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Sure peakers are expensive, but they are profitable, otherwise no-one would build and run them. Supply and demand etc. I'm not sure what you mean by Tesla cann

Sure peakers are expensive, but they are profitable, otherwise no-one would build and run them. Supply and demand etc. I'm not sure what you mean by Tesla cannibalizing the peakers? Do they already own traditional peaker plants? I agree revenue is revenue, I'm just saying this is perhaps unlikely to provide more revenue from sales outside CA.

toomuchtodo 10y ago
Batteries are now cheaper than peakers everywhere, not just CA. That's what I'm saying. Tesla's PowerPack installs (battery storage receives federal incentives, nat gas does not) will replace peakers, leaving them as stranded assets (the cannibalization I refer to). Edit: unepipe: Tesla packs perform the exact same role as a peaker plant: energy on demand. They are distributed, dispatchable loads and generators, available to draw or release energy from/to the electrical grid as needed, when commanded to do so by a grid operator. I assume I used "cannibalization" improperly in this context. Mea culpa.
- unepipe 10y ago
  Tesla is not producing peakers, correct?
  - manicdee 10y ago
    Tesla is producing battery storage, which is either a peaker plant or backup for failed transmission lines, take your pick.
- itissid 10y ago
  Could you share a reference for "Batteries are now cheaper than peakers everywhere"
  - toomuchtodo 10y ago
    Bookmarked to come back to show my math in the morning. The gist is they can absorb power at a cost that is pretty close to free (when there is excess power flowing through the grid) versus burning a fuel whose price is volatile, a steep declining cost curve for batteries, and aggressive federal government tax incentives.
    - forgetsusername 10y ago
      >aggressive federal government tax incentives. I'm not sure that should be included in the cost analysis, otherwise anything can be subsidized to the point of being "cheaper".
      - mikeash 10y ago
        That's entirely fair, but then we should also include the full costs of peak power, including all the externalities due to emissions and such that the utilities don't currently have to pay for.
  - andrewtbham 10y ago
    The cost of batteries is falling at a current rate of 16% per year and it's accelerating. As such, battery storage will become increasingly competitive with peaker plants. "From around 1995 through 2010, energy storage costs had fallen by about 14% a year – a rate that means the price will halve in a little more than five years. In 2010 – that rate sped up to 16% a year, and while a 2% increase might seem small it actually means that instead of taking five+ years to halve – it would now take slightly less than four years, more than 20% faster. Tesla’s Gigafactory has now increased the rate of price decrease even faster than the 16%. It is estimated that the Gigafactory, by doing nothing more than moving all of the supply chain arms under a single roof, has decreased the price of battery packs by 30-50% – while doubling the global volume." https://electrek.co/2016/05/19/the-math-and-evidence-all-around-you-that-shows-shared-autonomous-vehicles-powered-by-solar-power-and-batteries-are-inevitable/ https://electrek.co/2016/05/19/the-math-and-evidence-all-aro... JB Staubel has indicated the same... https://www.youtube.com/watch?v=lgcozueYXMU&feature=youtu.be&t=287 https://www.youtube.com/watch?v=lgcozueYXMU&feature=youtu.be...
  - andrewtbham 10y ago
    btw, the price recently dropped on powerpack by 5% and 19% on inverters. https://electrek.co/2016/09/09/tesla-quietly-reduced-the-price-of-the-powerpack-by-5-and-its-commercial-inverter-by-19/ https://electrek.co/2016/09/09/tesla-quietly-reduced-the-pri... "At the time, the Powerpack was being quoted at $470/kWh, but now we learned that Tesla brought the price down to $445/kWh." Incidentally Goldman sachs estimates the cost to be around $200/kWh back in February. http://webcache.googleusercontent.com/search?q=cache:n5WQK1Ac2r4J:www.valuewalk.com/2016/02/tesla-stock-rallies-after-tough-couple-of-weeks/+&cd=1&hl=en&ct=clnk&gl=us http://webcache.googleusercontent.com/search?q=cache:n5WQK1A...
- semi-extrinsic 10y ago
  As you can see in the graphs I linked in upstream comment, in the UK alone, CCGT power plants have a capacity of 20 GW. That's 1000x this battery plant; meaning a $20 billion capital investment. And I don't see any way that Tesla (or anyone else) has the manufacturing capability to deliver that. Remember this is just for the UK, so for the US and Europe in total you're talking at least 10 000 plants like this.
  - ZeroGravitas 10y ago
    Not all gas generators are peaker plants. Gas is displacing coal for what is often termed "baseload" (though I don't like the framing implied by the term). The batteries will nibble away at the most expensive peaks first, the plants that run for only very short periods per year. Meanwhile solar and wind will roll out to displace fossil fuel usage as well. Ideally they'll meet in the middle at some point, but it appears financially viable for this process to start now, and await further drops in pricing to expand later.
