
Tesla's giant battery saved $40M during its first year, report says - touristtam
https://electrek.co/2018/12/06/tesla-battery-report/
======
ricw
This is going to become more and more common. Li-ion battery costs are falling
at a constant ~15% per year and there is no real reason why this shouldn't
continue. Similar to what Moore's law did to semiconductors, this will mean
that batteries are poised to have a massive impact and eat any energy
application that can't keep up. New tech will have a hard time to keep up
simply due to momentum this has already developed, aka it will have to be at
least a magnitude better AND keep on scaling.

This is why Tesla is valued higher than GM, Daimler or pretty much any other
car company. Tesla at it's heart is a battery company with products built
around that. From what I've read, from 2025 onwards traditional internal
combustion engines will not be able to compete on price with electric cars.

Something similar will likely happen to energy storage, though this is of
course still a relatively novel industry that has been spurred on by renewable
energy's intermittent availability. Interesting times..

Edit: percentage of annual battery price drop after doing some googling

~~~
ckastner
> _This is why Tesla is valued higher than GM, Daimler or pretty much any
> other car company. Tesla at it 's heart is a battery company with products
> built around that._

It was Samsung, not Tesla, who supplied the actual cells [1]: _Tesla’s giant
new Powerpack project in Australia will use battery cells made by Samsung_

[1] [https://electrek.co/2017/08/09/tesla-powerpack-project-
austr...](https://electrek.co/2017/08/09/tesla-powerpack-project-australia-
battery-cell-samsung/)

~~~
hyperpallium
And in Tesla's Gigafactory 1, it's Panasonic who make the batteries.
[https://wikipedia.org/wiki/Gigafactory_1](https://wikipedia.org/wiki/Gigafactory_1)

Someone else owning your key competitive advantage sounds like a
vulnerability...

OTOH you could similarly say the _touchscreen_ was the key to the first
iphone... invented, developed, manufactured and owned by someone else.

~~~
tgtweak
I believe it (the Tesla battery plant) was built as a joint venture with
Panasonic giving the IP and tooling and Tesla operating the plant. They're
using a custom cell format also, away from the ubiquitous and standard 18650.

LG, Panasonic and Samsung make almost all the lithium ion cells used today so
it doesn't seem odd that Tesla would license one of their technologies to
start. The r&d savings would be in the billions.

~~~
jsight
The 2170 (or 21700) batteries used in the Model 3 were not invented for the
Model 3 originally. AFAIK, they predate the development of that vehicle.

~~~
solarkraft
They might not have invented the format, but they are fairly certainly using
chemistry optimized for their cars.

Not sure whether Panasonic does it for them but the way I hear them talk about
it they seem to have quite a bit of R&D in house.

------
quillo
For anyone that might be interested, here are live graphs representing
different generation types and their current cost for the Australian energy
market (caveat: not all of Australia):

[https://opennem.org.au/](https://opennem.org.au/)

[https://opennem.org.au/#/regions/sa](https://opennem.org.au/#/regions/sa)

South Australia - where the battery is located - is an outlier in the
Australian market due to its relatively progressive energy generation
composition. It's worth noting the battery charge/discharge values depending
on the market price of wholesale electricity. Arbitrage in action! :)

The application is open sourced and available here:

[https://github.com/opennem](https://github.com/opennem)

~~~
pjc50
That's a horrifyingly large amount of coal there for a developed country.

~~~
shard972
Because the left in Australia is deathly afraid of nuclear and the right finds
that it constituents are those who work in coal, one of our major industries.

Our largest 3rd party, the greens just won't even consider nuclear, to them
it's solar/wind or bust.

~~~
frankietwenty9
Nuclear would be ridiculously expensive for Australia. Renewables and gas
would be achievable in under 10 years.

~~~
haihaibye
Australia has 34% of the world's low-cost uranium reserves.

~~~
Tade0
Fueling a nuclear power plant is never expensive comparing to just about
anything else there.

------
benj111
So it cost $66 million and saved $40 million.

That's impressive. I assume most of the saving is from grid stabilisation,
rather than supplying/storing energy but still.

Why is this not more wide spread? These figures suggest this is a no brainer.
Am I missing something?

~~~
ph0rque
So it paid for itself in 1.65 years, which comes out to an ROI of ~52%.

Why is this not more widespread? There must be some barriers.

