Energy storage systems are a hot topic lately. After the excitement caused by the Tesla announcements about commercial storage systems and especially their home storage product, Powerwall, everyone took notice of the potential for local energy storage. Often when the buzz eases off, the reality surfaces. Here we summarize our view of the state of the energy storage industry, especially as it impacts the homeowner.
Nothing beats having local storage if your goal is to be self-sufficient whenever there are short term or long term grid issues. The grid advantages are well documented:
Better manage supply and demand. Energy storage can similarly charge during hours of low net demand and dispatch energy to the grid when desirable to address high demand.
Improve power supply quality. Storage is fast at responding to supply issues such as voltage levels and AC power frequency. The grid managers constantly monitor and control these parameters as supply and demand fluctuate independently, causing the values to shift.
Provide for a greater level of renewable energy integration. One of the biggest facts cited by renewable energy detractors is the level of diversity in wind and solar output at any moment. As noted above, at most any point within a grid with wind or solar integrated, storage can be used to buffer those effects. It doesn’t have to be adjacent.
There have been a few extensive studies conducted to define the existing market potential for all forms of energy storage, the obstacles and barriers to market penetration, and to forecast the near future activity. In every case, the findings agree that the economics are not yet sufficient to make installing distributed generation equipment with local storage – often referred to as a hybrid system – a clear and easy option for budget conscious buyers. The financial advantage is best for sites with larger power demand and the ability to install larger systems for generating and storing. Commercial and Industrial sites (C&I) are best suited for a number of reasons:
Higher total energy costs (while lower rates)/ More complex billing with demand charges, time of use, and demand response programs. Often more flexibility to overproduce (more space for panels) and ability to install generally large systems.
Many C&I customers peak long before the grid peaks, their demand more closely matches solar output profile.
Many C&I customers are located along grid segments designed for high power fluctuations.
The more PV that is installed on local system, the more power quality control is needed. Energy storage provides a way to respond to those needs while also allowing for the reselling of power at any time. It accomplishes two goals at once.
Some Good Signs
California regulators and utilities have been leaders in setting targets and experimenting with ways to accelerate the usage of renewable energy sources. Around two years ago, the state legislature mandated a minimum level of thermal and electrical energy storage for the investor owned utilities. This sets the bar and gives added incentives to all parties, from the supply side, to the user, and to the storage hardware and energy management software providers. Most recently one utility, San Diego Gas & Electric (SDG&E), has established a pilot program to set lower rates for residential storage owners who give the utility access to their capacity. SDG&E is testing both the feasibility of a much larger program as well as the impact on their generation and distribution costs. The hope is that they will demonstrate a positive cost impact in both cases.
The rest of the nation including Ohio learned about integrating distributed solar installations into the network from California’s lead more than a decade ago. So we can learn from their move to evaluate and optimize distributed energy storage.
In the immediate future there are a number of questions that need to be answered that will likely lead to further evolutions in the products and technology. Some examples include:
When do you charge and when do you discharge with respect to cost and reliability? It wouldn’t be wise to charge the storage system when the utility is willing to buy the power at the highest rates, for example.
How large an area should be monitored? Should the local storage respond only to power supply (quality) needs at the point of interconnection?
How do you integrate this into existing or planned energy management programs? Already there are many large SaaS providers perfecting their applications to improve C&I customer’s energy bottom line. They balance rate plans and local demand. Including storage adds a number of dimensions of complexity.
Our Message to You
We think storage has a bright future, even for many homeowners. There are still bugs to be worked out regarding how to best integrate and use the storage on a moment by moment basis. For those who want to be leaders and early adopters, we encourage you to experiment with us. But for most, the prime time to invest is still a little further off.
The potential rewards are easily stated. The financial returns are still difficult to quantify with confidence. Applications with a greater need and that offer more opportunity to test all facets of the technology and its benefits should be examined first. Certain C&I sites fit that definition. Within a short period of time, perhaps just a year or two, we hope to be able to demonstrate that investing in a hybrid system with solar PV and local storage is an obvious value for many of our customers. It requires some maturing of the technology, cost reduction from scaling, and willing participation to some degree from Ohio utilities and grid managers.
Interested in learning more about YellowLite’s renewable energy solutions? Reach out to us today to learn more.