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Residential Battery Energy Storage: Poised to Take Off with Hurricane Force?

Andrew Burger's picture
Man Friday Energy Ventures

I've worked a pretty diverse range of jobs around the world over the years. I feel fortunate to have found vital, satisfying work, and a career reporting, editing and researching developments in...

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  • Sep 13, 2017

Solar energy industry participants had lots on their minds during the 2017 Solar Power International conference and exhibition in Las Vegas this week – from news of Hurricane Irma and Harvey and Suniva’s unfair international trade petition, which is being considered by the U.S. International Trade Commission, to the latest technological, legislative and regulatory developments and how to further reduce the costs and add value to solar energy projects amid the phasing out of the federal solar investment tax credit (ITC). 

The role that energy storage, and more specifically lithium-ion battery (LiB) battery energy storage, is playing and will play in solar energy markets and industry going forward was at the forefront of SPI attendees’ minds, however. A scenario is taking shape for the combination of solar PV and LiB energy storage in which the costs of LiBs follow a steep, declining path akin to that which resulted in soaring consumer demand for wireless and mobile computing and communications devices, equipment and services, according to Sunnova CEO John Berger. 

That’s got solar industry players questioning whether or not LiB manufacturers will be able to pump out enough product and installation companies install systems quickly enough to meet a sharp, steep uptick in consumer demand and the opening of new business opportunities, such as those that could flow out of the need to rebuild grid infrastructure as a result of Irma and Harvey, as well as replace aging equipment and generation capacity over the longer haul. 

A Perfect Storm?

Word that hurricanes Harvey and Irma had reached historic proportions didn’t necessarily come as much of surprise to SPI attendees, Berger noted. Solar energy company executives and other employees were among the first outside the climate science community to accept and take the theory that human carbon and greenhouse gas (GHG) emissions is the deciding factor exacerbating the Greenhouse Effect and pushing global climate warming beyond a critical tipping point.

The potential for solar energy technology and systems to make a large dent in and reduce those carbon and GHG emissions was and continues to be a seminal motivating factor for industry players, and one that has been gaining in prominence and currency as public awareness, empirical scientific data and the rising incidence and costs of extreme weather events has increased. 

SPI attendees zoomed in on the potential for their companies and the industry to leverage and capitalize on the sharply declining costs of LiB energy storage, as well as emerging alternatives, by integrating them with solar PV generation systems at the residential, mid-tier and utility scales. A golden opportunity to do so appears at hand given the incidence of extreme weather, aging U.S. grid infrastructure, the political economy of “green” job creation and economic growth and development, and global efforts to reduce GHG emissions and blunt the effects of rapid global climate warming. 

Ramping Up Lithium-ion Battery Manufacturing Capacity to Meet Anticipated Growth in Consumer Demand

Manufacturing capacity and supply typically lags consumer demand when new technologies really begin catching on and markets start growing fast, to the point where mainstream, mass market status is seen on the horizon. That’s the case with LiBs at present, Berger explained in an interview. 

The combination of residential solar PV and LiB energy storage is beginning to take root and grow quickly in leading edge markets around the world, such as Australia, Germany, as well as in a few U.S. states, such as Hawaii and California. Island states and territories, as well as remote, off-grid areas and regions have been at the leading edge of adoption, and serving as critical test beds and proving grounds. 

Sunnova monitors and manages some 340-MW of “beyond the meter” solar PV installations for some 50,000 customers in 23 U.S. states and territories, from Hawaii to Massachusetts and points in between, as well as in Puerto Rico, Guam and Saipan. To date, battery energy storage has been installed and integrated at only a small number, less than 30. 

Essentially, the economics, as well availability and “boots on the ground” capacity, to offer and add LiB capacity to customers’ solar PV systems on a broad-based scale hasn’t been sufficiently attractive, at least to date, Berger said. 

A Coincidence of Key Factors

A variety of developments are now coinciding that lends credence to the belief that consumer demand for residential LiB systems, and pairing them with both new and existing solar PV installations, is poised to take off, however, he explained. 

At the top of the list are ongoing and projected declines in the cost of stationary LiBs, along with projected increases in manufacturing capacity. As described in part one of this series, recent announcements by national governments and market-leading auto manufacturers aimed at increasing production and uptake of electric vehicles (EVs) comprise another. 

Then there are all the damages, costs, after- and ripple effects of hurricanes Harvey and Irma, which will likely extend far and wide and prompt further actions to cost effectively enhance the resiliency, security and efficiency of energy and power generation, transmission and distribution while at the same time reducing associated GHG emissions and negative human and environmental impacts.

“A big part of the conversation [at SPI 2017] concerned battery storage and having sufficient back-up power capacity, particular in areas prone to hurricanes and other natural disasters. The extends more broadly to recover from broad-based grid threats, cyber attacks to be more specific. 

The Ripple Effects of Hurricanes Harvey and Irma

Having sufficient back-up power capacity is high up in the minds of consumers in Texas, Florida, and Puerto Rico at the moment. That may well expand to include energy consumers generally speaking, Berger told Energy Central. 

“The question for our companies and industry is how do we meet that demand? How far and how fast can the price of battery storage capacity fall?”.

More pointedly, this boils down to if, and the rate at which, LiB prices can fall and availability increase to the point where they make up the difference between LiB back-up power generation and natural gas, diesel or propane back-up power generation alternatives, which at present are less costly to install with sufficient capacity to ride out extreme weather events, such as Hurricane Harvey, which lasted several days, Berger highlighted.

“Five million-plus people in Florida lost grid power. It was the same for more than 900,000 in Puerto Rico. That is a recipe that argues for fairly substantial adoption of batteries and solar for homeowners. The grid just isn’t as resilient as we may have thought it was."

Berger pointed out that utility executives in Florida are already angling for federal government support to invest the billions of dollars required to rebuild much of the state’s power grid infrastructure, primarily along Florida’s southwest coast and across the Florida Keys, where Irma made its first landfall.

Today's Power Grids: Not as Resilient as Thought

Berger and others attending SPI questioned whether it’s wise, or the best use of public sector capital, to invest in rebuilding power grids in the conventional way given repeated evidence that such approaches have largely failed to meet expectations when confronted with hurricanes and other extreme weather events. 

“No matter what system you look at, be it telecoms, internet services, power or water, at the end of the day providing resources in distributed fashion is a lot more resilient. When a centraliz system is threatened – whether from a natural or man-made event, such as a cyber attack, –  it’s clear that systems that are distributed in nature respond much better and more quickly,” Berger said. 

“We see and hear commercials from Puerto Rico calling on residents to augment diesel and propane-fired back-up power with batteries in order to make them more resilient. Along with that, the idea of building distributed microgrids is going to spread pretty widely across the Caribbean, and these hurricanes have pushed that forward.

“I get the feeling that [battery energy storage] market conditions are going to change, and change quickly, in large part due to extreme demand for EV batteries. Ramping up takes time, even given the exponential rise in manufacturing capacity we are experiencing, so the availability of batteries and technological advances coming together is not as fast as we want, but it’s coming. 

“And when it hits, it’s going to hit with pretty powerful force in the sense that large numbers of [energy and pwer] consumers are going to want battery energy storage in their homes – whether they’re living on the coasts and with or without net metering. For an incremental amount of money paid monthly to Sunnova, they can gain peace of mind. It will be a challenge ofr all of us [in the industry], including Sunnova to meet that demand.”

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