I will respond with thoughts later and thanks jezyh.Meanwhile,...

I will respond with thoughts later and thanks jezyh.

Meanwhile, on batteries, UQ has had some experimental fun:

https://reneweconomy.com.au/balancing-act-tesla-battery-system-earns-university-nearly-74000-in-3-months-78436/

On Macrobusiness this morning was this interesting commentary about the UQ battery install:

so let’s analyse the performance:
– they made $74k during 3 months of the best possible conditions they’ll ever have– $46k made on FCAS thanks to a bad summer (poor reserve, as many as 12 events) and early stage of FCAS market with only few participants and poorly managed grid by AEMO
– they made $28k on arbitrage and peak load reduction thanks to very good summer period when margin was much better than expected
– (75% of net arbitrage revenue was made on 5 “high price” daily events which are unlikely to repeat until next summer
)– but during that period they used 100MWh of “battery life” (around 2% of lifetime aggregate throughput) so they made $78k (or around 3.8% of the total capital cost) thanks to one-off super favourable conditions when it comes to FCAS and market pricing
– not sure about operational and finance costs but let’s ignore than for a moment if they continue with the arbitrage and peak load reduction strategy they may expect to make much less during lower margin “off season” and based on “capacity loss” they are likely to make much less than $1m in total before battery dies.

They could improve this financial aspect if they go with upgrading their own solar system they sold off to finance the battery.when it comes to FCAS the good days may last for one or two more years due to large number of battery storage system coming online competing for the same small slice of the pie

– over the next year or two before the battery boom hits the market I doubt they will be able to make more than $300k and than maybe $100k afterwards for the rest of battery life time so even with so favourable conditions they are likely to lose a lot of money on this battery?

Than there is the operational and opportunity costs
– they had a lot of problems with the installation which I guess incurred some additional costs, also they funded the battery by selling solar certificates for their 6.3MW behind-the-meter solar PV portfolio
– how much would they made if they kept the solar instead? hard to tell without more details … but this battery may turn to be the worst investment ever despite such a good marketing spin …I think one of the reasons for such a poor performance is the extreme price they paid for such a small system 1.1MVA, 2.1MWh – around $1m per MWh

– if they went with some other suppliers they could have get same size system for maybe half the price what’s also funny in their report is comparison with pumped storage where they ignored the nature of the storage, operational aspects and capital investment costs by simply comparing income per MWh stored.

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Ash here.

I don't presume to compare UQ's S+B to IFN's W+B opportunity. UQ is largely interested In peak load reduction with maybe some solar arbitrage
(one charge opportunity a day versus two for W+B as we have noted earlier) and FCAS.

Doctor X make some nice points about consuming battery life and how arbitrage benefits are likely to shrink as more batteries are installed. The fact remains, intermittent night time generation will continue to be worth a lot less than discretionary peak despatch. IMHO, the combination W+B will continue to provide the largest value uplift in the market. The AEMO can monitor colocated W and B separately, yet can not, will not, stop IFN trading with itself, virtuously storing low/nil value electricity and increasing peak supply.

Doctor X also notes the acute sensitivity of returns to capex costs. Jezyh gave a more granular annual insight to my broad generalisation that battery costs are falling 18% a year, without invalidating the trend and its scale. While battery manufacturers are currently enjoying pricing power, I expect that advantage and excess profits to be competed away over time as more manufacturers enter the market and innovation continues.

Ash