- semi-extrinsic 10y ago
  I thought about this some more, and I realised, Tesla and other EV manufacturers better be praying that this is not a financially viable replacement for gas turbine peakers in general. Otherwise there will be a big jump in demand for batteries, as power companies will be looking for hundreds of GWh of battery capacity. If they make a yearly profit for the power company that's significant enough to warrant the CAPEX of replacement, increasing the battery price by 10% only means one or two more years before break-even. So power companies could easily afford that if we assume the investment at current price levels is profitable for them. That is going to significantly (negatively) affect the price developments of batteries and constrain supply even more than today, so EV manufacturers will be faced with either losing (more) money on each car or increasing prices and selling less cars. Unless we assume Tesla is looking to pivot out of EVs in general, but I think that's a rather absurd assumption given their current actions.
  - ghshephard 10y ago
    I recall reading quite a while ago that Tesla said that they see themselves primarily as an energy company. Looking for a citation...
  - manicdee 10y ago
    The batteries used for cars are different to the batteries used for power banks. Tesla is selling internally to themselves, and already has production set up for batteries for stationary power. The best outcome is for demand to ramp up, keeping prices high long enough to fund the rest of the construction of the gigafactory. No praying required.
    - semi-extrinsic 10y ago
      Musk has stated publically that they're betting the company on the battery price coming down for the Model 3 to be profitable. That's why they're building the Gigafactory, to reach $100/kWh. If suddenly power companies start buying lots of batteries, and prices stabilise at or above today's levels, it would mean (by implication) that the Model 3 won't be profitable (at least initially). Sure car batteries and power banks are different, but they're all Li-ion and I believe Tesla (unlike others) is packing 18650's in both.
- barney54 10y ago
  Peakers are still much cheaper than batteries. Here's the most recent analysis from Lazard: https://www.lazard.com/media/2391/lazards-levelized-cost-of-storage-analysis-10.pdf https://www.lazard.com/media/2391/lazards-levelized-cost-of-... See p. 9. So current peakers will not be stranded assets, especially because the life of batteries is likely less than 20 years.
  - chillingeffect 10y ago
    holy cow that is an amazing pdf file! Or maybe I just especially like it bc it's exactly what I've been looking for in the last few weeks. I'm really very interested in the economy and technology associated with deploying clean energy. I'm an idealist and want to see green power, but only in a way that makes sense. And I'd like to profit it from tracking the process. Have you got any other resources or directions to go to find more information like this? I've found this: https://sam.nrel.gov/download https://sam.nrel.gov/download
- themartorana 10y ago
  Since they're not technically a "plant" - just storage - is there any advantage to be had to build in many smaller (say per-neighborhood) battery plants? Seems like they could act not only as peak providers, but also battery backup in the case of storms and whatnot. Plus it reduces a single-point of failure. I ask for I am uneducated in this area.
  - toomuchtodo 10y ago
    Yes to both your suggestions. It also would stave off transmission line upgrades.
kilotaras 10y ago
Peakers are profitable precisely because the supply is close to non-existent at peak consumption. What batteries are doing is "moving" excess supply from one moment to deal with excess demand at other.
akiselev 10y ago
Peakers aren't "profitable" per se, they're a result of the government granted monopoly given to power utilities. In california, at least, a brown or blackout caused by insufficient capacity can cost the utilities tens or hundreds of millions in fines so the peaker plants are a relatively cheap way to avoid having your margin wiped out in the summer. That said, I'm not sure 20MWh would really help replace any peakers although in the future they definitely will.
- yessql 10y ago
  80 MWh. 20 MW.
- arielb1 10y ago
  That's because a blackout costs the customers the same tens or hundreds of millions.
beachstartup 10y ago
> Sure peakers are expensive, but they are profitable, otherwise no-one would build and run them. i don't know anything about power, but this is faulty business logic. we do plenty of stuff that isn't profitable, but rather is value-add to either win or retain business.
avn2109 10y ago
>> "...but they are profitable..." They're probably not profitable in the usual sense of the word. Instead they're just required by the regulators that enforce the utility monopoly and set the utility rates such that the power company doesn't go out of business.

