Storage Is the New Solar

Storage Is the New Solar

When Wes Kennedy started engineering solar systems in the mid-1990s, he pretty much had one integration option: batteries.

At that time, Kennedy designed and installed systems for Jade Mountain, a Colorado-based distributed energy retailer that eventually merged with Real Goods Solar. With very little policy support from utilities, the off-grid market was the dominant driver of business in the U.S. and globally. The vast majority of PV was paired with lead-acid batteries and sold to people who wanted to disconnect from the grid, or who had no other choice for electricity.

Thats the way it was from the 1970s onward for a couple of decades, until a steady march of state-level policies and interconnection laws made tying solar into the grid more attractive. In typical first-mover fashion, California offered some of the first U.S. incentives for solar systems connected to utility wires in 1996. A handful of other states followed, extending net metering to solar and creating state rebate programs.

At that time, Germany and Japan also beefed up promotion laws, creating a strong burst of activity for the grid-tied market globally. In 1997, nearly two-thirds of worldwide solar deployment was off-grid. Three years later, grid-tied installations outpaced off-grid installations globally for the first time. In 2005, the market finally flipped for the U.S. as state promotion policies blossomed.

Over the last decade and a half, battery storage went from being the core enabler of solar PV to a marginal technology. Battery-based systems now only represent around 1 percent of yearly solar installations in America and throughout the world.

Sometimes people forget that storage was the roots of the solar industry, said Kennedy.

But the industry is getting back to those roots and embracing storage once again. As lithium-ion batteries get cheaper and more abundant, solar penetration reaches high enough levels to worry utilities, and electricity markets evolve to reward storage, attention has suddenly turned back to batteries.

This time, interest in the technology isnt coming from backwoods pioneers and off-grid enthusiasts -- its coming from technology pioneers in Silicon Valley and savvy industry veterans who see it as the next big business opportunity.

Storage is a big deal for our industry, declared SunPower CEO Tom Werner during a keynote address at a recent Energy Storage Association conference.

In Germany, as feed-in tariff rates dipped below retail rates from the grid, batteries have become more popular to serve self-consumption. In the U.S., solar service providers like SolarCity and SunPower see batteries as a way to enhance their long-term relationships with customers, while also utilizing net metering and ancillary service payments to increase the value of the solar system.

The applications are still very limited, but a growing number of solar companies are declaring batteries a central piece of their growth strategy.

Its kind of satisfying, said Kennedy. Its great to see people trying to crack storage again.

Kennedy is now developing hybrid systems at SMA, the worlds biggest inverter manufacturer. Like Kennedy, SMA also has its roots in off-grid and microgrid applications. Over the years, however, the company turned much of its attention to grid-tied applications, where most of the activity was happening. SMA put some of its hybrid inverter designs on the back burner, waiting for a time when pursuing them made sense.

The market dictated that we mothball some of that early stuff for a big chunk of time, said Kennedy.

The dust has finally been brushed off. SMA is boosting its investment in hybrid inverter products due to a renewed interest in microgrids, the promise of solar-storage combinations, a surge in self-consumption in Germany, and the increased use of solar to reduce diesel consumption at remote industrial and tourism sites.

Kennedy said the companys Sunny Island inverter, which has been the core of SMAs hybrid activities for the last decade, has been getting cheaper, more efficient and more responsive when stacked together for sites requiring up to several hundred kilowatts. SMA is also developing a central grid-forming inverter for large applications that can switch between batteries, the grid or other generating units.

For applications behind the meter, SMA is programming the Sunny Island inverter to control a hybrid solar-battery system that responds to signals from the grid -- going far beyond its traditional use as an enabler of storage simply for backup. The inverter could be used for residential customers seeking to take advantage of time-of-use rates, or commercial customers looking to reduce demand charges and use batteries for ancillary services.

Currently, SolarCity is using two inverters to integrate storage at a small number of residential sites. SMA and others are betting that hybrid inverters that can handle switching demands will be the next big thing in residential and commercial solar. The question is when.

That market is just emerging. Its not quite there, but its definitely coming, said Kennedy.

The timing of the surge is up for debate. GTM Research projects that distributed storage in the U.S. will grow to more than 700 megawatts in the next six years, partly driven by solar installers who can monetize batteries.

Some executives in the solar industry are far more bullish -- perhaps even borderline hyperbolic -- in their projections.

In the next five years, customers are going to decide what they pay the utility, said SunPower CEO Tom Werner in an interview. Youll simply be able to dial in your home lifestyle.

Werner believes that the combination of lithium-ion batteries, home energy management software and smarter power electronics will make SunPower into an energy services provider, not just a solar supplier. And he thinks that shift will almost be complete by the end of the decade.

SunPower has been talking publicly about storage since 2010, when it first developed its internal strategy and rolled out pilots to test solar with flow batteries, lithium-ion batteries and thermal storage. However, the company hadnt done anything noteworthy in that arena until last month, when it announced two more residential pilots in Australia and California to outfit dozens of homes with hybrid solar-storage systems.

Last January, SunPower also partnered with Ford on a project called MyEnergi Lifestyle to demonstrate how solar, electric vehicles, smart appliances, energy monitoring and price signals could empower consumer choice. Werner said that was one of the foundations on which we learned how to integrate storage.

But nearly five years after declaring storage part of its business strategy, SunPower hasnt gotten past the pilot phase. Will another five years fundamentally change the value proposition of storage for the company and its customers?

It "seems very unrealistic to assume storage will dominate solar in five years, according to Shayle Kann, VP of GTM Research. But if theres any company that can move the needle on both of those technologies at once, its a company like SunPower.

Others arent convinced it will be the solar companies that directly leverage the value of distributed storage. Jigar Shah, a partner with Clean Fleet Investors, doesnt believe that installers and service providers are internally equipped to handle the complexities of storage regulation.

My sense is that youre going to have storage-only companies that really get the model right, said Shah, speaking on GTMs Energy Gang podcast. I think the solar companies are going to be forced to outsource storage to those distributed storage companies.

Source: Greentech Media

Smart Grid Bulletin May 2018

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22 June 2018