~~~
ZeroGravitas
I think part of the savings don't go directly to the battery owner, but
instead prevent the electricity suppliers from price gouging the customer.

Happens a lot with renewables. You personally don't capture all the value you
provide. This is part of the reason that rooftop solar should get paid more
than the going rate but even 1:1 rates get attacked as some kind of scam, even
as they reduce peak load which may be literally 1000x more expensive than
average.

~~~
Scoundreller
Correct. A proper grid system would pay a premium for the size of the solar
grid that fulfills solar-induced demands.

After that, solar should get paid grid rate.

I have no idea if anyone has bothered to calculate what the solar-induced
demand is.

------
Tade0
This is only the beginning. Companies like this one here:

[https://eosenergystorage.com](https://eosenergystorage.com)

Are already delivering zinc-air batteries which have many advantages over li-
ion with one huge disadvantage being low power density - not a problem for
grid storage. AFAIK if you shorted such a battery it would bleed out its
charge without much fanfare.

~~~
Wowfunhappy
Is anyone working on massively scaling up the production of these types of
batteries, the way Tesla is with lithium?

~~~
Tade0
Sort of. Those mentioned secured funding for a plant:

[https://www.businesswire.com/news/home/20180924005178/en/Eos...](https://www.businesswire.com/news/home/20180924005178/en/Eos-
Energy-Storage-Secures-Strategic-Investment-Manufacturing)

But the scale isn't there yet since only recently someone was able to finally
demonstrate a rechargeable zinc-air battery.

------
DINKDINK
One dynamic that's underestimated in markets where the optionality of
substantial non-marginal costs (CapEx, RegEx, etc) is amortized over volume
(rather than optionality charges: access charges) is that a 10% decrease in
use will never (in the long run) result in a 10% decrease in costs of the
product. i.e. Consider a Crusoe economy, where you buy a magic box that
supplies free electricity 99% of the time. Do your electricity costs (in the
long run) go down 99%? No because the electricity supplier will now have to
amortize all their costs over the 1% time when you need to buy electricity.

Regulation delays this (inevitable) blow up, allowing the magic-box seller to
oversell the market before prices are allowed to adjust to snap down to what
would have been the post-magic-box equilibrium without regulatory friction.

Electric-utility arbitrage batteries are basically physical call-option
contracts: you pay a premium for the right to purchase electricity below
market rate. The question for a firm assessing this gambit is, is the ratio of
the premium to in-the-money(ITM) payoff time profile worth the premium.

~~~
timerol
Note that the arbitrage batteries can also respond faster than the rest of the
grid, so you also gain some of the benefits of HFT with your call options.

------
gok
I've often wondered if the plan is to use "worn out" batteries for this kind
of thing. After 250,000 km, an electric car's battery might be down to only
80% of its original capacity, rendering it not ideal for cars any more. But
grid scale storage doesn't care about energy per volume or per mass, so those
old cells can be out to pasture for a few years before they are ultimately
broken down.

~~~
grecy
The data coming in so far is that with a lot more kilometers that than Tesla's
batteries degrade less than 10%

~~~
gok
Yeah I've heard that, yet when I picked mine up I got a speech about not using
high speed charging too often, or charging past 90% all the time...

I'm not convinced these battery packs are as durable as they say.

------
corradio
For those who are interested, you can see in real-time the charge/discharge of
the battery on the electricityMap:
[https://www.electricitymap.org/?page=country&solar=false&rem...](https://www.electricitymap.org/?page=country&solar=false&remote=true&wind=false&countryCode=AUS-
SA)

~~~
pugworthy
That's a nice visualization!

------
haberman
For a huge "site battery" like this, what does lithium ion offer over storing
energy as mechanical potential energy (pumping/moving something uphill)?
[https://en.wikipedia.org/wiki/Energy_storage#Mechanical_stor...](https://en.wikipedia.org/wiki/Energy_storage#Mechanical_storage)

I'm sure the battery can come online faster, but a it seems like a small
battery can provide the "quick response" while the gravity-driven generator
comes online.