toomuchtodo 10y ago

Batteries are now cheaper than peakers everywhere, not just CA. That's what I'm saying. Tesla's PowerPack installs (battery storage receives federal incentives, nat gas does not) will replace peakers, leaving them as stranded assets (the cannibalization I refer to). Edit: unepipe: Tesla packs perform the exact same role as a peaker plant: energy on demand. They are distributed, dispatchable loads and generators, available to draw or release energy from/to the electrical grid as needed, when commanded to do so by a grid operator. I assume I used "cannibalization" improperly in this context. Mea culpa.

unepipe 10y ago
Tesla is not producing peakers, correct?
- manicdee 10y ago
  Tesla is producing battery storage, which is either a peaker plant or backup for failed transmission lines, take your pick.
itissid 10y ago
Could you share a reference for "Batteries are now cheaper than peakers everywhere"
- toomuchtodo 10y ago
  Bookmarked to come back to show my math in the morning. The gist is they can absorb power at a cost that is pretty close to free (when there is excess power flowing through the grid) versus burning a fuel whose price is volatile, a steep declining cost curve for batteries, and aggressive federal government tax incentives.
  - forgetsusername 10y ago
    >aggressive federal government tax incentives. I'm not sure that should be included in the cost analysis, otherwise anything can be subsidized to the point of being "cheaper".
    - mikeash 10y ago
      That's entirely fair, but then we should also include the full costs of peak power, including all the externalities due to emissions and such that the utilities don't currently have to pay for.
- andrewtbham 10y ago
  The cost of batteries is falling at a current rate of 16% per year and it's accelerating. As such, battery storage will become increasingly competitive with peaker plants. "From around 1995 through 2010, energy storage costs had fallen by about 14% a year – a rate that means the price will halve in a little more than five years. In 2010 – that rate sped up to 16% a year, and while a 2% increase might seem small it actually means that instead of taking five+ years to halve – it would now take slightly less than four years, more than 20% faster. Tesla’s Gigafactory has now increased the rate of price decrease even faster than the 16%. It is estimated that the Gigafactory, by doing nothing more than moving all of the supply chain arms under a single roof, has decreased the price of battery packs by 30-50% – while doubling the global volume." https://electrek.co/2016/05/19/the-math-and-evidence-all-around-you-that-shows-shared-autonomous-vehicles-powered-by-solar-power-and-batteries-are-inevitable/ https://electrek.co/2016/05/19/the-math-and-evidence-all-aro... JB Staubel has indicated the same... https://www.youtube.com/watch?v=lgcozueYXMU&feature=youtu.be&t=287 https://www.youtube.com/watch?v=lgcozueYXMU&feature=youtu.be...
- andrewtbham 10y ago
  btw, the price recently dropped on powerpack by 5% and 19% on inverters. https://electrek.co/2016/09/09/tesla-quietly-reduced-the-price-of-the-powerpack-by-5-and-its-commercial-inverter-by-19/ https://electrek.co/2016/09/09/tesla-quietly-reduced-the-pri... "At the time, the Powerpack was being quoted at $470/kWh, but now we learned that Tesla brought the price down to $445/kWh." Incidentally Goldman sachs estimates the cost to be around $200/kWh back in February. http://webcache.googleusercontent.com/search?q=cache:n5WQK1Ac2r4J:www.valuewalk.com/2016/02/tesla-stock-rallies-after-tough-couple-of-weeks/+&cd=1&hl=en&ct=clnk&gl=us http://webcache.googleusercontent.com/search?q=cache:n5WQK1A...
semi-extrinsic 10y ago
As you can see in the graphs I linked in upstream comment, in the UK alone, CCGT power plants have a capacity of 20 GW. That's 1000x this battery plant; meaning a $20 billion capital investment. And I don't see any way that Tesla (or anyone else) has the manufacturing capability to deliver that. Remember this is just for the UK, so for the US and Europe in total you're talking at least 10 000 plants like this.
- ZeroGravitas 10y ago
  Not all gas generators are peaker plants. Gas is displacing coal for what is often termed "baseload" (though I don't like the framing implied by the term). The batteries will nibble away at the most expensive peaks first, the plants that run for only very short periods per year. Meanwhile solar and wind will roll out to displace fossil fuel usage as well. Ideally they'll meet in the middle at some point, but it appears financially viable for this process to start now, and await further drops in pricing to expand later.
semi-extrinsic 10y ago
