15 May 2016
We’ve seen a huge increase in homeowners going solar in the last few years. Is this where we should expect to see the most growth of solar-plus-storage in the coming years?
Solar has certainly grown rapidly lately, from homeowners’ rooftops all the way to utility-scale installations. In fact, the U.S. solar growth rate has recently been calculated to be as much as 34 percent. For energy storage adoption, the split will be about even between homeowners and the rest: Consumers are expected to be responsible for half of the total U.S. energy storage market by 2017, and the other half will come from utility- and commercial-scale installations.
Solar-plus-storage is appealing to homeowners because it can enable them to use stored sunshine on rainy days or even at night. But that’s not the only benefit to solar customers: More than just back-up power, storage can provide multiple value streams. Combining solar with smart storage lets customers participate in time-of-use shifting, and can automate demand response participation. For businesses, solar-plus-storage can drastically reduce expensive demand charges.
From a utility perspective, storage is beneficial because it helps smooth out the peaks and valleys in supply and demand of energy that come with integrating an influx of solar customers. When aggregated, behind-the-meter solar-plus-storage can provide additional capacity for utilities and support ancillary services. This means utilities can provide more power when needed without having to rely on peaker plants, as they traditionally have done.
Utility scale solar-plus-storage on the front side of the meter is also gaining popularity as a means of supporting the grid. California has developed storage mandates requiring utilities to implement certain amounts of storage, which is helping spur growth of the market. Certain utilities are planning to build their own solar-plus-storage plants.
You mentioned new policy in California requiring energy storage. What are some other policies affecting the solar-plus-storage market?
Federal and state policy has a big impact on the progress of the solar-plus storage market. The extension of the ITC will encourage the continued growth of solar, and, as we talked about earlier, solar’s expansion leads to the simultaneous expansion of storage. At the state level, certain states are specifically incentivizing the adoption of storage. States including California, New York and Texas have storage or solar-plus-storage incentive programs. One of the biggest of these is California’s Self Generation Incentive Program (SGIP). Through the program, upfront and performance-based incentives are offered for behind-the-meter storage systems, and most program participants are linked with solar projects. The results of the current debates in U.S. states about net-metering and rate-design reform will have significant impacts on the solar-plus-storage space as well.
What technologies are driving the growth of solar-plus-storage?
Utilities are looking at flywheels, compressed air, liquid metal, lead acid and other types of technology for their storage plants. Each of these technologies has different advantages and disadvantages, from varying lengths of discharge duration to different levels of commercial maturity. All of them, however, are improving in terms of cost. For consumers and commercial customers, the main storage technology is lithium-ion batteries. The cost of these batteries continues to come down, helping them grow in popularity. For the past six years, lithium-ion battery costs have decreased by about 23 percent each year.
It’s important to remember that the hard costs of storage technology are just one component of the price of a system. Power conversion, hardware, management systems, and installation costs as a whole account for 40 to 60 percent of the total cost. These costs are also continuing to decline, making solar-plus-storage ever more attractive to customers.
What should people watching the solar market from a financial perspective expect to see in solar-plus-storage in the future?
From a financial perspective, the solar-plus-storage market is a huge opportunity. While the U.S. solar-plus-storage market is still nascent today, with less than 0.1 percent of the 2014 solar installations installed with storage, experts predict the market to grow quickly in the coming years. Total solar-plus-storage installations are expected to reach 769 megawatts (MW) by 2020, with a $3.1 billion valuation, according to GTM Research. California will likely make up the majority of installations at 422 MW of storage by 2020, or 54 percent of the total U.S. market. The combination of public interest, improving technology, and supportive policy makes solar-plus-storage a compelling proposition from any angle.
Florian Wessendorf is the newly appointed managing director of Solar Promotion International, one of Intersolar and ees North America’s organizers. Florian also takes care of Intersolar South America, Intersolar India and the global Intersolar conference program. You can learn more about Intersolar North America here and ees North America here.