~~~
pjc50
The energy density of mechanical storage is pretty terrible, and you need the
right geography to help.

~~~
haberman
> and you need the right geography to help.

That's true of things like pumping water upstream, but I was thinking of
something like this: [https://qz.com/1355672/stacking-concrete-blocks-is-a-
surpris...](https://qz.com/1355672/stacking-concrete-blocks-is-a-surprisingly-
efficient-way-to-store-energy/)

I'm curious how much real estate it would take with that approach to equal the
energy storage capacity of the Tesla battery.

~~~
simias
I always heard that gravity was very poor for energy storage because it's such
a relatively week energy. I haven't done the math so I'm not outright
dismissing the idea but your article states:

>A 120-meter (nearly 400-foot) tall, six-armed crane stands in the middle. In
the discharged state, concrete cylinders weighing 35 metric tons each are
neatly stacked around the crane far below the crane arms.[...]

>The system is “fully charged” when the crane has created a tower of concrete
blocks around it. The total energy that can be stored in the tower is 20
megawatt-hours (MWh), enough to power 2,000 Swiss homes for a whole day.

That seems like a huge hassle for a relatively meager storage. You'd need more
than 6 of these to match Tesla's giant battery. Sounds like it would be an
eye-sore too, but that's always a bit subjective. Maintenance-wise it could be
rather tricky too, the article mentions complex systems to lift the blocks.

------
pgtruesdell
$66mm initial cost, so just short of a 20 month ROI. That's impressive.

~~~
Scoundreller
It is diminishing returns though.

The more you shave the most profitable peaks and fill the deepest valleys, the
less volatility you have to work with.

~~~
why_only_15
The world energy market is huge, though and this is in one small area. It also
seems like a pretty easy thing to evaluate the utility of - energy costs are
public domain, and the way that the batteries work is pretty clear. Calculate
the possible cost/benefit over the last year and increase until you're no
longer willing to build more.

------
caf
One of the most interesting parts in the report, albeit brief, is on page 25
where they mention possible new frequency markets that can take better
advantage of the capabilities of batteries.

Particularly of interest is the "Simulated Inertia" market, where the battery
operates without a frequency deadband configured.

------
burlesona
What is the recycleability of these things like? IIRC most batteries contain a
bunch of rare earth metals and aren’t great for land filling. When these are
worn out in 10-15 years how much environmental impact is there to replace /
refurbish / recycle them?

~~~
hwillis
> IIRC most batteries contain a bunch of rare earth metals and aren’t great
> for land filling.

That's incorrect. Batteries don't have any rare earth metals. You're thinking
of cadmium telluride thin film solar panels, which have been replaced by
silicon solar. They were a contender for cheaper solar panels, but it didn't
work out in the end. They were also so terrible for the environment that they
tainted the reputation of completely unrelated technologies.

> When these are worn out in 10-15 years how much environmental impact is
> there to replace / refurbish / recycle them?

It seems likely that the battery will last a lot longer than 15 years, but
Tesla gives 15 years expected and 10 warrantied. Disposing of li-ion batteries
involves shredding and burning them, which leaves behind a ceramic clinker
(sold for concrete filler) and several metals (nickel, cobalt, copper,
aluminum and steel in order of importance). Cobalt and nickel are the only
hazardous materials and are fully collected since they're also the most
valuable. Lithium is not cost-effective to recover; it's sold with the
clinker.

The incineration process only gives off CO2 and water. This comes from the
electrolytes and plastics being burnt. It's obviously not great and the heat
isn't captured for use (AFAIK) but there's no other pollution and the net CO2
savings are still great.

~~~
philipkglass
Tellurium, like e.g. gold, is _rare on Earth_ but not a _rare earth element_.
CdTe panels aren't terrible for the environment either. They have a faster
energy payback time than crystalline silicon. The cadmium doesn't leak out of
the panel any more than arsenic leaks out of cell phone power amplifiers. But
CdTe modules have lost ground to crystalline silicon panels because c-Si has
reduced costs faster. There's just one significant producer of CdTe modules
today, First Solar.

