As we’ve seen the cost of solar drop rapidly in the last ten years (more than 80%), we continued to endure those naysayers in the distance arguing that “no matter how cheap you make solar; much like wind, it will never dominate the energy landscape because of intermittency.” It’s hard to believe people still say “Never” in the context of technology? That term only provokes our great American drive and ingenuity, which continues to deliver. Witness electric storage costs have dropped 80% in the last eight years, outpacing the dramatic solar cost reductions!
Battery technology today
Today, electric batteries continue to back up solar in more and more markets every year. Batteries are giving solar system owners a lot more control and choice about energy independence, while giving grid operators a game changing tool to help manage the modern grid with greater economic efficiency. We’ll talk more about the how and why, later in this post.
Storage market is heating up
So far SES has contracted for 7 battery installs already this year in Maryland, up dramatically from 2017. The residential solar plus storage market has begun to take off in many markets. In fact, the preferred battery suppliers were out of stock for more than 4 months this year, both from increased demand to complement solar projects, but also due to the soaring demand increase for Electric Vehicles (EVs) that use the same battery technologies.
Storage is like bacon
Why is storage so valuable? One of my favorite energy experts, Katherine Hamilton (https://38northsolutions.com/team/bios/) once said that “storage is like bacon, it makes everything better.” Storage has almost a dozen value streams that can be monetized now or in the future. The two biggest and most obvious value streams are that it can provide extra capacity in times of high demand, and it can provide extra demand in times of excess capacity. In both cases, it provides stabilizing value to the grid and more efficient use of generating assets.
A testament to the value of storage on the grid was seen several years ago when the California Public Utilities Commission required utilities to procure a minimum amount of storage. Not only did the major utilities comply, they all procured more storage than mandated. They are well aware, storage helps them modulate an increasingly dynamic and decentralized grid.
Why should I consider solar plus storage for my home?
If you deploy solar along with your energy storage solution, you can utilize the same federal tax benefits as you do for solar, namely the 30% investment tax credit. In Maryland, you are eligible for an income tax credit on the storage portion of the system, in addition to the other state solar incentives (https://energy.maryland.gov/business/Pages/EnergyStorage.aspx). As a result, the economics in Maryland for residential solar + storage are much improved from a few years ago.
The main reason our residential customers are deploying energy storage is for backup power during a grid outage. This is typically done by way of an essential loads subpanel in their electric system. SES often installs these subpanels as part of our solar + storage project.
Another factor driving this trend is a residential customer’s desire to position themselves to cut the cord in the future, if the utility relationship becomes unappealing or uneconomical for them.
Lastly, future changes to electric rate design and/or net metering policy, could present solar + storage owners the ability to increase their savings or even generate revenue from the services that their frequently-idle storage can provide.
Are you building a new home and want to be sure it is ready for the energy architecture of the future? It’s easier than you think. Ask your builder or electrician to insure you have an essential loads subpanel (to use with electric battery storage, or possibly a generator). Secondly, request they install an empty (capped) electrical conduit from attic to electric room for us to easily add your solar energy conducting wire in the future.
Please see Roger Perry’s technical writeup on residential storage applications recently implemented by SES.
What has brought about this market opportunity?
Electric storage has long been an essential part of any true off-grid solar/wind application and this is where the earliest developments have taken place. As solar began to penetrate the grid in the last 10 years, there has been a lot of R&D investment in this future “holy grail” of renewable energy development. The investment is now paying off.
Storage broke into the US grid-tied market about five years ago. In the case of Hawaii, it was mostly a market driven change. Extremely expensive power, a grid congested with rapid solar growth, denials and delays of solar interconnection applications, and abundant sunshine, all contributed to the new paradigm. This resulted in economics that justified a certain segment of residential customers in Hawaii to cut the cord and embrace storage as a long-term solution. This sent an alarming message to utilities around the world: You better embrace these changes or plan to go the way of the buggy whip!
At about the same time, California’s PUC mandated a specific quantity of storage on the grid, much of it behind the meter. The utilities went on to exceed that mandate in the first auction and later in 2017, the target was increased again, with little to no resistance. In the past year, we’ve seen California utilities choose new battery storage over new gas fired peaker plants to meet peak loads in three separate cases. This is a tremendous validation of the economics of storage, particularly in an age of record low natural gas prices.
What’s ahead for energy storage?
The horse is out of the barn. Distributed energy generation combined with storage, will be the foundation of the future electric grid. The role that storage will play in this transformation will be enormous at the macro level, but somewhat uncertain at the micro level due to regulatory policy, incentives, and local market conditions.
We should expect to see strong storage growth in markets with the following attributes:
- Places where local or state incentives are promoting storage – Maryland is one of them.
- Markets where system owners can capture supplemental revenue from their storage investments (Our grid operator, PJM has piloted bundling distributed storage as a revenue generating resource for storage system owners)
- Markets with high electric rates or Time of Use (TOU) rates.
- Markets where electric “demand charges” represent a large cost for commercial and industrial (C&I) customers. This is because storage can dramatically lower a building’s electricity demand profile, and thus add energy bill relief to a portion of the bill where solar has had limited impact.
- Microgrids are increasingly popular, particularly with campus style environments and military installations. These applications will increase storage demand and further drive down costs through scale and experience.
Be sure to contact SES if you are interested in solar + storage. We will be happy to design a system that is customized to your needs. As always, we’ll provide you all the support you need to capture the Maryland solar grant and the storage tax credit (which has a limited budget) so contact us right away.