Is Battery Storage a Good Bet for Solar Contractors?

Industry Issues

The current US market in residential battery storage is small but growing steadily. While there are a number of companies offering batteries (some looking to move into the US market from overseas), economic factors and some limitations with the current tech may prohibit fast growth in the near future.

The relationship between energy storage providers and residential solar install companies in the US has some good possibilities for both markets, though it would behoove installers to proceed with caution given some of the complexities and possible pitfalls of moving into batteries.

Below I’ve highlighted some key points from a compilation of articles (with links) about battery storage and solar.

Homeowner Interest

  • In 2016 Enphase surveyed almost 600 US homeowners (who had solar or were thinking about solar) to identify the relationship between the solar and backup generator markets. The survey showed that only 2% of those surveyed felt that battery backups met their needs. The majority (whether green minded or not) wanted multiple days of backup power, and they want it for less than $10,000, something that only generators can provide. Some quotes: “reliability and cost are more important than any other factors” and “when it comes to backup power, practicality trumps image, even amongst green-minded customers.”
  • Sonnen just began production of sonnenBatterie products for the US market and its VP of Sales for North America stated: “The U.S. market represents significant opportunity for sonnen as we look to expand and encourage energy independence globally…We’re seeing a rapidly growing number of homeowners interested in achieving energy independence, and a large portion of those are seeking smart storage and software capabilities for better efficiency and management of their renewable energy output.”
  • This article sums up the main factors driving the growth of homeowner interest in energy storage. It discusses net metering 2.0, devaluation of exported solar pv, net zero export limitations, time of use rate structures, buy all sell all programs, residential demand charges, and net metering credit expiration.
  • A report on an Australian homeowner who was the first Tesla Powerwall user in the country stated: “Six months on, he has cut his daily power bill by nearly 90 per cent and said his family had become “smarter” with their use of appliances…But Mr Martin cautioned battery units, which are charged using renewable sources such as solar and wind, were still a costly option. ‘The thing that is common to these battery banks is they still don’t make sense from a pure financial perspective,’ he said. ‘Pretty much none of them will pay for themselves before the warranty expires.'”

Size of the US Market

  • GTM’s Shayle Kann testified on the state of energy storage at the CA Energy Storage Summit 2016:
    • Volumes are small: “Residential deployments in the U.S. are measured in the hundreds, not thousands — because there is ‘just not an economic case for residential energy storage yet.’”
    • ISO level or state policy support is needed: “There are a bunch of different ways that states are starting to provide mechanisms for behind-the-meter energy storage to have a real value proposition. The first are net energy metering and rate reform.”
    • The FREC proposal provides needed rules and regulations: “there are lots of wholesale markets where energy storage doesn’t play a big role not just because of economics but because of the lack of clarity of rules and regulations. The system wasn’t designed with energy storage in mind and therefore it’s tough to get these projects built and financed.”
    • Proceed with caution: “I think energy storage is in an interesting place,” but “it’s got all the makings of a bubble,” noting the “attention, excitement and investment being paid to a market where not that much is getting deployed yet — and that should give everyone pause.”

  • Barry Cinnamon’s 2017 prediction for energy storage: “Utility deployments of battery storage system will grow rapidly in the U.S. Trial programs will drive this initial demand, and income from rate-basing these installations will improve the bottom lines of utilities and vendors. Meanwhile, customers will see zero impact other than higher rates. BTM energy storage systems will continue to be deployed gradually in Hawaii and to a lesser degree in California. Residential BTM deployments need better economic drivers (lower equipment costs, incentives and even demand charges) before deployments begin to take off. BTM energy storage systems are still at the stage that rooftop solar was in 2000.”
  • This GTM article gives a nice overview on the growth of energy storage with utilities and in relation to residential solar, touching on areas like policy, demand and geographic areas of interest (though it is almost a year old). This SolarPro article discusses the economics of energy storage in the US.

Smaller Solar Installers, The Future and Battery Reviews

  • In this article Travis Hoium describes the relationship between small and mid sized residential installers, energy storage companies and the current tech.
    • Hoium talks about the complexities of providing energy storage, as opposed to the conventional solar panel install, which means a need for significant support from energy storage companies. He asserts that energy storage companies like Enphase and SolarEdge (and companies outside the US like LG, Panasonic and Schneider Electric) are eager to fill this need while “long-tail installers, not to mention customers, are still trying to get their heads around” energy storage.
    • He sites EnergySage’s recent 2016 Solar Installer Survey of the long tail of installers as showing significant interest and growth around energy storage for these companies. He quotes EnergySage’s Vikram Aggarwal: “Larger installers like Sunrun are starting to roll out lease/PPA-style products that include storage, but smaller installers will likely offer solar-plus-storage options via a cash/loan purchase in areas where the economics are reasonable.”
    • Hoium reports that Aggarwal and SunPower’s Tom Werner also observed that big solar panel manufacturers companies will probably offer more integrated solar-plus-storage options offering as a way to capture more value in the market. “Long-tail installers are going to have to lean on someone to build the algorithms to control energy storage in the future — and not all energy storage offerings will be created equal.”
    • He goes on to discuss who will provide the capabilities needed for long tail installers around energy storage and what kind of tech will be emphasized.
  • GTM interviewed Mateo Jaramillo, former higher up at Tesla who helped build Tesla’s in-house storage development arm and the team that designed their Powerwall/Powerpack.
    • The interviewer, Shayle Kann of GTM, observed that there is a debate about storage, whether it is supposed to be an economic value proposition for the residential customer or if it is more about resilience and reliability and that it doesn’t matter so much if it is saving you money in the short term. He added that if it was the latter, it meant pulling away from what had solar take off in the US – that it would save the consumer money (rather than about being green or going off the grid).
    • The three men discussed the feasibility of seasonal energy storage here and abroad.
    • Jaramillo talked about his choice to focus on long duration storage as the future of energy storage (rather than the lithium ion battery storage work he did at Tesla). He argued that because it is a pretty nascent/unproven field with undefined market opportunities this would allow it to compete in markets that lithium ion storage can’t. He says that by contrast, the markets for lithium ion are well understood and competitive with the only issues being about cost and scale for the companies offering it.
    • Jaramillo also talked about the importance for larger and established solar technology companies to think in a longer term – like what things will look like and what the need will be in 2030 (where you have utilities that think in rate case cycles, 2030 being only about 4 or 5 rate case cycles away).
  • There is an interesting, detailed exchange in the comments section of this and this GTM article where several US and Australian solar engineers talk about certain problematic aspects of the Tesla battery and the merits/limitations of several other options (like Solar Edge’s product).
    • “I think [the Powerwall] will be a great product eventually . . . but right now it is still a little half-baked. Tesla needs to come out with their own DC-optimizers, solar inverter, and full battery controller & bidirectional inverter. PLUS I’m thinking that they need to provide an alarm so when the inverter trips out, the owner knows he’s not producing any power to the system and can reset the inverter.”
    • “Enphase does have a battery system but it is kind of a stupid battery since IT DOES NOT WORK WHEN THE GRID GOES DOWN. They can rationalize that all they want but people want their batteries to work when the grid goes down.”

 

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