the biggest issue most cynics have with solar power. Aside from the cost, being able to store the energy you generate is an evolution for solar. And it’s one that promises to take renewable energy to the next level.
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Origin teams up Tesla
Origin Energy [ASX:ORG] has stolen a march on competitors in this exciting new field. It’s announced a partnership with US energy storage giant Tesla [NASDAQ:TSLA]. Origin will become the first local supplier of Tesla’s Powerwall system.
This is a big deal for Origin. The Tesla name carries a lot of clout, even in Australia. It’s the leading supplier of home battery tech in the world.
Origin is banking on that brand resonating with customers to increase its market share. And chances are they’ve made the right bet.
For Tesla, the foray into Australia is something of a testing ground. Australia will become one of the first countries to enjoy the benefits of the rollout. Will it be successful?
With the growth of solar power this past decade, you’d expect so. There’ll certainly be high demand for Tesla’s Powerwall — even if most of that demand comes from existing solar power users.
In that sense it’s a bit like Apple releasing a new iPhone. The technology already exists elsewhere. But it doesn’t have that rock star name attached to it. Origin is hoping to use Tesla’s appeal to reach the 28% of households looking at battery storage.
We can be sure the market will expand in the coming years. By how much, and to what extent, is unclear. But the potential is massive.
Morgan Stanley estimate the market could grow into a $24 billion industry. It bases this assessment on 2 million households spending $100,000 each.
As of 2014, there were 1.4 million solar powered homes in Australia. So you’d need these households to double up on their investment. And you’d need to rope in another half a million to buy a solar-battery bundle.
It’s optimistic, but not unrealistic. Battery power is dependent on the growth of solar energy too. Both will need to feed off each other to grow renewable energy.
Home battery power still hampered by costs
As many households found out with solar, renewable energy is an expensive gambit. Sadly, home batteries aren’t about to make things any cheaper.
It’s an expensive piece of tech. And, despite its obvious benefits, that barrier could derail take-up.
Telsa’s Powerwall battery won’t sell for below $15,000 at first. If you bundle it with solar panels and an inverter, you’re looking at $16,500 all up. Even a smaller system, with a 3kW solar system, still fetches $15,500. So home batteries won’t come cheap, that much is obvious. At least not during the initial phase of its rollout.
Yet costs might be only one consideration households have to weigh up.
At full charge, the Tesla’s battery can power a home for two and a half hours. Which, at first impression, sounds underwhelming. However, that also takes into account air conditioning, among all other appliances.
If you calculate costs against usage, that could potentially put you off. At that kind of price point, you might consider it a waste of money. One imagines costs would need to fall much further to appeal to a wider market.
In any case, solar power take-up is likely to keep growing. And battery storage is set to both help, and take advantage, of that. But the potential size of commercial renewable energy remains unclear.
You’d think that any new solar buyers would bundle with home batteries. But if these households never invest in solar before, why would they start now?
The reality is that they may not. But there is that upside with battery storage that didn’t exist before. Turning solar into a 24 hour, year round investment opens up a whole new market. Being able to store energy could clinch the deal for those sitting on the fence.
Ultimately, that’s what households really want. A renewable energy source that works when they need it to work.
For the industry to reach the next level, costs will need to fall. Competition in the marketplace will drive down prices in the long run. Those at the forefront of this battery revolution will help drive renewables to new heights.
The good news for competitors is that Tesla’s arrival in Australia should drive interest in battery storage. Local providers shouldn’t see that as a threat. But rather as an opportunity that raises awareness of the entire industry.
Junior Analyst, The Daily Reckoning
PS: Renewable energy stocks are primed to grow as battery storage becomes universal. But they might be a beacon in an otherwise gloomy stock market.
The Daily Reckoning’s Vern Gowdie believes we’re going to see a catastrophic crash on the ASX.
Vern is the award-winning Founder of the Gowdie Letter and Gowdie Family Wealth advisory services. Vern’s ranked as one of Australia’s Top 50 financial planners. Not only does he predict a major crash, but he’s convinced the ASX could lose as much as 90% of its market cap. It’s already down 4.5% this year.
Vern wants to help you avoid this coming wealth destruction. His special report, ‘Five Fatal Stocks You Must Sell Now’, will show you how. In it, Vern shows you which five blue chip Aussie companies could destroy your portfolio…you almost certainly own one of them. To find out how to download the report, click here.