Sizing Up the Residential Energy Storage Opportunity

Energy Storage for Homes, Residential Solar Arrays

When considering present opportunities in the residential energy storage market, we need to ask ourselves two things: 1. Is it viable and 2. Is it adoptable; perhaps not in that order, though. Residential energy storage viability has a lot of aspects to it, both in categories and to whom it applies. There’s financial viability and functional viability to name the top two, and the players range from technology mind smiths to manufacturers to retailers (likely to be utilities or utility/producer partnerships, and power purchasing agreement providers) to end-users whose sense of viability is the foundation of adoptability. With adoptability, what we’re looking at is the public’s current and potential willingness to embrace the technology, not to mention prospective sellers’ interpretation of this market segment’s interest level, which could prompt or discourage them to get the word and product out there.

Putting aside industry-wide speculation and the assumptions of the interested public (that energy storage is simply the key to all our energy problems), let’s look at some direct applications that show us where community and residential energy storage (CRES) is succeeding right now and how it spotlights growth potential.

Earlier this month, we saw Panasonic Corp. beginning mass-production of a compact lithium-ion (Li-ion) battery storage system for the European residential market. This kilowatt scale battery production comes in addition to the company’s recent move to increase investing in development of large-scale energy storage, namely with a largely publicized partnership with Siemens. Answering the question “Why now?” we can address both questions of viability and adoptability in the market.

In countries across Europe, motivated to reduce energy costs and by increasing government pricing incentives, there is a greater and growing movement among residents to adopt rooftop solar. Panasonic is simply pursuing an opportunity in the market to provide complementary technology to home PV adopters, particularly after piloting a successful program in partnership with the German engineering firm E3/DC to install battery storage systems in households in Germany (Panasonic supplied the Li-ion batteries for E3/DC’s systems). Here, market opportunity is demonstrated in consumers’ investments in both on-site renewable technology and the complementary storage tech that optimizes their investments.

In Korea, $64.5 billion of cleantech monies are being invested between 2009 and 2013 on Jeju Island in what is expected to become the world’s largest Smart Grid community. The investment naturally includes advanced CRES technologies, research and development to greater innovate solutions, and concentrated development of business models needed to help make energy storage successful in small-scale markets.

On this side of the pond, there have been a number of programs piloted to test and then scale residential battery energy storage adoption in recent months. Late last year, the California Utility Commission awarded $14.6 million to CRES research and development, including $1.8M to residential photovoltaic company SolarCity to research the feasibility of storing electricity generated by rooftop solar arrays in batteries provided by Tesla. Similar research and community pilot programs have sprung up across the U.S.

Taking a look at how a CRES system works (indeed how residential battery systems work in general) we can speak to the question of functional viability – of course they work, and well. The battery management system (BMS) controls charge and discharge of the energy stored in the battery depending on the resident’s needs per their power usage. Here’s the quick 1 – 2 of domestic energy storage charge/discharge function:

  1. The battery system stores excess, i.e. unused, energy generated from the household’s rooftop PV system during strong daylight hours, energy that would otherwise in most cases be transferred back to the grid. 
  2. Later, when the PV system is no longer receiving solar rays, but when the home requires more energy for lighting, among other things, the system signals to retrieve the reserve energy stored in the battery system vs. acquiring it from power line connections, i.e. the grid.

Two other ways it “works” or rather, two big benefits of residential energy storage, are load reduction during peak hours, i.e. by routing excess energy to the BMS instead of the grid (this means grid systems are not taxed with intermittent and unknown/unexpected surges of energy) and cost savings as seen on consumer electricity bills (consumers save money in both uptake and downtake fees from their local utility). Basically, the systems reduce stress on both sides, promoting energy independence. This also carries obvious environmental benefits inherent in using renewable energy over conventional fossil fuels (reduced CO2 pollution, less depletion of natural resources, etc.), but with a boost in efficiency, i.e. less electrons lost in the process.

In and of itself, of course, BMS technology for domestic use does nothing. It requires pairing with an energy source (not exclusively renewable), so questions of viability and adoptability require keeping an eye on how well installed energy solutions, primarily rooftop solar, are being embraced by consumers in thought and deed. While a small number of residents, much like larger-scale commercial energy storage users, may adopt battery storage technology to optimize off-peak grid-based energy purchasing (electricity is generally cheaper when there is less need and more local production, and where the region allows peak-based pricing), the return on investment is poor in light of the minute differences of energy costs as viewed on the domestic scale, and where it is even an option. This leaves residential energy storage to be primarily, if not exclusively, a complementary technology paired with on-site renewables.

