Energy storage a profitable business? HY1 2018 "earnings" of EUR...

Energy storage a profitable business? HY1 2018 "earnings" of EUR 8.1m by Neoen SA towards an investment of EUR 56m look promising

https://www.bloomberg.com/news/articles/2018-12-04/musk-s-outback-battery-sparks-new-projects-after-promising-run

Big BatteryBonanza

Musk'sHornsdale battery facility has spurred others to follow in its footsteps

Source: Bloomberg NEF

NOTE: Projects that have been commissioned. Teslaplant in Australia, all others in South Korea.

 

Ø  Topsun Haenam Hanjari                                 125.0MW

Ø  Tesla Hornsdale                                             100.0 MW

Ø  Korea Zinc Onsan                                             93.8 MW

Ø  Gochang Energy Storage Pilot Project            54.0 MW

Ø  GS E&R Yeongyang                                         50.4 MW

The battery system isdesigned to overcome one of the main obstacles to renewable energy taking abigger role globally: reliability falters when the wind stops blowing or thesun goes down. Batteries store up power and then release it steadily to the gridwhen generation stalls.

The storage industry isalso increasingly important in places like South Australia, which has lessaccess to traditional fossil-fuel sources like coal and gas. The Hornsdaleproject proved its worth when it responded swiftly to a sharp drop infrequency after one of the country’s biggest coal-fired generators trippedwithout warning in December 2017, helping to stabilize the grid, according tothe Australian Energy Market Operator.

Hornsdale’s “speed andlaser precision in response to system events has been encouraging,” AEMO saidin an emailed response to questions. “The battery is capable of providing arange of valuable power system services.” However the operator pointed out thatHornsdale doesn’t have the capacity to replace lost power when a major unitgoes down.

Price Tag

The plant earned itsowner Neoen SA about 8.1 million euros($9.2 million) in the first half of 2018 from a supply contract with the SouthAustralian government and independent sales of stored electricity, helping topay back some of its 56 million euro price tag. It has also contributed to analmost 75 percent drop in the cost of ancillary services to the grid, accordingto Bloomberg NEF.

Neoen has plans for two more battery storagefacilities in Australia, which will be paired with renewable energy projects inQueensland state. Liberty House chief Sanjeev Gupta wants to eclipse Hornsdalewith an 120 megawatt plant in South Australia. Tesla and Neoen will hold anevent Wednesday in Sydney to mark Hornsdale’s first anniversary.

Not everyone is convincedof the battery’s value. Prime Minister Scott Morrison has compared the projectto having the world’s biggest banana or prawn, saying it doesn’t solveAustralia’s energy problems. Tomago Aluminium Co. CEO Matt Howell saidHornsdale would only be able to power his smelter, among the nation’s biggestsingle-site consumers, for less than eightminutes.

‘A BitSkeptical’

The attitude of localbusiness had been generally positive, but also “a bit skeptical in terms ofwhat it can really provide,” said Andrew McKenna, a senior policy adviser atBusiness SA. The state has yet to experience an extended heatwave that wouldreally test the battery’s limits, when households and businesses crank up theirair conditioners and cooling systems, according to McKenna.

Still, Tesla’s outbackbattery was never intended to be a cure-all for the state’s power problems, butit has given an invaluable insight into the potential contribution of storagesystems to an electricity grid.

The project “has improved our understanding of the possible revenuestreams and returns on a storage project, and has indirectly helped de-riskfuture energy storage investments,” said BNEF analyst Ali Asghar. SinceHornsdale’s inception, about 2,500 megawatt-hours of new storage projects havebeen announced by the public and private sector in Australia