Soaring demand for electric vehicles has pushed up prices for lithium-ion battery components, raising doubts about the viability of future neighborhood battery plans.
- Global economic pressures are squeezing the profitability of neighborhood batteries
- A report has concluded that a neighborhood battery is unlikely to be financially viable for an isolated Victorian community
- Locals say the need for reliable electricity needs to be built into the business case
The tourist town of Apollo Bay on Victoria’s Great Ocean Road has long faced unreliable power supplies and prolonged outages, as its only two connections to the grid cut through steep and densely forested terrain.
Apollo Bay Bakery co-owner Sally Cannon is one of many who have taken drastic measures to ensure the lights stay on.
She and many others around town have purchased backup generators to ensure their businesses can keep running during the outages.
“It also affects holidaymakers, they paid good money there, a power outage would be a major inconvenience,” she said.
The Southern Otways Sustainable Group has been working to find a solution.
A feasibility study of options for the city recommended a 5-megawatt battery with the ability to operate off-grid.
Such a battery would serve as a back-up in case of a power outage, and would also allow the city to store the energy generated by the rooftop solar system if needed.
However, the report, prepared by Mondo, found that the battery’s upfront cost would be between $10 million and $18 million, assuming a 39 percent share of state funding.
“The battery system is unlikely to be financially viable and would struggle to attract third-party owners and investors without additional government funding,” the report’s authors wrote.
Despite this, Southern Otways Sustainable president Matt Armstrong said the battery may still have a future.
“Even if a battery isn’t commercially viable right now, I think the industry and government see it as a matter of time before they’re profitable,” Armstrong said.
Since the report was completed, projected battery revenues have also increased in line with rising energy costs.
The report notes that there are several ways to improve the battery’s business case, including pushing for more government funding, reducing battery size, or pricing in the value of reliability to locals.
Ms Cannon said any solution is welcome as local service workers responding to disruptions in areas around Apollo Bay will be laid off next month.
“Anything that can improve performance and reliability in cities like ours across Victoria … can only be a good thing,” Ms Cannon said.
Global pressures weigh on profitability
Battery storage systems have been touted as a crucial step in decarbonizing the power grid as supply and storage become more decentralized.
The Professor of Electric Power Systems at Pierluigi Mancarella said the growing demand for electric vehicles has led, for the first time ever, to an increase in the price of battery components, which are also used in neighborhood batteries.
“The world is changing, in the last six months we’ve seen a little bit of everything,” he said.
He said common assumptions about the falling cost of battery technologies in policy making may need to be reassessed.
“If we assume that the trend towards renewable energy and battery costs will continue to fall, we will see more and more opportunities for community batteries… but that’s a big ‘if’,” Professor Mancarella said.
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