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Monday, December 28, 2015

Forcing Homeowners to Go Off Grid With Batteries Is a Victory Knock Out Punch for "Big Utilities"

I have been meaning to write this up for quite some time, say 9 months.   It is not rocket science, but you can see how the average person would be daunted by attempting the analysis.

However, with grade school math, you can see how this works out.    If you like this stuff, drop a comment and sign up as a follower.    I might even believe someone is reading my articles.

Synopsis: Big Utilities want to kill customer owned solar, and keep it all for themselves.     One trick they are developing is to pretend that customer generated solar and customer owned batteries are a legitimate way to allow people to have solar, and to "protect the grid" from the dangerous solar.

Right now the cost of batteries for a large home system is about $5000, and they need replacement every 5 years when used in a daily use environment (its 10 years or more when used only for emergencies)

That $5000 of batteries will store about 10kWH per day at a 50% discharge rate. That is 3650 kWH per year, or 18250 kWH delivered over 5 years.

JUST the cost of replacing the batteries is therefore 28 cents per kWH. Not to mention amortizing the cost of the solar PV AND the cost of the additional equipment needed to make the batteries work, that is around $12,500 for the additional equipment. If we assume the additional equipment has a life of 15 years, along with the batteries output in that time, produces/delivers

 54,750 kWH of electricity

in 15 years..    let's highlight that quantity of electricity, because we are going to keep coming back to it. 

15 year system cost, the initial cost of battery specific equipment plus
$12,500 +$5,000+$5,000+$5,000 3 sets of batteries) is $27,500

So the average cost of the Battery specific equipment and the batteries equates ($27,500 / 54,750 kWH) to 50.2 cents per kWH.

The average rate per kWH in the USA is 12 to 14 cents per kWH.

Encouraging people to go batteries leads to 2 things:
1) A proper investigation, which also wastes time and energy and destroys resolve to go solar PV.
2) An improper investment which leads to higher costs to the consumer.

The Solar PV itself, however, if you divide the cost after tax credits, by the kWH produced over a 30 year life, calculates to less than 3 cents per kWH.

So if you stay attached to the utility grid and use the grid and all the other customers and all their electric vehicle batteries as "your battery" you get power at less than 3 cents.

Or you can decide "allow" the utilities to prevent you from using the best and biggest battery around, the grid, and instead pay 50 cents plus 3 cents.

Or 3 cents.   Which is better?

What if on your initial purchase you could receive a total Federal and State tax credit of 50% of the initial cost of the system, and let's focus on the cost of the battery specific equipment and first set of batteries.    On your second and third set of batteries you won't get any tax credit, you pay full list price and probably some labor and overhead and profit also (but lets ignore those for simplicity).

So the initial batteries plus battery specific equipment to make them work is $17,500.     And if you can get 50% overall tax credit the net cost is $8,750.

Now add the sets 2 and 3 batteries in at $5,000 each.     $18,750 divided by 54,750 kWH is 34.2 cents per kWH.   Now add in the 3 cents cost for the PV itself.

That's 37.3 cents per kWH, compared to 3 cents for just the PV using the grid as a battery.   And 12 to 14 cents for current residential rates.   

See how going off grid is a huge economic cost?   Sure it might feel good to whip the bird to the utility, but in reality, by them not letting you use the grid as a battery, they have whipped the bird to you in a large way.

What if the cost of batteries falls by half and Mr Musk succeeds?

Simple math --- $12,500 +$2,500 +$2,500 +$2,500 = $20,000 / 54750kWH    or    36.5 cents per kWH plus 3

Wait, wait....there must be some way to make this work.......

Hey I can get 50% total tax credits on the initial battery and battery specific I betcha I finally got that utility whooped.....and using Mr. Musk's half price batteries.....

($12500+$2500) *50% = $7,500 +$2500 +$2500, Wow now we are down to $12,500 or

$12,500 / 54750 kWH = 22.8 cents per kWH, plus the 3 cents for the PV itself.

Sheesh.....even over long time spans, the consumer cannot rely on batteries AND even get close to the current rates of 12 to 14 cents.  

For solar to succeed, the grid must be used as the "battery"

For Big Util to keep their slaves ever under their control.....they need to prevent people from using the grid as a battery.

Have I drawn the line in the sand clearly enough?

Lies like the article below give the victory directly to Big Util.    Even where a grid doesn't exist, an area should develop a microgrid through which the participants will benefit from diversity of when specific people are using electricity.    The bigger the grid the better, and that needs to be the lesson.

Cheap batteries will give utilities electric shock

By Katrina Hamlin December 28, 2015

The author is a Reuters Breaking views columnist. The opinions expressed are her own.
Power suppliers have long enjoyed a natural monopoly. But the arrival of budget batteries coupled with cheaper solar power will allow a growing number of consumers to pull the plug on old-fashioned electricity networks in 2016 and beyond.
Solar panel prices have already plummeted, and batteries look set to follow in the near future as manufacturers hone new technologies and ramp up production. Tesla says it can slash the cost of its own batteries by more than a third with a bigger, better factory. That’s plausible: costs dropped by 14 percent on average every year between 2007 and 2014: broker CLSA reckons they will tumble by a further 70 percent over the next five years.
The prospect of being able to generate, store and manage their own power may prompt some customers to leave the grid. In parts of developing economies where electricity has yet to arrive, power networks may not be needed. More than a fifth of India’s population does not have access to electricity. Rather than waiting for infrastructure to expand, Prime Minister Narendra Modi’s government is offering a 30 percent subsidy to encourage homeowners to use solar …

Some may question my 3 cents per kWH average cost for the Solar PV (with no batteries)

Here is the backup on that, it is already pretty old, so it could be even cheaper.


  1. Thanks for the heads up. What would help is if there were anomalous, eccentric jurisdictions that would by hook or crook ignore ridiculous strictures from on high, and foment local small grids based on a variety of sources of electricity: Steam driven by wood waste, methane, small and micro hydro, solar, wind large and small, air compression storage, etc depending on local opportunities. Creating wedges of sanity...

    1. Yes, this is what I speak of with micro-grids, and they don't have to be so micro. Defecting from the grid, from the powers that be, from those that depend on others dependency.

  2. Bloom Energy has helped.
    If the full energy of peoples' imaginations were unleashed there's no telling the extent of accomplishments here.

    1. Indeed, I like the nat gas load followers, but the smallest at 250kW is enough for a mid-size business, and probably still attached to the grid at that. Imagination can fight back a certain amount of control and corruption, but removing the unnecessary control and corruption would be even more effective. We need a new FERC, a real regulator for the good of the nation, not the established bribe layers.

  3. I don't disagree, but the PROGRAM is that we all need this control and corruption as it is the WAY. Silly me, as I lost the bulk of my investments backing the alternatives, because I did, and still do believe in them.

  4. Ooops. I posted my replies under the wrong topic.

    Starts with the following question:

    Is generated power taxable as income via Net or Gross Metering?

    ... and ends with ...

    Would one potential side-effect of a Lithium Battery Bank meltdown be a calmer neighborhood?

    1. If you make it an use it, no gov entity that I know of has tried to tax production. In many cases, it is impossible to "know" production because it never flows through a meter.

      LOL Lithium


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