What is the State of the Market for Home Solar Energy Storage?
We’re just a quarter of the way through 2014, but this year clearly is shaping up as the year of home energy storage.
The past few weeks alone have featured major investment bank, think tank and energy agency reports on the threats and opportunities of battery-backed solar electric systems; regulatory hearings and high-level discussions on potential conflicts with utilities; storage-focused trade missions by California energy commissioners and Canada’s head of state; an international conference keynoted by Germany’s energy minister; as well as new incentives, new product launches and the opening of an energy-efficient prototype home that combines on-site solar with battery storage and electric vehicle charging.
Indeed, the already widely recognized battery storage buzz quickly is morphing into a deafening roar.
Amid all this activity, it can be difficult to decipher which home energy storage options actually exist today from those on the way and those possibly not – or at least not yet.
Home energy storage systems, of course, are nothing new. They have been around since the dawn of terrestrial solar power. From the pioneering late 1970s into the 1990s, most residential photovoltaic systems were off-the-grid projects supported by lead-acid batteries. In the United States, in fact, it wasn’t until 2002 that the cumulative installed capacity of grid-tied, distributed solar electric systems actually surpassed that of battery-backed off-grid solar homes, according to International Energy Agency (IEA) data.
Just a little over a decade later, and following the record growth of grid-tied PV in the U.S. in recent years, off-grid solar homes with battery storage now make up only a tiny fraction of the total solar market. Although good data on the U.S. market for off-grid solar homes doesn’t even exist, equipment suppliers have estimated it at roughly 15 to 30 megawatts annually in recent years. That’s roughly 1,500 to 3,000 off-grid solar homes installed per year, assuming an average system size of 10 kilowatts — although typical off-grid solar homes can be either larger or smaller than the average 6.2-kilowatt size of grid-connected solar homes.
The rapid expansion of intermittent solar (and wind) – coupled with storage-friendly rate structures in some U.S. states and new incentives in California, Germany and Japan – is fueling much of the heightened interest in on-grid home energy storage.
In Germany, where about two-thirds of installers now offer grid-tied storage, about 6,000 systems were installed in 2013 with the help of grants and loans, according to a new report from EuPD Research, which expects an annual market of 100,000 units by 2018. German households are finding that it is a better deal to avoid buying pricey grid power by boosting their on-site consumption using storage.
In the U.S., rules governing net-metered solar power systems with storage are under development (some might say under attack). Net metering with storage is not even allowed in California – so most on-grid solar home systems in the U.S. at present are used primarily only for back-up power or electric vehicle charging.
Despite the market uncertainty in the U.S., growing demand in Germany and Japan is being courted by a host of new products and prototypes, many of which piggyback on electric vehicle battery advancements and mass production.
Back to the Future
The initial investment cost for deep-cycle batteries in distributed off-grid and short-term on-grid home storage applications spans a wide range, depending on technology, of between approximately $300 to $3,500 per installed kilowatt, according to a just-published IEA energy storage technology roadmap.
Lead-acid batteries remain the most common type of home storage product available on the market today. They are commercial, off-the-shelf and relatively inexpensive. Brands such as Deka, Enersys, Sun Xtender and Trojan offer a variety of deep-cycle flooded and valve-regulated batteries for off-grid and grid-connected solar homes, and can be purchased directly by ambitious DIYers or through installers.
Innovation continues to occur with lead-acid batteries, showing that this century-old technology may have some juice left.
Trojan, for example, this year introduced a new line of lead-acid batteries with a slightly tweaked chemistry (more carbon) aimed at addressing the impact of partial state of charge on cycling batteries. A challenge for most battery-backed solar home systems, partial state of charge happens when batteries do not fully recharge – which is most often due to undersized PV systems, weather or shade.
San Jose, Calif.-based start-up Gridtential Energy is developing advanced lead-acid batteries to improve the energy density, cycling performance and battery lifetimes. The company says its goal is to create products with “highly repeatable, high-volume battery production capabilities.” This is aimed at leveraging the mass production of car batteries to bring down the cost of stationary ones.
