Economic democracy is a socioeconomic philosophy that proposes to shift decision-making power from corporate managers and corporate shareholders to a larger group of public stakeholders that includes workers, customers, suppliers, neighbours and the broader public.
Batteries are a critical part of the distributed renewable electricity grid. Economic democracy provides the most cost and operationally-efficient method to deploy batteries. Consumers serviced by the batteries decide on the battery finance and operations instead of corporate managers and shareholders.
Within an electricity network:
- Occupants and investors in buildings determine the fair use of building batteries.
- Representatives of buildings determine the fair use of Community Batteries on a feeder line.
- Representatives of feeder lines determine the fair use of Big Batteries servicing many communities with Community Batteries.
- Representatives of Big Batteries determine the fair use within regions.
The electricity grid governance becomes a fractal structure with households at the base, buildings, feeder lines, groups of feeder lines, to representatives of regions. Each level has storage, generation, and consumption. Each level tries to be self-sufficient for some length of time. If it cannot, it obtains electricity from the next level up. By contrast, the existing system is driven from the top down.
Funding Feeder Line Community Batteries
Investors in Batteries contribute Capital, and consumers of electricity pay for the electricity, whose cost will include the cost of Battery Capital.
Feeder Line Community Batteries (FLCB) work most efficiently when excess power generated from households is stored and consumed within the homes on the FLCB. Financing FLCB is the least cost if the Capital Funds remain within the FLCB using Public Capital. Public Capital is in the form of future payments for electricity rather than a share of profits, which means money flows match the flows of electricity.
Batteries reduce the cost of electricity, and a simple way to distribute the savings is for all consumers on the feeder line to pay a percentage of the savings to the investors and, in return, buy the Public Capital returned by the investors. This method keeps the Capital within the FLCB and saves the cost of a Capital market. Returns on Capital are treated as Capital gains if money and a discount if the consumer used Public Capital to buy electricity.
The approach deploys batteries for the least cost and includes everyone in the community. It makes batteries economically attractive for communities from arbitrage, with the income from grid stabilisation paying for the operations. With Australian prices and the new Gelion battery, the payback time is less than four years for community batteries financed with Public Capital. The payback time will continue to drop as batteries become cheaper.
Different levels of government can finance electricity storage with Public Capital via Non-distributing Cooperatives. Governments will get their money back, and private individuals and organisations will gradually acquire the Public Capital and control the electricity grid. There will still be competition for different forms of storage, but no competition for investment funds as the government will finance from the Capital account. Significantly all citizens will both contribute and benefit equally from their financial contributions.
Any level of government could trial half a dozen feeder lines with support from Australian Cooperative groups and the local electricity distributor. The owners of the community batteries could be Non-distributing cooperatives from volunteer households on the feeder lines.
Financing and Earnings from Community Batteries
Batteries earn money through arbitrage. They buy electricity when the price is low and use it or sell it when it is high. A house battery saving is a difference between the grid price when the electricity is used and when it is stored. There will be a loss of some electricity. A house battery stores electricity from solar panels on a roof and uses it when the price is high, and the sun is not shining. The value of a house battery is typically the peak price minus the feed-in tariff or about 20 cents a kWh. It is less when the battery is charged from the grid.
- The difference between the high and low prices is 20 cents
- 15% loss of electricity
- 5% operations cost
- The installed capital cost of a battery varies from $100 to $1000 a kWh
- A battery charges and discharges once a day
- The battery lasts 3000 cycles.
The lifetime of a battery is about eight years. $200 a kWh will give a payback time of about four years with Public Capital or about eight years with Private Capital.
All the houses on a feeder line operate like a single house battery where the savings per household is proportional to the consumption of each household. It means the book-keeping for community batteries requires no changes to the existing billing arrangements and is handled with an agreement with the distributor who operates the community battery. The distributor treats the input to the battery as a deduction to the wholesale distribution and the output from the battery as a cost. The difference is passed on to the local cooperative for distribution and payment to investors.