Christoph Ostermann, the founder and CEO of Sonnen Battery, a reputable German battery storage developer is a lucky man—just when he was about to reveal his strategy for putting Australian utilities “out of business”, the energy utilities announced—unanimously, an almost 20 per cent increase in the cost of grid energy.
Sonnen believes that the Australian battery storage market has enormous promise – owing to its abundant sunshine, high uptake of rooftop solar, volatile energy market and rocket-high retail energy prices— all of which make the market appealing to investors.
“It was perfect. We said: ‘Thank you very much’,” Ostermann explained to journalists during the Sonnenflat battery storage retail product launch last Wednesday in Sydney.
Sonnen unveiled what it claims to be an attack on the existing energy utility business model. The company plans to introduce a distinct offer that mimics the kind of deal customers can access via their mobile phone company, but of course with a quick payback.
“That’s our goal, to take the traditional utility out of business,” Ostermann states. “What we do is provide grid power for free.”
Ideally, an Australian home with a 5kW of solar system can purchase a Sonnen battery storage system and purchase their electricity supply for a flat rate of $30, $40 or $50 a month, based on the capacity of their system, storage capability and daily consumption.
Apparently, an average household can use about 10,000kWh annually, or around 30kWh each day, and eventually slash its annual electricity bill of around $3,400 to approximately just $480 each year.
Obviously, you’ll also require a battery storage unit which could cost you around $15,000 for the average storage system. This investment would provide a payback within a span of 5 years, and therefore once the initial cost is paid off, the only remaining cost to the consumer will be the annual fee.
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Sonnen storage systems come with a guarantee of 10,000 cycles. This translates to an almost 20-year life span.
Sonnenflat provides a real solution
The new Sonnenflat solution is designed to remove the complexity from solar power and storage systems which often complicates the process for consumers looking to invest in renewables.
This will combine various concepts including virtual power plants and peer-to-peer trading. Members of the Sonnenflat scheme will sell the excess power generated to each other or directly to Sonnen, who will then repackage and use it to trade through a third party on the wholesale market and other markets like ancillary services.
On the other hand, this plan is convenient for the consumer who doesn’t need to worry about appropriate times to consume electricity. This will remove consumer concerns about load shifting, and how much needs to be exported, stored or drawn from the main grid.
Sonnen will take care of all of these for an affordable flat fee. The customers will be able to use the energy they want within a given parameter. (However, it should be noted that this arrangement may not be available in areas with high fixed network charges).
Sonnen has already installed about 600-700 battery storage systems across Australia since last November when it entered the market and targets 2,000 customers expected to participate in its Sonnenflat project. That translates into a “virtual power plant” of about 20MWh.
However, the company hopes quadruple this in 2018 to 80MWh and then double it in each subsequent year.
The energy market ready for transition
Ostermann believes the Australian renewables market is ripe for harvest, especially for rooftop solar panels. Ideally, if one quarter of the 1.6 million Australian homes were to sign up for the proposed deal, they could create a virtual solar power plant with a capacity of 1.4GW; which is equivalent to the capacity produced by the recently-closed Hazelwood power plant.
The founder and CEO of Sonnen Battery says the retrofit market has a bright future as more and more households seem to have completed paying off their solar PV system. And that the declining cost of solar panels continues to attract new customers.
Professor Ross Garnaut, the chairman of Zen Energy, a battery storage developer based in Adelaide that have partnered with Sonnen, said that this development is an “important step in Australia’s energy transition.”
According to Garnaut, the move would ultimately kill the existing traditional energy utility business model.
Renewables innovation to dismantle utilities business model
Ostermann notes that utilities that don’t embrace the change will suffer as the market transitions. However, Sonnen is open to making new alliances with incumbents. Before this announcement, the company was already in talks with AGL Energy about the possibility of operating through its wholesale market trading platforms.
Sonnen Battery has also signed up a start-up retailer to manage its portfolio of customers. In addition, Ostermann says existing utilities would have to list their assets given the implications of rooftop solar and battery storage in providing “free electricity” once their purchase price is amortised.
“They are sad and happy at the same time. They are laughing and crying. It’s like standing at train station and watching (a train) leave and trying to run and catch up with it when they realise ‘oh shit, our business model is disrupted.’
“They are trying to adapt. They are intelligent enough to recognise that it is impossible with their current model.”
“If you look 10 years ahead, you will see amortised PV sites that are generating electricity at zero cost. New installations are getting cheaper and cheaper. They will have to write off assets they’re sitting on.”
Indications point to the fact that the battery storage market is bound to rapidly expand, as stated by Jonathan Fisk, co-founder and director of Solaray Energy, one of the distributors of Tesla and Enphase batteries.
“In June alone, Solaray took orders for over half a megawatt of storage just in Sydney and we see the Sonnenflat product adding to our rapid and continued growth,” he states.
“It will give our customers the option to never pay for energy again. This is the model for the future and could well be how the majority of batteries and solar PV is bought in the future.”