NiMH batteries do contain mixed rare earth elements (mostly lanthanum), but
the particular elements used are fairly abundant. And of course NiMH batteries
look like they can't keep up with lithium ion and will see their niche
shrinking further.

~~~
hwillis
Whoops, you're totally right- got my Chinese metals mixed up. 75% of US
tellurium comes from China, and I must have gotten cross-contaminated.

> The cadmium doesn't leak out of the panel any more than arsenic leaks out of
> cell phone power amplifiers.

The actual cells are perfectly safe but the mining and manufacturing process
is not. The extremely lax controls in China 20+ years ago aren't
representative of the present, but they did do terrible damage and mining
cadmium will always cause contamination.

> NiMH batteries do contain mixed rare earth elements (mostly lanthanum), but
> the particular elements used are fairly abundant.

Yes! That's what I had been thinking of, besides magnets obviously. Lanthanum
is also notable in that it's used to make gasoline, along with cerium.

------
pmarreck
It cost $66 million but saved $40 million its first year?

How's the projected rate of return on that guy look?

It's about time people realize "green" can be profitable.

------
drpgq
I think it is definitely interesting, but doesn't South Australia have a
particularly screwed up electricity system (and I say that as an Ontarian)?

~~~
Reason077
Ontario has one of the best and cleanest grids in North America, if not the
world. Coal was completely phased out years ago, and dependence on gas-fired
peakers is low.

South Australia has the cleanest grid in Australia (except Tasmania), with
extensive wind generation, but does not have the nuclear and hydro resources
that somewhere like Ontario can call on. Thus it depends, at times, on dirty,
lignite-fired imports from neighbouring Victoria for balancing. By building
more solar and battery storage over time, SA can reduce the need for imports
(and expensive gas-fired peakers), making their grid even cleaner.

~~~
drpgq
As an Ontarian, sure we have a decent amount of hydro and nuclear, but there's
been a lot of problems. Fair Hydro for one.

~~~
martythemaniak
As an Ontarian, no one has been able to explain to me what our problems are.

We have moderately priced electricity that is very clean and reliable. If the
rest of the industrialized world looked like Ontario electricity-wise, we'd be
decades ahead of where we are in fighting climate change.

~~~
Scoundreller
Politicized cancellations of power plant projects, instead building them far
from demand and beefing up the grid because of the new distance.

Wind and solar subsidy policies based on ??? Other than “wind and solar are
good, we should pay whatever it costs, locked in for decades, to switch to
it”.

~~~
Scoundreller
I’ll also add mandatory submetering for apartments/condos.

So now I pay a $37/month fixed fee on top of my $17 in actual electricity use.

Historically, an entire building would pay one delivery fee. Albeit higher,
but still less than every unit paying its own monthly fee.

A stupid way to encourage conservation (by the lowest electricity users
anyway) when they have to pay more in new monthly fees than they could ever
save by conservation.

------
leeter
Honestly the concept here is not new, and the more I think about it the more
likely I see levels of storage from fastest to slowest (and capacity in the
same vein) ranging from batteries/capacitors to pumped storage systems.
Between all of those they should be able to normalize the inputs into the grid
I would think.

------
eutropia
Seems like an interesting take on peak energy supply -- charging it up for
"free" from renewable sources and discharging instantly when needed.

Edited for clarity: For people that are in the know regarding grid-level
energy: is this the path of least-resistance for renewable adoption? I.e.
Renewable+energy storage for peak demands, something else for baseline
production?

~~~
pjc50
> better ways to use clean energy?

I'm not sure what this question is really asking? Better ways to store it to
match supply to demand?

In response to edit:

> is this the path of least-resistance for renewable adoption? I.e.
> Renewable+energy storage for peak demands, something else for baseline
> production?

This is a false dichotomy. There is baseline _demand_ ; on the other side the
supply can be divided into dispatchable and non-dispatchable. Renewables can't
be turned on by demand, so they're non-dispatchable. Perhaps surprisingly
nuclear plants go in the non-dispatchable class; they produce a constant
amount of power, apart from occasional month-long shutdowns for refuelling or
maintenance.

The path of least resistance is to just keep adding more wind and solar, for
the time being. A certain amount of highly dispatchable gas plants are needed
to cover the difference. The tricky thing is working out how they should be
paid, as they run less and less often.

The battery is then just another piece of dispatchable power generation, and
can be paid to cover peaks.

Eventually we reach a point where the spread on the spot market between high
and low prices becomes very wide: there will be times when electricity is
being given away, and times where a plant is fired up a few times a year to
cover midwinter. A good market for more batteries.

~~~
eutropia
Sorry, edited my question to make more sense. I didn't really put enough
effort in the first time.