So, as far as keeping an eye on installed energy solutions to gauge viability and adoptability of home BMS, let’s check in and see how the residential renewable market is fairing. Here’s a look by the numbers for solar, by far the leading renewable technology used in homes today:

  • The solar market jumped 67% to $6 million in 2010, up from $3.6M in 2009 and growth has continued through 2011 and now into 2012
  • Q1 2012 showed residential installation growth of 12% quarter/quarter and 31% year/year (notably, that’s four quarters in a row of steady residential solar install growth in the US)
  • The residential solar market has had the most steady, least volatile growth of all the solar market segments (though naturally, this market is the smallest among categories that include much larger commercial and grid-scale installation)
  • The size of home solar installations has increased in recent years (some reporting that home array sizes have doubled to an average of 6 kW)
  • Costs of installed residential solar fell 7.3% from 2011 to 2012 increasing affordability
  • 16 different companies now offer solar lease options to homeowners
  • A survey of 72,000 homes sold between 2009 and 2011 in California showed an average premium of $17,000 per sale for those averaging 3.1 KW and two years old

Many of these solar industry insights can be found via Solar Energy Industries Association and particularly in the 2012 Q1 Solar Markets Insight Report (Executive Summary).

Pike Research forecasts the growth of installed capacity for community and residential energy storage will take the just-shy-of double-digit MW figures of 2012 all the way to 800 MW in 2021. Considering most home BMS support a range of 1 – 10 KW, that’s an estimated growth of between 2,000 and 9,000 homes this year to between 50,000 and 700,000 homes in the next ten years, and Pike confesses these figures to be very conservative.

If you are a homeowner interested in purchasing battery storage to work with your current or planned solar array, NREL (National Renewable Energy Laboratory) has a handy two-page PDF on user-end battery basics called Battery Power for Your Residential Solar Electric System.

If you are a residential developer, PPA provider or solar leasing company, or community organization interested in discussing lithium-ion battery storage options for your homes and the homes of your clients, contact BeVault and we’ll talk you through your options, answer any questions you have, and help you design a solution that optimizes onsite solar investment. 

How Grid Energy Storage Applies In Today’s Growing Market

Grid Energy Storage Battery Blog Post ImageI’ll admit that when I first started delving into the opportunities of energy storage my assumptions were a little pie-in-the-sky. I formed dreamy images of car-sized battery packs that would sit next to wind turbines at night while the nearby world was sleeping, and be trucked to the bustling metropolis by day to unload all the energy a few of their resident and business complexes would need. Global warming was reversed, dirty energy pollution was halted in its tracks, and happy, smiling farmers leasing little pieces of their land to wind turbine developers were thriving despite falling crop prices. What I was seeing in my head was the potential of energy storage to leverage off-peak energy production for high peak need times in a very big way.

The reality is that this sort of hours-and-hours-of-electricity-generation-saved-for-later, whenever, wherever use model would require not car-loads, but city block-loads of advanced battery tech to fly, and at prices too steep to make sense in today’s power market. Of course, this could change very fast if tax credits such as those proposed in the U.S. Energy Storage Act go through, and the demand for these technologies continues to push the tech possibility envelope, but obviously, we’re not quite there yet.

But however ahead of themselves my early visions may have been, grid-level energy storage application is very much alive and well today, indeed helping to make renewable energy especially useful in the face of growing grid demands. How is it working? Namely, by leveling out the intermittency problems (and headaches) that renewable sources give grid operators. Let’s take a look at the award-winning Laurel Mountain wind power and energy storage project in West Virginia to highlight.

In the fall of 2011, AES Energy Storage, in conjunction with AES Wind Generation, announced full commercial operation of the 98 MW wind generation project called AES Laurel Mountain. The project includes 32 MW of integrated battery energy storage, the largest of its kind. The storage provides valuable frequency regulation to the local PJM utility market while helping to manage output change rates that can occur in shifting wind conditions. Basically, it gives short boosts of energy to the grid as needed on a second-by-second basis, storing and unloading short intervals of energy as it goes.

