By Jessica Harrison, DNV GL
Innovative financing, declining costs of equipment and installation and supportive policies have all contributed to a rapid uptake in photovoltaic (PV) solar across the U.S. and the emergence of PV as a consumer product. In addition, new private sector investment and innovative financing, dropping costs and emerging policies are supporting a growing market for energy storage. Energy storage, therefore, should follow suit to also become a consumer product.
Figure 1: Number of Households With Rooftop Solar
Source: Adapted from USC 2014
The first consumer storage products are already entering the marketplace. Tesla’s Powerwall home battery, offered in a 10 kWh ($3,500 plus installation) size for back-up applications and 7 kWh size ($3,000 plus installation) for daily use, will ship soon. SimpliPhi is also offering commercial and residential units in 2.6 kWh ($5,395 plus installation) and 3.4 kWh ($6,945 plus installation) sizes. In addition, Orison has announced a concept for 2 kWh batteries that plug into standard wall outlets with expected availability in 2016. The units will be offered in a panel ($1,600) or a tower ($1,995) format with expansion batteries ($1,100 each). They come with LED lamps, wireless controls, smart-phone connection and an added Bluetooth speaker and induction phone charger for the tower.
Consumers appear to be interested in home storage devices. In the days following its launch, over 38,000 orders were in for Tesla’s Powerwall. Desire for clean energy, increased resiliency and energy bill management are driving market demand for home energy products like energy storage. Furthermore, current and planned policy initiatives will likely push the market demand. California’s investor-owned utilities will be moving residential customers to default time-of-use pricing by 2019, increasing the economic benefit of load-shifting capability to a larger pool of people. The California Public Utility Commission energy storage target outlines 200 MW of customer storage (though not all will be independent battery units). In New York, Consolidated Edison and the New York State Energy Research and Development Authority launched incentives for demand management resources, including energy storage.
At today’s costs, however, mass adoption of home energy storage product remains a tough proposition. Prices need to drop to justify storage as a means for PV shifting, back-up power or energy bill management. (A reservation for the Powerwall doesn’t require putting money down). Total installed costs for storage are dropping and expected to drop precipitously, similarly to expectations for PV.
It is likely, too, that more innovative financing for storage and storage plus PV units will emerge. Larger commercial, industrial and municipal customers are beginning to delve into this area. For example, TIP Capital, which provides leasing and financing options for commercial, industrial, and municipal energy-related projects, has partnered with Green Charge Networks to offer zero down energy storage financing for Green Charge Network customers. LFC Capital has partnered with ViZn Energy Systems to offer financing for solar and storage investments. The program would use an operating lease with ownership options after six and seven years. In addition, SolarCity is offering financing options to its customers for solar and storage products, including options with no upfront costs. In the not so distant future offerings that bundle solar and storage financing with home mortgages are likely.
Will storage emerge as a consumer product? Yes. Will this market emergence differ for storage than what it did for PV? Probably. To start, the dispatchability of storage makes it readily available for pairing with multiple resources, such as demand response and PV, or it can be used on its own. In addition, energy storage has the potential to serve multiple functions for a single installation, depending on how the controls and priorities are established. These factors create a wide playing field for energy storage.
The emerging concept of plug and play devices could significantly reduce installation costs and make storage ubiquitous throughout the household. A wide range of products might eventually arise in the storage space-stand-alone, pluggable devices to larger units paired with PV that serve as back-up power or demand response management.
With the advent of improved aggregation and controls systems, a growing potential for customer-cited, grid-supporting applications exists. Through a process of prioritization and seamless switching, customer storage devices could both meet customer needs and provide grid resources, narrowing the economic hurdles for investment. For this to occur, more policies and programs must be created to fairly compensate customers and further investment for the aggregation and control systems.
Finally, to support large-scale deployment of storage as a consumer product, a sizable amount of storage standards work still needs to be completed. The main gaps include safety, reliability and commissioning and installation. A number of efforts are underway today:
– Pacific Northwest National Laboratories has a program focused on key installations.
– The Electric Power Research Institute’s Energy Storage Integration Council has established a working group on standards.
– The National Electric Manufacturers Association has a technical advisory committee on storage (TAG 120).
– UL Safety Testing has established a safety standard for storage (UL 9540).
– Sandia National Labs initiated a standards inventory and roadmap.
– DNV GL is running an initiative named GRIDSTOR, which will deliver an open-source, recommended practice for grid-connected energy storage. It focuses on guidelines and methods to evaluate, assess and test safety, operation and performance of grid-connected energy storage while taking into account worldwide-accepted regulations and best practices like ISO, IEC and IEEE standards (e.g. IEC TC-120).
Ultimately, the various technologies, applications and types of storage devices make energy storage products unique. Further work in aggregation and controls and the rules for shared services will expand the applications and economic viability of energy storage devices for consumers. As it did for PV, the marketplace’s gradual increasing faith in the engineering and controls along with increased understanding of lifetime operations and maintenance costs for the technology will help create new financing options. The synchronization of standards also will support more common deployments of the technology.
Though on separate tracks, together solar-plus-storage offers a powerful prospect for customers, policymakers and grid operators. Energy storage is a key enabler for solar because it allows solar to be dispatchable, enhancing the value to customers and mitigating some of its biggest grid-integration challenges. In turn, solar is a key enabler for energy storage, serving as a valuable application and helping break some of the barriers in the market for consumer energy devices. Both likely will see market expansion with continued policy support and cost reductions.
Together, solar and storage can further drive volume up and prices down.
Jessica Harrison is the head of section for energy strategy, markets and policy development at DNV GL.