------
piscisaureus
If these batteries are as good as the one in my iPhone, they'll need to be
replaced after a year and a half. Given that the plant cost 66M, sounds like
they're going to make break even approximately.

But kidding aside, how long are these batteries really supposed to last?

~~~
rcMgD2BwE72F
There's little in common between an EV/stationary battery pack and a
smartphone battery. What's the redundancy and the battery management/cooling
system in the latter?

------
beastman82
$40M AUD, which is ~ $29M USD

~~~
mmartinson
It looks like the 66m is USD cost.

------
andyidsinga
as battery prices drop - it will be interesting to observe Jevon's paradox in
action as demand increases for the batteries and surrounding technology.

------
throwaway12iii
Around 2,034 MW of industrial solar was built in 2017 in SA. More than 100MW
of Solar was installed on rooftops from the time the battery was first
discussed to the time the contract was signed. A lot more was installed after
delivery.

This means that these sources, along with industrial efficiency and scaling,
they are in effect a virtual battery installed more quickly, and more cost
effective than the battery.

It is estimated that by 2023 the whole state can be powered by rooftop solar
alone. The battery is good to suck up the excess wind power, and provide
energy in times of need.

There's still lots of peaks the wind+solar combinations don't cover. Like high
frequency trading, the batteries are able to act quickly to demand peaks
outstripping supply.

However, most times this happens is on a hot day... and on those days it's
extremely predictable. These are the times when gas wins. It's also the time
when rooftop solar is the most cost efficient.

Around 2020-2023 rooftop solar will decimate the gas providers. The wind farm
batteries will probably still be useful in these times however.

How long will that demand last? Will the prediction technology and dynamic
industry power usage (including desalination plants) come online by then? What
about smarter cooling technology? That's be rolled out too.

One of the states main industrial power users also has started building solar
and pumped hydro. Reducing gas further. These molten pools of metal are very
much like virtual batteries.

The wind farms have lots of excess sometimes. Well, that is being exported
across state lines in these times. There's much more than can fill such
batteries. Note that in times of excess wind, the gas is still burning at a
less rate. Even though there's more than enough 'free' wind energy to cover
their use. I expect this will change in time.

What about other wind farms coming online in other parts of the state? These
are supposed to cover the current valleys in power generation too. If all of
the wind that is under construction or planned comes online by 2023, that's
more than enough to cover the needs of the state even at peak... let alone the
valleys.

Electric car technology is expected to generate some demand, but mostly this
will be charged with the excess rooftop solar/wind.

Large batteries like this are an important, but stop-gap measure. It's cheaper
to build another wind farm in a very different part of the state which has the
same effect. Because it can fill up the valleys in power generation where the
batteries currently snipe good returns. Probably they would be cost effective
to buy more in the next 1-2 years, if they can be installed much more quickly
than wind farms (that often require approval, whereas the existing wind farms
can be fitted out with much less of an approval process).

------
brisance
It may be important for readers to know that Electrek has some kind of
financial interest in Tesla.

~~~
golfer
Indeed. Electrek is a biased source, and to be taken with a large grain of
salt. They openly admit it.

"Some writers of Electrek maintain positions in $TSLA and other green energy
stocks"

Https://electrek.co/about/

~~~
jillesvangurp
Not the first time I've read this kind of dismissive tone with respect to
Electrek's articles on this site. Maybe if you have better facts or
articulated opinions, you could share them?

Sure, they are biased, and quite openly so. It's quite obvious from looking at
their site that they are not funded by the oil lobby and they are most likely
somewhat concerned about such things as global warming and other tree-hugger
stuff. It's not like they are being very secretive about that.

However, that does not discredit their articles or mean that they are wrong
about stuff. They generally do a fairly decent job of separating their
opinions from facts they are reporting, linking to source materials, quoting
individuals, etc. Decent journalism in other words.

In this case they are reporting some simple facts, citing a few key people,
and voice some opinions/interpretations that don't strike me as outrageous or
unreasonable. There's no need for them to up sell/sugar coat this in any way.

~~~
herewulf
I've read a lot of their articles. In general they are high on facts, low on
fluff, and they are not afraid to criticize Tesla. It's what journalism should
be.

I think everyone without a vested interest in oil or short selling Tesla wants
(or should want) to see them succeed. You don't need to own Tesla stock for
that.