The function of frequency regulation is one of the biggest applications and therefore opportunities for advanced battery energy storage out there today. Because frequency regulation will continue to be a very important aspect of grid operation, especially as renewable energy standards put more and more wind and solar on the grid, it is a key driver to energy storage industry growth – one reason why proven, reliable storage options like advanced Lithium-Ion batteries will continue to be a sought after and well-backed technology.

In a Laurel Mountain project press release, Terry Boston, PJM president and CEO said, “Energy storage technology is the silver bullet that helps resolve the variability in power demand… Combining wind and solar with storage provides the greatest benefit to grid operations and has the potential to achieve the greatest economic value.”

And in another potent nutshell, Gary Rackliffe, vice president of smart grids North America for ABB Inc., was quoted recently in the Forbes article Energy Storage: Costly but Key to Power Production, states, “The challenge with the grid is that the load is not uniform… Energy storage balances those demands and addresses the issue of variability.”

The West Virginia wind project isn’t the only place we’re seeing the power of advanced battery technology put to use to provide more reliability to energy grids. This year, AES launched their second high-profile storage project in Northern Chile. This description from a recent AES press release highlights not only the features of its new Chile storage array, and the success of an earlier and similar project in the region, but also of the basic frequency regulation function energy storage provides:

Designed, built and operational in just fifteen months, the energy storage system provides superior speed and response to any system reliability event such as loss of transmission, or loss of a power generator. Fast response enables the power system operator to maintain and restore the grid with less shedding of load from customers or other disruptive actions. In 2011, the first 12MW project in Los Andes was noted by the region’s grid operator, CDEC-SING, as one of the best performing reserve units in Northern Chile.

So, while my imagined macro-scale plains-to-city portable battery packs may not be a thing of today, and it’s yet unseen when they might be reality in the future, I’ve got plenty to be excited and even dreamy about. The real-life, real-time application of grid-scale energy storage is a powerful driver in today’s advancement of battery tech, making every electron count a little more. Today’s innovations will only lead to more, and the future looks a little brighter because of it.

(For those who want to dig in a little more to the technical aspects of frequency regulation in a business management-friendly language, I recommend John Peterson’s 2008 article Alternative Energy Storage: Why Frequency Regulation Is Important. Peterson, a former Axion Power International director, gives great insight into the differences of load variability between fossil fuel and renewable energy sources.) 

Heather Philipp, VP Marketing, BeVault Inc.

Why Energy Storage Will Give Commercial Operations an Edge

Commercial Building Energy StorageGrid-based energy storage, battery storage solutions for renewable energy application, and effective storage technologies that reduce power and energy intermittence problems are leading topics in today’s energy media and across a variety of R&D initiatives. We strongly agree that widespread adoption of storage across energy infrastructures will be key to solving our growing electricity supply challenges. But we’re also strong advocates for storage applied closer to home, or office, as it were.

Commercial buildings can (and do) reap an amazing array of benefits from installed storage technologies. Be it thermal or electrochemical storage tech, key benefits of installing energy storage at business locations like large office buildings, manufacturing facilities, warehouses and multi-use commercial structures are many and far-reaching. Notably, commercial building energy storage:

  • Delivers higher reliability and consistency.

If your operations require power and energy intensity, and its consistency directly affects the quality and/or efficiency of your output, the reliable, uninterruptible power supply (UPS) that advanced battery storage delivers in an otherwise intermittent supply situation will directly benefit operations on the line and thus output-related financials.

  • Reduces your peak electricity demand charges.

If your utility passes along the varying cost of electricity (time of use/ TOU rates), you know that the energy you pull off the grid at peak hours of your operation are more expensive than at times of low demand respective to needs of average regional users. Storage will help you load up on energy in off-peak hours at a lower cost so that you can utilize it when you most need it at the reduced rate.

  • Creates future budgetary security.

Energy costs are volatile and will likely only increase as demand grows, generation technologies struggle to meet the demand, and resources become scarcer. The reduced costs of energy now via storage applications will increase financial security for you in the future.

  • Promotes higher utilization of your energy infrastructure.

Since energy storage will help reduce your energy costs, you’ll better empower your employees – from operations managers to entry-level thermostat lovers – to more freely use energy to increase production and service quality or simply make the working environment more comfortable to increase personal productivity.

