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IHS: 9% of solar PV systems in North America will have attached storage in 2018

IHS forecaststhat 9% of solar photovoltaic (PV) systems in North America will include attached storage in 2018. Led by commercial systems, IHS expects 700 megawatts (MW) of PV systems with energy storage will be installed by 2018, compared to just 30 MW in 2014.

According to the IHS “Energy Storage in PV Report - 2014,” commercial buildings are subject to peak demand charges, which are based on the maximum power drawn from the grid during the billing period. These charges can make up a significant portion of a business’s electricity bill; however, using a battery and PV to reduce peaks in grid power consumption can reduce these costs significantly.

The North American residential market for PV systems with attached storage will be limited, as the only real incentive for homeowners to install these systems is to provide back up for power blackouts. Although having a source of back-up power is desirable, particularly in areas that have experienced long blackouts, it is rarely valued enough to justify the high cost of a battery system.

In a number of markets in Europe, such as Germany, Italy and the United Kingdom, the economics of a residential PV system are improved, when the system owner is able to increase the amount of power that they self consume, which has been the primary reason the PV energy storage market in those regions has developed more than it has in North America, IHS said.

The market growth for energy-storage PV systems has been largely driven by suppliers like STEM and Green Charge Networks. IHS anticipates that SolarCity, a leading US solar installer, will also be increasingly active in the attached storage market this year. In fact, SolarCity is already offering Tesla batteries with its PV systems, in order to offer peak demand reduction services. (In addition to being Chairman and CEO of Tesla Motors, Elon Musk is also Chairman of SolarCity.)

Comments

Account Deleted

But home owners with solar power do have an incentive to install battery backup. This is because many utilities have started to charge a monthly fee of about 50 USD for allowing the solar panel owner to feed excess electricity into the grid. Investing in a battery means that the solar panel owner can just produce electricity for himself and that battery and thereby skip the monthly feed-in fee. This will of cause also mean that the solar panel owner is not allowed to send electricity back into the grid.

Tesla knows this is happening and therefore there will be a huge demand in a few years for solar power battery storage. Therefore, Tesla is planning to manufacture such solar battery backup systems as well on their 50Gwh per year factory. The first such system will be announced later this year.

Engineer-Poet

Going off-grid means having to manage your own dry spells.  Solar + battery + backup generator + fuel starts getting complicated as well as pricey, and that assumes that local zoning and fire regulations allow you to use the generator and keep the fuel on hand.

It would be much better if the control of the battery was turned over to the utility.  With a late-evening demand peak, the utility would likely use the battery to help supply that peak and charge the battery during the overnight hours and the noontime PV generation peak.  That would reduce overall costs.

Account Deleted

@EP people will still be on the grid. No need for fossil home generators. But during spring and summer the solar panel owner is not going to buy much electricity from the grid. Going off-grid is not the objective here. It is to reduce the annual electricity bill and to do something good for the environment. I also expect Tesla to sell smart items that can control your freezers, garden pumps, heaters etc so that they use electricity when the sun shines and otherwise not unless absolutely needed.

Nick Lyons

What E-P said.

Going off the grid is very expensive, and it is counter productive to duplicate infrastructure all over the place. Better to have an intelligent network of generation and storage that works to supply benefits to all the nodes as needed.

Account Deleted

I very much like the idea that private people show who they are and stand for by buying EVs and solar power to say no to pollution and the degradation of our planet and say yes to oil independence and local job creation. That is a statement just as it is a statement to drive a gasser and use electricity from a grid that is far from being clean. However, we are not there yet in terms of costs. Nevertheless, solar power and battery backup is making such statements economically possible for many more people every year as the costs are dropping.

JMartin

I have no expertise, but I would think going off the grid would not be good for most individuals or our overall economy. However, I can see the development of many microgrids, connected by national lines (HVDC) to balance loads and use renewable resources. In 15 years, most homes and buildings will have fuel cells for that winter heat while they produce more electricity. The grid will be needed to manage it all and the fee is just a cost of doing business -- like road taxes.

canuckinaz

There is another reason for homeowners to install energy storage systems: Time-of-use (TOU) rates. If the utility charges more for power during periods of high demand, it would make sense for the homeowner to capture the energy from the PV system when his demand is less than the capacity of the system, and use the captured energy during these higher-rate periods. One could imagine a "smart" system in which the homeowner sets the price at which he will begin to purchase from the grid and when he wants to use the stored energy.

