Today, we re-learn the laws of supply and demand. Great news!!!
Well, Tesla isn’t using them, so why not?
NEW YORK (AP) — The solar panel installer SolarCity is beginning to address one of solar power’s big drawbacks: The sun doesn’t always shine.
The solution: big battery packs that will provide backup power while lowering electric bills. The supplier: electric car maker Tesla Motors, whose CEO Elon Musk is also the chairman of SolarCity. …..
The batteries will be offered first to commercial customers because of the way many commercial electric bills are calculated. SolarCity is also conducting a pilot program in California for homeowners, but because residential bills are calculated differently — and the batteries are so expensive — it could be years before batteries make financial sense for homes.
Well, as to whether or not they make sense for businesses remains to be seen.
For power-hungry businesses battery backup can make financial sense even now. Many businesses are charged not just for the amount of electricity they use over a certain period, but also for the level of electricity they need from the grid at any one time. Think of a car owner paying for gasoline to run the engine, but also for the amount of horsepower needed when the car is loaded with people and climbing a steep hill.
Often, those horsepower charges, known in the electric industry as “demand charges” ratchet up quickly….. SolarCity’s solar panels can lower those demand peaks when the sun is shining. ….. The company says the battery systems will lower demand charges by 20 percent…..
For traditional electric utilities already struggling with weak electricity sales, this represents yet another threat. …. Now commercial customers may have a way to reduce demand charges, too.
It’s not a threat to the utility business, because it doesn’t replaces the electric providers. Yes, it may reduce demand, but, what happens when an essential service/supply has a reimbursement rate lower than the cost? ….. Duh, the rate increases. You still have to supply electricity and the medium to provide it. That’s not going away any time soon, not in our lifetimes, anyway. Most providers are now also paying a higher premium for peak demand, so, they’d probably welcome this development, if it has a realistic chance of being widely utilized. but, I doubt that it does.
The batteries offered by SolarCity are the same lithium-ion ones that power Tesla’s electric vehicles, reconfigured for stationary use. SolarCity’s chairman is Elon Musk, founder and CEO of Tesla Motors. Musk is a cousin of the founders of SolarCity, CEO Lyndon Rive and chief technology officer Peter Rive. ….
The battery systems are also extremely expensive. SolarCity won’t say exactly how expensive, but industry insiders put the cost at near $1,000 per kilowatt-hour, which would make typical commercial system well over $100,000.
SolarCity won’t charge customers for the battery, but will instead offer it as a service for a monthly fee. They will be offered first in markets with high demand charges, such as parts of California, Massachusetts and Connecticut.
As per usual, when regarding these pipedream notions, the details of the energy offset and provision is too sparse to do any real math for anyone considering this notion. The obvious question is at what point does a company achieve the return on investment? How much does a company save with a 20% reduction in the demand charge?
For the record, the linked article states that residents don’t have a demand charge, that’s not entirely true. Many do, and more and more have some sort of demand charge attached. (Thanks to the econuts who think using electricity is bad.)
But, even if all of this works out exactly like the lunatics think it should, and this idea catches hold and the world starts installing lithium battery backups in their commercial enterprises, we’ve got another huge problem. ……. that damnedable law of Supply and Demand. Again!!!!
Lithium has never really been known as a cheap commodity. It’s always been pricy stuff. And, it’s not very common in good purity form. For instance, we have this Canadian company seeking to take advantage of the EV market. It seems they’ve found a spot with good lithium purity.
There are only a few rock lithium deposits worldwide with purity ratings above 99% which makes it suitable for lithium ion batteries.
The vast bulk of the global lithium supply is extracted from brine deposits often as a byproduct — primarily in South America. It usually end up being used in grease, ovenware or industrial desiccants and not in the electrical storage industry.
Lithium today is used in batteries for everything from cellphones to hybrid vehicles — the electric vehicle market is destined to grow by nearly 40% per annum for the rest of the decade.
The growing demand for lithium is being reflected in the price. The current spot price for battery-grade lithium carbonate is around $6,600 a tonne, that’s up from $5,500 a couple of years ago.
But, even that doesn’t tell the story. Here’s a graph which shows a price differential, but, most importantly, the price of lithium in 2006. We’ve doubled to tripled the price of lithium in just a few short years.
Let’s say the EV market will increase by 40% per annum for the rest of the decade. And, let’s also say that commercial enterprises also want lithium batteries in their shops to curb peak demand. What then, would be the price of lithium? $20,000/ton? How much would the cars and the commercial battery packs then cost? When and where is the ROI (return on investment)? Well, if the price of lithium gets that high, then the ROI doesn’t exist. But, as a bonus you do get more expensive laptops and cell phones, so there’s that.
This is exactly like the idiotic wind turbines which use REE. We can only produce so much at a lower cost. Once the demand kicks in, then the costs skyrocket.
But, you know what we have in abundance which, when compared to the cost of lithium is a bargain at any price?
Oh, a few things, coal, oil, and natural gas.
The lunatics don’t understand energy, economics, supply, demand, ROI, or anything remotely related to numbers. They live in a fantasy world which bears little resemblance to reality.
At what point is society going to say that we’ve had enough of these insane children running amok and screwing up our lives? It’s well past time for the adults to step in and try to straighten things out.
My thanks to Dirk for the heads up on the lithium.