  • Prepares you for smart grid interaction.

Even if your buildings aren’t connected to a smart grid now, they likely will be in the future. Energy storage is a key element of building-smart grid interaction and will help you deal effectively with intermittency issues from and to the grid, especially as more renewable technologies are utilized.

  • Provides potential tax break incentives.

Depending on your location, installing energy storage may result in tax breaks for your business that offset the cost of installation. Energy storage is increasingly regarded as a stand-alone technology within alternative energy incentive programs that also incentivize installed renewable energy and energy efficiency measures. In the U.S., the Energy Storage Act of 2012 may provide up to a 30% tax break, though some already exist in states such as California and Texas.

Whether you develop commercial properties in the heart of America or head up operations for a major manufacturing company based in China, energy storage will provide you considerable, consistent budgetary savings that help stretch your profit margins. If you then pass those savings to your clients and customers, you’ll see that investment stretch your returns exponentially. With commercial energy storage, the bottom line is your bottom line.

If you’re looking seriously at the benefits of energy storage for your business, BeVault and companies like ours can help you put together a needs assessment and strategy to start reducing your costs and increasing the productivity of your energy in the short and long terms. Contact us.

If you are searching for a more in-depth look at commercial energy storage applications, technological potential, market trends, and contributing factors to industry growth, check out Pike Research’s recent report Energy Storage in Commercial Buildings

Donald Sadoway’s TED Talk on Grid Energy Storage for Renewable Energy

Donald Sadoway’s recent TED Talk “The missing link to renewable energy” has gone viral, and in the face of our national and world energy needs, the huge potential of renewable energy sources to meet those needs, and hundreds of organizations invested in just that, there’s little question why.

Sadoway’s key point is that the way to address renewable energy’s problems of intermittency is with storage. He asserts, and much of the battery energy storage industry is growing up around the principle, that the battery is the enabling device that will finally make renewables the go-to source for electricity in the world. He talks about a specific kind of liquid metal battery he is developing, but the assertions of application apply to a broad range of energy storage technologies being developed today. Sadoway does a good job in this talk of pointing out ways of applying lessons learned during his work at MIT to support development across the spectrum of grid energy storage possibilities; definitely worth a watch (and a share).

“With a giant battery, we’d be able to address the problem of intermittency that prevents wind and solar from contributing to the grid in the same way that coal and gas and nuclear do today.” – Donald Sadoway, TED 2012

How Renewable Portfolio Standards Push Energy Storage Growth

BeVault Energy Storage and RPS, Renewable Portfolio Standards Blog PostBattery Energy Storage is in the news, all over renewable energy commentary sites, and on the minds of investors the world over (not to mention sitting in both the U.S. House and Senate in the form of sibling Energy Storage Acts).

Growth of energy storage technologies and their applications is at an all-time high, but why? Some of the same reasons why we think this just may be the year the Energy Storage Act passes are also clear drivers of storage industry growth. But another important factor to consider is Renewable Portfolio Standard (RPS), the more and more broadly adopted state-by-state mandate that a portion of electricity demand be met through renewable sources; growth is seen not only in the number of states who are adopting an RPS, but also seen in increasing percentages required within states who have had a RPS in place, some for many years (California, always a leading example, has had an RPS in place since 2002 and recently raised their standard from 20% to 33% to be met by 2030).

Currently, there are 32 U.S. states with RPS, a number that has grown steadily since the first RPS was introduced in 1983, with a major jump in adoption and percentage requirements in 2000. Current RPS states have mandates for renewable energy levels that range from 8% to 40% with goals to meet these mandates ranging from 2013 to 2030. The majority have legislated mandates in the range of 20% and many aim to hit that goal by 2020. Since all RPS mandates are based on future goals, even if there are no further RPS adoption or percentage increases, the supply of renewable energy is legislated to keep growing.  

As electricity demand continues to grow across the fifty states, obviously that will demand an even greater growth in renewable supply to meet RPS standards based on percentages. While few will argue that more renewable energy needs to be brought online to meet these and larger growing energy needs, an important component to support this growth is and will more increasingly prove be energy storage for renewable energy.

