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.

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.