Despite the generally lower upfront cost of lead-acid batteries for solar home systems compared to competing chemistries, cost comparisons have shown since at least 2012 that lithium-ion batteries can have a lower cost of ownership for some applications when considering factors such as lifetime, maintenance and reliability. Also, lithium-ion-based battery production is surging, with the expanding market for electric vehicles.
Compared to lead-acid, lithium-ion-based batteries have higher energy densities, require less maintenance and less space, and operate more effectively at low temperatures.
Increasingly, big Asian lithium-ion battery producers like BYD, LG Chem, Panasonic, Samsung and Sony are partnering with solar installers, inverter manufacturers and innovative product integrators to bring sleek new grid-tied battery systems to market.
Currently, a host of lithium-ion-based on-grid solar home systems are available in Europe – primarily Germany – and Japan. More products are becoming available in the U.S. as well.
German company Sonnenbatterie this month announced a partnership with Los Angeles-based solar installer and distributor SK Solar USA to launch its lithium-iron-phosphate battery system in the U.S., with a storage capacity range of 4.5 kWh to 60 kWh.
About 90 percent of Sonnenbatterie’s 2,500 units delivered to date in Europe are in the residential sector, where the company is partnering with big utilities such as E.ON and RWE, according to Boris von Bormann, country manager of Sonnenbatterie North America. Sonnenbatterie sees great potential in U.S. markets with peak demand charges for commercial and residential customers, and in markets with climbing penetration rates for residential solar, such as Hawaii, and directly incentivized markets like California.
“We plan to launch our residential system in the U.S. in September or October, and our commercial system in early 2015,” Von Bormann told SolarEnergy. “There is a lot of value we can deliver here.” The company has not yet determined pricing.
Bosch has just introduced a similar system, the BPT-S 5 Hybrid, but currently it is only certified in Germany. “As a second step we plan to adapt our product to meet European standards in 2014 at the earliest, with other countries to follow afterward,” according to Bosch Power’s Teona Macharadze. There are no concrete plans for a U.S. introduction.
Leading inverter manufacturer SMA Technology plans to launch an integrated home energy storage system in 2014, using lithium ion batteries from LG Chem. Pricing also has not yet been announced. E3/DC is another German company selling lithium battery-based storage systems for residential use in Europe.
Chinese solar PV manufacturer ReneSola claims to have introduced two types of home energy storage units using lithium ion batteries already in 2012, which it says in a recent blog posting “are being sold to homeowners in Germany, Australia, United Kingdom and the USA.” However, the company failed to reply to repeated requests for information about the product and where it could be purchased.
SolarCity, the largest installer in the U.S., is rolling out a solar home storage system in California that relies on lithium ion batteries supplied by electric carmaker Tesla – whose CEO and founder Elon Musk is SolarCity’s chairman.
Tesla recently announced plans to launch a massive factory for U.S.-based lithium ion battery production, the so-called Gigafactory.
The SolarCity system, currently used only to back up critical loads, can be leased for 10 years with $1,500 down payment and $15 per month.
Unfortunately, this appears to be yet another case of technology development racing ahead of the market, and being hampered by regulatory hurdles, as the company has complained that unreasonable application and interconnection fees are being applied as part of California’s Self-Generation Incentive Program.
SolarCity’s policy director Meghan Nutting said at a recent regulatory hearing on battery storage in Arizona that regulations “still need to evolve” in order for SolarCity to unleash the full potential of it battery system. In addition to providing critical load back-up power, the system could also enable customers to take advantage of time-of-use rates, ancillary services and PV system interaction – if regulators would allow it.
While developers and suppliers of commercially available home storage systems negotiate with utilities and regulators over market rules, start-ups and large corporations are exploring other interesting battery chemistry combinations that may some day also become commercially available.
Just as grid-connected residential solar has undergone a revolution in recent years, these signs all suggest that 2014 may be not just the year of home energy storage, but the beginning of a whole new era of solar energy storage technology. In the end, given the limitations for integrating large volumes of intermittent solar power on some utility circuits and grids, storage may be the only way to keep the momentum going.