I thought about this some more, and I realised, Tesla and other EV manufacturers better be praying that this is not a financially viable replacement for gas turbine peakers in general. Otherwise there will be a big jump in demand for batteries, as power companies will be looking for hundreds of GWh of battery capacity. If they make a yearly profit for the power company that's significant enough to warrant the CAPEX of replacement, increasing the battery price by 10% only means one or two more years before break-even. So power companies could easily afford that if we assume the investment at current price levels is profitable for them. That is going to significantly (negatively) affect the price developments of batteries and constrain supply even more than today, so EV manufacturers will be faced with either losing (more) money on each car or increasing prices and selling less cars. Unless we assume Tesla is looking to pivot out of EVs in general, but I think that's a rather absurd assumption given their current actions.
- ghshephard 10y ago
  I recall reading quite a while ago that Tesla said that they see themselves primarily as an energy company. Looking for a citation...
- manicdee 10y ago
  The batteries used for cars are different to the batteries used for power banks. Tesla is selling internally to themselves, and already has production set up for batteries for stationary power. The best outcome is for demand to ramp up, keeping prices high long enough to fund the rest of the construction of the gigafactory. No praying required.
  - semi-extrinsic 10y ago
    Musk has stated publically that they're betting the company on the battery price coming down for the Model 3 to be profitable. That's why they're building the Gigafactory, to reach $100/kWh. If suddenly power companies start buying lots of batteries, and prices stabilise at or above today's levels, it would mean (by implication) that the Model 3 won't be profitable (at least initially). Sure car batteries and power banks are different, but they're all Li-ion and I believe Tesla (unlike others) is packing 18650's in both.
barney54 10y ago
Peakers are still much cheaper than batteries. Here's the most recent analysis from Lazard: https://www.lazard.com/media/2391/lazards-levelized-cost-of-storage-analysis-10.pdf https://www.lazard.com/media/2391/lazards-levelized-cost-of-... See p. 9. So current peakers will not be stranded assets, especially because the life of batteries is likely less than 20 years.
- chillingeffect 10y ago
  holy cow that is an amazing pdf file! Or maybe I just especially like it bc it's exactly what I've been looking for in the last few weeks. I'm really very interested in the economy and technology associated with deploying clean energy. I'm an idealist and want to see green power, but only in a way that makes sense. And I'd like to profit it from tracking the process. Have you got any other resources or directions to go to find more information like this? I've found this: https://sam.nrel.gov/download https://sam.nrel.gov/download
themartorana 10y ago
Since they're not technically a "plant" - just storage - is there any advantage to be had to build in many smaller (say per-neighborhood) battery plants? Seems like they could act not only as peak providers, but also battery backup in the case of storms and whatnot. Plus it reduces a single-point of failure. I ask for I am uneducated in this area.
- toomuchtodo 10y ago
  Yes to both your suggestions. It also would stave off transmission line upgrades.

kilotaras 10y ago

Peakers are profitable precisely because the supply is close to non-existent at peak consumption. What batteries are doing is "moving" excess supply from one moment to deal with excess demand at other.

akiselev 10y ago

Peakers aren't "profitable" per se, they're a result of the government granted monopoly given to power utilities. In california, at least, a brown or blackout caused by insufficient capacity can cost the utilities tens or hundreds of millions in fines so the peaker plants are a relatively cheap way to avoid having your margin wiped out in the summer. That said, I'm not sure 20MWh would really help replace any peakers although in the future they definitely will.

yessql 10y ago
80 MWh. 20 MW.
arielb1 10y ago
That's because a blackout costs the customers the same tens or hundreds of millions.

beachstartup 10y ago

> Sure peakers are expensive, but they are profitable, otherwise no-one would build and run them. i don't know anything about power, but this is faulty business logic. we do plenty of stuff that isn't profitable, but rather is value-add to either win or retain business.

avn2109 10y ago

>> "...but they are profitable..." They're probably not profitable in the usual sense of the word. Instead they're just required by the regulators that enforce the utility monopoly and set the utility rates such that the power company doesn't go out of business.