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How Much Would One Day’s Worth of Battery Storage Cost Minnesota Households? $820 per Year, for 20 Years

Last week I was on WCCO’s program with Paul and Jordana, and we had a very spirited discussion. I’d highly encourage you to listen to the 12 minute interview if you have time.

During the interview, I asked Paul what he planned to do when the wind wasn’t blowing or sun wasn’t shining, and he emphatically stated that batteries with large posteriors (he used other words, of course), would be up to the challenge of providing electricity when the weather did not cooperate with wind and solar generation, citing examples in Australia and California as evidence for his claim.

For the sake of argument, let’s explore what it would cost Minnesota households to build just one day’s worth of electricity storage, assuming no sources of electricity were able to provide electricity to the grid on this day.

The short answer is, just one day of battery storage would cost the average Minnesota household $820 per year, every year, for 20 years, on their electric bill, and it is important to note that this amount does not take into account the cost of building wind turbines or solar panels needed to charge the batteries.

The math is below.

According to data from the Energy Information Administration, Minnesota consumed 72,751,031 million MWh of electricity in 2017, including net imports from Canada and other states. This equates to an average daily usage of 199,318 MWh (72,751,031 MWh per year/365 days per year = 199,318 MWh per day), and an average hourly use of 8,305 MWh (199,318 MWh per day/24 hours per day = 8,305 MWh per hour).

Here, it helps to contextualize what a MW and a MWh are, because otherwise I may as well be writing this in German.

A MW is a measurement of electricity flow, it’s like a speedometer on a car, telling you how fast the car is going at any given time. A MWh is a volumetric measurement, measuring how many MW have been generated or consumed over the course of an hour. Think of the number of MWh’s generated as the odometer on a car, counting how many miles have been traversed over the course of an hour.

For batteries, the amount of MWh available is akin to the size of the gas tank, or how many “miles” of electricity are available for the battery to discharge.

So, how many large-posteriored batteries would it take to provide just one day’s worth of electricity in Minnesota, and what would that storage cost?

Let’s look at the cost and size of the battery Tesla built in Australia a few years ago. I would love to discuss the cost for newer battery technologies which were proposed in California at the end of 2018, but the project costs are not available.

Tesla built a 100 MW, 129 MWh battery for $66 million in South Australia. This means the battery can discharge 100 MW of electricity at a time (go 100 “miles” per hour) and holds a total amount of 129 MWh (enough gas in the tank for 129 “miles”). This means that if the battery were discharging at full capacity, it would be able to provide electricity to the grid for about 1 hour and 20 minutes.

One may think we would be able to divide the daily electricity use in Minnesota (199,318 MWh) by the storage capacity of the batteries (129 MWh) to find the total amount of batteries needed for one day’s worth of electricity (199,318 MWh per day/129 MWh per battery= 1,545.1 batteries per day, rounding up to 1,546 batteries, for a cost of a little more than $102 billion for one day’s worth of “gas,” or MWh, per day of storage, but this is not correct.

Electricity must be provided at the exact same rate that it is consumed. Therefore, we must determine how many batteries would be needed to service Minnesota’s hourly electricity needs.

To find out how many batteries we would need to supply all of Minnesota’s electricity for one hour, we divide the total amount of electricity needed per hour (in MWh) by the discharge rate of the battery system (8,305 MWh/100 MW=83.05 batteries to provide 8,305 MW per hour). We’ll round up to 84. Multiplying this number by the cost of each battery gives us the cost of providing one-hour’s worth of electricity (84 batteries x $66,000,000 = $5,440,000,000), or $5.44 billion for one hour of discharge capacity. We then multiply this cost by 24, the number of hours in a day, bringing the total cost of storage to $133 billion for one day of battery storage.

Furthermore, the table below shows the companies, technologies, terms, discharge duration, and battery size who submitted bids for energy storage projects in California. Look at the Term, these batteries are contracted to run for only 20 years.

Dividing the cost of the one day’s worth of battery storage over its contracted lifetime (20 years) brings the annual cost of the battery to $6.65 billion. To find the additional cost per MWh of electricity consumed, we divide $6.65 billion by the total number of MWh’s consumed in one year ($6.65 billion per year/72,751,031 MWh per year = $91.45 per MWh). Dividing cost per MWh by 1,000 gives use the cost per kilowatt hour (KWh) ($91.45 per MWh/1,000 KWh per MWh = $0.09145 per KWh), or 9.145 cents per KWh.

The average Minnesota household used 748 KWh per month in 2017, according to EIA. This means the average Minnesota household would pay an additional $68.40 every month for 20 years,(748 KWh used x $.09145 per KWh = $68.40 per month), which is an additional $820.82 every single year for 20 years for one day’s worth of battery storage (68.40 per month x 12 months per year = $820.82 per year).

It is important to reiterate: This cost does not take into account the cost of building wind turbines or solar panels needed to charge the batteries.

Unfortunately, the idea that battery storage can make wind and solar a reliable, cost effective alternative to coal, natural gas, or nuclear power has no current basis in reality. Batteries are not a magical technology that will soon allow wind and solar to reduce electricity costs, no matter how large the posteriors of these batteries may be.

 

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