Public Batteries funded with Public Capital
Purchased in large quantities, it costs five cents per kWh to store electricity in heavy stationary community batteries, with the price dropping by 20% each year. The price of electricity in the five minute Australian Energy Market varies from zero to 30 cents per kWh. Assume each day a battery can shift load and earn about 15 cents. Financed with Public Capital, community batteries with roof-top solar will lower electricity prices in every Australian neighbourhood. Supplementing community batteries with eBRIM will halve the capital cost of storing energy in a “Rewired Australia”.
Banks are licensed to create new money on behalf of the government. They can only lend to people and businesses that pay the money back with periodic payments. Banks cover their risk by increasing the amount of money with an interest charge that depends on the amount of money still owing. At each payment, the amount due increases by the interest charge and decreases by the agreed repayment. It leads to compound interest, where interest is paid on interest.
What if the government created Public Capital and lent it to neighbourhood Non-distributing Cooperatives to build or buy assets? The lending contract would state equal repayments each month, where the total amount depended on how long it took to repay the money. The neighbourhood would repay with income produced by the assets. The money paid back would be income for the government if the Reserve Bank supplied the funds. However, if the government did not wish to do it, the community itself, through super funds, would.
A government could try the approach with neighbourhood batteries and fund batteries with Public Capital, where the neighbourhood serviced by the batteries owns the batteries via a Non-distributing cooperative. The batteries generate savings and earn an income. The neighbourhood keeps 30% of the savings and pays 70% of the savings to the government until the amount owing is zero. The electricity distributor for the neighbourhood would operate the batteries and be paid with grid stabilisation services from the batteries. The savings become rebates sent to retailers or passed directly to neighbourhood co-ops. The savings are divided between households according to criteria established by the neighbourhood.
Households do not have to join the neighbourhood cooperative, but if they don't, they do not participate in distributing income from the batteries.
Back of the Envelop Calculations using Public Capital for Canberra
Assume 300 households each consume 6,500 kWh per year or 5342 kWh per day for the neighbourhood.
Assume Large Battery storage to support load shifting has a Capital Cost of $1000 per kWh and a life of 20,000 cycles or 5 cents per kWh. Assume an average price difference between buying and using is 15 cents per kWh and happens once a day. Assume 50% of consumption needs to be shifted or 2671 per shift. It requires $2,671,000 of capital expenditure. Each day saves $401 or $146,250 per year. Users paying 70% of this means government receives an income of $102,375, and households save $148 per year.
The cost of batteries per household is $8,904. Smart building technology with eBRIM can shift about 80% of the load with heat storage. Instead of spending $5,600 per household as $1500 would be spent making a smart home, The total capital cost per household would be $3300 or about $1,000,000 for a neighbourhood of 300. The time to pay off the investment would drop from 26 years with batteries alone to 10 years with batteries and smart buildings.
Resilience and Reliability
The batteries shield 300 households from blackouts and supply interruptions caused by outages elsewhere in the network. Intelligent, locally controlled metering installed in the households increases the network's reliability and resilience. Intelligent households future proofs the system from changes in technologies, costs and demand.
The neighbourhood community batteries owned by the community remove the need for energy retailers. The neighbourhood communities can deal directly with the distributor, which is allowed under the existing AER regulations. The savings will pay the cooperative administrative costs and leave a profit to distribute.