In addition to increasing renewable energy capacity, by making more of the current production usable through battery storage and other complimentary technologies, we can meet our expanding needs more efficiently and with less new development, relatively speaking. This is because energy storage, such as Lithium-Ion battery storage, makes it possible to use energy generated in off-peak hours during times of high-peak demand, resulting in less lost energy from renewable sources (such as extra, i.e. unused, energy produced by wind farms on above-average windy days, and similarly by solar arrays on sunny days when demand is lower than at night). Implementing energy storage solutions is generally less costly than developing new energy production, so this will save both utilities and consumers money; a compelling reason for the former to consider it closely in light of growing RPS requirements and related electricity needs.

This answer is not a new one. Energy is either kinetic or potential, and utilities have been utilizing ways of storing energy (basically, converting it from kinetic to potential for the future reverse) for a long time to reduce waste and meet peak demand, RPS or no. One example is pumping water to elevated reservoirs during times of low demand (and thus excess energy) to let it later drop through turbine generators during times of high demand (aka pumped-storage hydroelectricity, or PSH). Of course, batteries are simply another kind of reservoir, albeit very efficient and increasingly high tech, that stores energy in chemical form for later application.

Today, however, there is an ever-widening availability of energy storage technologies suitable for grid-scale all the way down to single-family-home-scale implementation, and with pricing becoming rapidly more and more accessible throughout this range. Advanced Li-Ion batteries are of the most widely utilized and due to recent technological and financially beneficial advancements, battery energy storage is now feasible, reliable and scalable.

We are sure to see tandem growth in RPS rates and energy storage technology utilization as the former begets the need for the latter and the latter makes the former more feasible; while legislation, budgetary considerations, and advancements in technologies contribute to storage industry growth.

Predicting the Fate of the Energy Storage Act, Third Time’s the Charm

Poised to be the biggest growth year for the energy storage industry, 2012 will build upon a number of promising technological, investment and legislative advancements that moved the market forward in 2011. A key player in the immediate future of the energy storage market is the Senate’s Storage Act of 2011 (along with its counterpart, the House’s newly-introduced Storage Act of 2012).

The Storage Act of 2011 (aka the Storage Technology for Renewable and Green Energy Act of 2011) is a bill to amend the Internal Revenue Code of 1986 that would provide for an energy investment credit for energy storage property connected to the grid, among other purposes. Currently the legislation does not consider energy storage as a stand-alone technology available for the credit, but the Storage Act of 2011 would change all that. The bill would make the Business Energy Investment Tax Credit (ITC) of up to 30% available for commercial and residential energy storage installation. As we’ve seen with the significant growth of renewable energy since the ITC was first provided in 2005 (and greatly expanded in 2008), this credit can make an big difference in moving energy storage from a minor to a major player across the U.S. energy system.

The Storage Act is currently sponsored by SenRon Wyden [D-OR], also the bill’s sponsor in 2010. This bill was first introduced in 2009, sponsored by SenJeff Bingaman [D-NM], and has been reintroduced twice. The current iteration of the bill was introduced in November, 2011 and was sent to the Senate Committee onFinance where it now sits for deliberation, investigation, and revision before the committee reports and sends the bill for general debate.

Obviously (and unfortunately), past versions of the bill never made it out of committee, but this time around could be different. Many of us think that the third time could indeed be the charm. A few reasons why we very well could see a different outcome this time around:

California’s Followed Example

The California SGIP (Self Generation Incentive Program) was amended in 2011 to recognize energy storage as a stand-alone technology, similar to what is being proposed in the Storage Act, incentivizing energy storage installation. We’ve seen federal regulation follow California’s lead before. For example, the introduction and installation of the federal ITC came on the heels of several years of the California Energy Commission’s Emerging Renewables Program, which funded and incentivized growth in renewable energy development.

DOE’s Innovative Push

The U.S. Department of Energy is launching a new Energy Innovation Hub focused on advanced batteries and energy storage in 2012 with $20 million in funding and a promise of up to $120 over five years. The DOE Energy Innovation Hubs are large multidisciplinary, multi-investigator, multi-institutional integrated research centers.  According to energy.gov, the new hub “should foster new energy storage designs and develop working, scalable prototype devices that demonstrate radically new approaches for electrochemical storage, overcoming current manufacturing limitations through innovation to reduce complexity and cost.”  U.S. legislators have an opportunity to pave the way for wide-scale, real-life utilization of current energy storage innovations and those that are expected to come out of the DOE Hub in the future.

