Save more by storing less: the way Redback increases your ROI

As disruptive and deadly as a redback spider can be, so too is this tech startup from Queensland. Redback Technologies has created a clean energy platform that turns the existing utility model on its head. Through a series of innovations in both software and hardware, Redback has driven down costs while introducing future-proof flexibility for the end-user. I had the chance to catch up with Philip Livingston, Founder of Redback Technologies. 

It all started three years ago, when Philip Livingston, conducted a desktop study on power electronics and battery form factors. The research focused on identifying standardisation opportunities with energy storage and inverter technologies, that would lead to commoditisation. What initially was meant to be a hardware play soon evolved into a solution that required a flexible operating system with a significant degree of smart software to crack the formula of making energy storage economically viable.

Philip Livingston, Founder of Redback Technologies, believes solar and variable wind will become the new base load, and if you want to create mass transition, you have to make the utilisation of such energy economically viable. Therefore, a rational return on investment is crucial.

To enable rapid return on investment, the core engineering focus should not focus on individual products, but rather on a systems approach that involves innovations along the entire value chain. Only through such vertical integration optimisation of both hardware and software is a rational sub 5 year ROI possible. Something Philip Livingston believes Redback will achieve within the 2016 calendar year. 

Batteries alone are too expensive

The concept of energy storage may seem simple, but the opposite is true. The idea of storing your solar throughout the day to power your home during the night sounds appealing, but what storage system suits your personal energy needs best? Attributes like size, smarts, compatibility and ease of install determine choice and potential savings.

Is it a sleek-looking DC to DC Tesla Powerwall type solution, a smart AC coupled Enphase, an Australian home grown Zinc Bromide Redflow or would you rather go with a tried and true LG solution? The decision-making process associated with these new technologies is highly complex and confusing for an average consumer to understand, simply due to a lack of awareness, and knowledge of the space.

Then there’s the big question around the economics, does energy storage actually financially stack up? Is there a financial benefit that outweighs the upfront cost and creates a lucrative return on investment? The simple answer is no. Take the famous Powerwall for example.

However, you should keep on thing in mind. When it concerns investment in renewable energy or our clean energy transition people apparently keep thinking in terms of ROI. Have you ever heard people talking about ROI when buying a car or a washing machine? I haven’t… I personally think that a positive ROI is important. But when it concerns a shift from fossil fuels to clean and green, ROI should be less of a worry.

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The sleek-looking Tesla Powerwall. But oh wait?! Were you hiding something?!

If you do a simple on the back of an envelope calculation, you’ll find that the Tesla Powerwall receives too much interest compared to its actual benefits. They’ve marketed their product pretty well, did a great job in creating awareness for storage and kickstarted the revolution of our energy system. We definitely should be grateful to them, but whether it’s the best product to go for is a different question.

Take an average household with a daily energy usage of 15kWh and a 2kW solar power system on the roof. Assuming that this solar power system generates about 8 kWh a day. Does it make sense to install a 7kWh Tesla Powerwall?

In case you’ll consume 30% of your solar during the day and store the other 70% in your Powerwall instead of exporting it to the grid, you’re storing about 6.6kWh per day. This implies that you’ll save 6.6 kWh on your daily electricity bill. This saving equals about $600 on a yearly basis and gives you a 22-year payback period on a fully installed Powerwall that easily costs about $13k.

Then there’s the install part. The Tesla Powerwall is hard to install, requires multiple installers for a couple of hours, unfortunately isn’t compatible with a great variety of inverters and requires space, either inside or outside. And what about the smarts? Does the Tesla Powerwall have controlled loads, automatic discharges or weather predictive algorithms? No it doesn’t. It’s important to highlight the fact that this device isn’t a home energy storage system, but rather a simple battery to store your solar.

I’m not trying to burn down the Tesla Powerwall. I’m rather explaining that it’s hard to build a healthy business case on a battery alone of this size, these high costs, with no degree of flexibility and no integrated smarts.

For any energy consumer that desires a higher degree of grid independence, home energy storage remains a great solution. To make such investments attractive, they require a different solution. Especially, when considering that you want to ensure your system is future proof and ready for the second stage of digitalization of our energy system, i.e. peer-to-peer energy trading. This implies a significant degree of smarts and flexibility.

“Today, batteries alone are not economically viable. You need to have other means of providing value other than simply relying on chemical storage, as alone storage is not an effective solution for achieving rapid, sub 5 year ROI… – Philip Livingston

The beauty of a smart hybrid solar inverter system isn’t just in the looks

According to Philip Livingston, it’s hard to grow the energy storage market rapidly if companies don’t fundamentally change the way energy storage systems are being designed. Just relying on storage itself to reduce cost is not an effective means of allowing for a rapid return on investment and more accessible to consumers.

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Redback’s Smart Hybrid Solar Inverter System

Every battery system requires an inverter to convert the DC-output of your solar PV array to AC to be able to use or store the energy in your battery. Redback Technologies found an intelligent solution in building the Smart Hybrid Solar Inverter System. Their hardware platform is able to act as a multi-mode PV inverter on its own for new installs, as well as to be utilised as a low cost AC coupled system for the retrofit market. Redback’s hardware employs multiple sensors and inputs to enable control of household appliances on-site, which through cloud control and processing, allow for an enriched user experience.

“Redback’s ultimate goal is we want the smart hybrid inverter system to be a highly functional low cost unobtrusive device that is easy to integrate. It needs to be built to last, and designed with standardisation in mind. The mass installation of such systems will allow for economies of scale, thus further driving down costs. Ever reducing costs allows for such convivial technologies to breach the chasm from early adopter to early majority where-by reinventing the grid as we know it. The creation of low cost highly functional systems is how we lower electricity bills for consumers with current readily available technologies and change the way the grid operates fundamentally.” – Philip Livingston

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Standardisation of install allows for further costs reductions

It’s widely known that prices of solar panels have dropped dramatically over the past 10 years. Something that might be less known is that the prices of sensors have also dropped significantly over the same period. Where most companies focus on expensive battery technology itself, Redback believes that their competitive advantage relies on their focus directly on implementing a cloud platform solely focused on telemetry, processing and control of data utilising the ever increasing volume of sensors making their way into household appliances. The true benefit of Redback is around an aggregation of all things software as they pertain to energy. The Redback platform is built incorporating multiple Microsoft solutions, allowing for seamless development of consumer rich functionality with high degrees of intelligence.

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An easy to use application gives you a clear understanding of what’s going on

Redback sees a future in which their team of software developers build scenarios specifically tailored to customers wants and needs. Integrating a considerable amount of intelligence within the system allows for a consistent and continual upgrading of core functional capabilities of deployed units in the field, including an ever increasing optimisation of solar related energy self-consumption. Increased self-consumption ensures that the consumer is able to rely on fewer batteries to achieve the same energy outcome, thus lowering upfront cost of systems, leading to faster ROI.

“I like to give my customers a predictable understanding on potential return of investment. There’s a whole stack of benefits that software might provide consumers, but the benefits that are most easily achievable is directly related to the energy costs they can actually offset on their electricity bill. Self-consumption optimisation through direct device control is of significant value as it allows for smaller volumes of storage to be utillsed. By utilising less storage capacity and greater intelligence within the system, a faster ROI is possible.” – Philip Livingston

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