HarveyD

Many Utilities already have a minimum "Connecting Charge" of $10 to $20 per month regardless of the energy (electricity or NG) used.

This connecting charge could be varied easily and increased for people with solar systems.

Nick Lyons

@canuckinaz: I guess you could game the TOU rates, even with net metering. You need a pretty sophisticated setup to do that--charge your batteries preferentially to exporting power back to the grid until the batteries are full, then resume exporting power. And whatever you do, DO NOT charge batteries from the grid during peak times.

We have solar panels with net metering and simple tiered rates. Our electricity bill was something like -$20 in 2014, and we don't have any storage (just 'grid storage'). I don't expect our great deal to last as solar penetration keeps ramping up, although I believe we're grandfathered in for another 18 years or so. In any event, there is zero financial incentive for us to spend money on storage.

Herman

There is a secondary question here not around the measureable benefits of storage schemes, but how the market for storage affects one of GCC’s favorite business topics: Tesla.

Lately we hear incessantly from wide-eyed analysts that the energy storage market will fill the Gigafactory with orders even more quickly than the coming avalanche of new EVs. But look critically at the IHS chart, and for that matter the more optimistic US Energy Storage Monitor chart. US ESM shows far more new installs ober the next five year, with 800+MW of new projects (utility, home, and industrial combined) in 2019 in the US. But if Tesla sells storage batteries at $150/kWh (which they will need to do to be competitive) and they win every single application, the volume of batteries is almost immaterial to the business. If 800MW of power delivery capability equals a need for about 2000MWh of battery, then that is $300M of battery sales in 2019... about the same economic benefit as two weeks’ production of Model S (in that year). And the margin is likely dilutive.

Even if you use the US ESM values but assume (appropriately) that there will be fierce competition in the very crowded energy storage market amongst Lithium-based batteries, other battery technologies, and non-battery storage methods (such as adiabatic compressed air at grid level), then Tesla’s likely sales are much lower and essentially become immaterial to the company’s revenue projections. Finally, apply what you see here in the IHS projections and you wonder why the topic of Tesla storage batteries makes more news than WeatherTech floor mat sales.

JMartin

Harvey is right. I have solar and pay ~$10 per month connect charge with net metering. I get a small check each year for the excess electricity produced. I have no objection to that connect fee. If it went to $50, that might be different.

msevior

Herman, where I live in Australia, you win far more by avoiding the 24 cents/KWhr worth of retail price for electricity than you gain by exporting PV production back to the grid (8 cents per KWHr).

Actually if you export to the grid here, the retail price of purchase from the grid is over 32 cents/KWHr.

My estimate is that I need about 10 KWHr of storage to not import any electricity into my new home. In this case I save around $2400 per year. I plan not to export my power, just use it to charge my batteries and consume it during the day.

Now if the retail price for those Tesla battries is $250 my storage costs are $2500. 5 KW of PV here will cost around $7000, so estimate an investment of ~10K$. I have a payoff time of ~ 4.5 years. I think my home is rather typical.

In Australia alone that means a market of~1x10^6 x 2500 = $2.5G.

The US is likely 5-10 times bigger. Rural India which has no grid supply is bigger still.

All up the Tesla batteries are a total game changer if they can hit that price point and offer ~4000 cycle-lifetime at 80% capacity.

Actually I doubt the 4000 cycle-life for Tesla batteries. A BEV needs only about 500 cycle-life since they're rarely fully depleted. Home storage is depleted once per day.

CJY

So it all depends on the local (national) policies governing net metering or feed-in rates. Here in Canada I get 400 kWh in August from my 3kW panels, and all of 50 kWh in December, so forget going off the grid. Fixed transmission charges of around $50/month are therefore a fact of life, even if netmetering gets me a small annual credit for excess power.
Makes me wonder how long before governments wake up to the huge disparities between consumer incentives in this industry. Would be nice.

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