President Obama’s Funding Proposal

The Presidents Fiscal Year 2013 budget request for the Department of Energy provides a strong directive from the executive branch to focus tax payer money in areas that the President and Energy Secretary Steven Chu believe will provide the greatest benefit over time. These benefits include energy independence, U.S.-based technological innovation, and jobs. The budget request includes $60 million to “perform critical research on energy storage systems and devise new approaches for battery storage”, the first inclusion of its kind for energy storage.

2011 Banner Investment Year

Energy storage markets saw a huge influx of investment capital in 2011 with an increase of 253% from 2010 to $932.6 million in 2011 in the U.S. alone. Sometimes legislation is pre-emptive in promoting markets, but it seems more often we see legislation coming behind commercial interest and following suite. If this is the case in this instance, this is definitely the time.

Demand for Green Jobs

The demand for jobs and the promise of cleantech development to deliver is ever alive and thriving. Though no hard figures have been offered up for how many thousands or tens of thousands of jobs could be created via energy storage advancement alone, we do know that the energy storage market has already begun to surpass previous growth expectation of 15.8% annually (leading to a market worth of $10 billion by 2015, as reported by SBI Energy in 2010 and with commercial building installations alone poised to reach the $6 million range according to a 2011 study by Pike Research). Not only will the industry itself sharply increase employment opportunities for technological, manual and administrative workers, but in light of the way energy storage supports renewable energy growth, the jobs that would be indirectly created in the solar and wind sectors especially exponentially increase this prospect. Our U.S. legislators must know that the boost to the country’s ailing economy would be a boon to us and to them in a re-election year.

Assuming the fate of the bill is a positive, living one, it will be off to the Senate for a vote later this year, subsequently to Congress for the same, then up to the White House for President Obama’s signature before the close of the 2012 session. Here’s hoping the committee sees it as we do and feels the pull of the law of threes emphasized all the more by an amazingly supportive national and international movement in energy storage innovative and application.

You can follow the progress of the bill through govtrack.us updates for S. 1845: STORAGE 2011 Act, and learn more about the members of the Senate FinanceCommittee.

Top 3 Success Indicators for the Energy Storage Market in 2011

Three Buildings, Energy Storage Success Indicators2011 was certainly a standout year for energy storage. A key indicator of an increasingly supportive international environment for the space was the tremendous growth seen in investment capital worldwide. According to Ernst & Young, U.S. energy storage investment alone rose 253% from 2010 to $932.6 million in 2011. In fact, energy storage led all cleantech investment sectors in Q3 with $524 million in VC injections. This came as awareness of not only the vast array of beneficial applications of energy storage grew, but also as the cost of previously cost-prohibitive technologies continued to fall into attainable range for wide-scale production and application.

Energy storage saw boons in legislative support as well, as policies were introduced and passed to support its development and application, adding to commercial and investor awareness alike. This is certainly smoothing the way towards great increases in research capital and sector growth.

Most notable of policy support was the introduction of the Storage Technology of Renewable and Green Energy Act  (STORAGE) by Senators Wyden, Collins, Bingaman which would recognize energy storage as a stand-alone technology, the spectrum of which would therefore be eligible for rebates similar to those given for renewable energy installation via the ITC (investment tax credit). This would mean that businesses and homeowners alike would be eligible to recoup up to 30% of storage project costs, including those for batteries and other storage technologies.

Another much-talked-about impact to the regulatory environment came with an important amendment to the California SGIP (Self Generation Incentive Program). The program, which has offered incentives for various energy-related cleantech in the state since 2001, previously incentivized energy storage only if it was directly connected to a renewable energy project. The amendments made last year, like that of the Storage Act of 2011, include updating the program’s view of energy storage to that of a stand-alone technology eligible for incentive independent of the energy source it is connected to. It should be noted that, like in much of the SGIP, this incentive favors end-user vs. utility-level implementation.

These three key indicators of energy storage sector momentum; 253% growth in investment, introduction of the Storage Act of 2011, and amendment of the CA SGIP, speaks volumes to the propulsion of energy storage into key playing position in the international energy community and related business and investment communities that stand to benefit from it’s growth.