Apr 17th, 2019
In the world of pairings there are the classics: bacon and eggs, peanut butter and jelly, milk and cookies. To that list we may now need to add another: behind-the-meter energy storage with solar PV. According to a report released last year from GTM Research—now integrated into the Wood Mackenzie Power & Renewables group—by 2023 some 90% of residential energy storage installations will be paired with solar.
It’s hard to imagine another clean energy technology whose market growth is so closely tied to deployment of another complementary technology. The only other example that comes to mind would be electric vehicles (EVs) and EV charging stations. It’s near-impossible and almost laughable to imagine a residential customer installing a home charging station in their garage in the absence of also purchasing an EV.
By the mid-2020s, the residential solar+storage market is going to get big. According to WoodMac’s most recent U.S. Energy Storage Monitor—released in March earlier this year—by 2023 and 2024 residential storage installs will surpass 1 GW annually.
Multiple factors are driving growth of residential solar+storage
Residential customers are adopting storage paired with solar for a variety of reasons. Some are of course interested in the resilience benefits of having their own clean generation and backup power for storing that self-generated electricity. Others will undoubtedly be interested in using the storage part of their system to reduce residential demand charges and/or arbitrage utility time-of-use rates, depending on what type of rate structure plan they’re on. Customers in the most-expensive retail electricity markets may be looking to insulate themselves from high and/or rising retail prices.
But other customers will be looking to pair their storage with solar for another important reason: to self-consume their PV generation. In other words, they’ll look to store their solar-generated electricity in home batteries, then use that stored electricity to power their home’s energy use. Maybe they live in a utility service territory without net metering, one where residential solar power exported to the electricity grid is compensated at a rate well below the retail price. Or maybe they’re on a rate plan similar to Hawaiian Electric’s Smart Export, which provides no export compensation at all during the 9:00 am to 4:00 pm block of daytime hours. Or maybe they’re simply motivated by environmental ideals, with the idea that self-consuming their own solar energy using a storage system helps to reduce their climate footprint.
These are rational and noble intentions, but in reality, there may be a wrinkle or two to consider.
Solar self-consumption isn’t always the answer to reducing emissions impacts
For residential customers pursuing solar+storage paired systems, the logic seems rational enough: a) produce clean energy, b) store clean energy to use later when solar isn’t generating, c) reduce your emissions and climate footprint. Right? Not always.
Although it’s tempting to consider residential solar+storage systems as units unto themselves sitting behind a utility meter, the reality is that they remain interconnected to a broader electricity grid. That grid is dynamic, just like the home systems. At times, renewables are cranking out kilowatt-hours of electricity; at other times, fossil-fueled power plants are ramping up to meet grid demand.
To wit, researchers Robert Fares and Michael Weber—in a study published in the journal Nature Energy—found that residential storage systems paired with solar in Texas can actually increase net emissions, rather than decrease them (vs. stand-alone solar). This counterintuitive finding has big implications. For residential customers that want to reduce their environmental impact, it’s not enough to simply say, “I installed a home solar+storage system.”
Instead, they need to ask themselves a question along the lines of, “What happens when I do or don’t use the grid, buy kilowatt-hours, export solar-generated electricity, or store solar power in my battery to use later?” The answer will give them a much closer and more-accurate sense of their true emissions footprint.
How Automated Emissions Reduction unlocks potential in residential solar+storage systems
Of course, answering the question of “What happens when…” requires both a) a way to know the answer to a fairly sophisticated question and b) a way to tell smart devices, such as a home energy storage system paired to rooftop solar, what to do when. Is it better to self-consume my solar, or store it for use later tonight, or export it now to the grid? Which option(s) yield the best emissions and environmental benefits? (As you might imagine, that answer can continuously change, making automation a key ingredient to the equation. No one should expect customers to manually modulate their systems!)
This is where WattTime’s Automated Emissions Reduction (AER) technology truly shines. (Please pardon the solar pun.) AER is a simple software update that allows smart devices to use energy during times of cleaner electricity and avoid times of dirtier energy. Behind the scenes, AER uses 5-minte increments of historical and real-time data (and eventually, predictive data as well) along with sophisticated algorithms and machine learning to deduce the specific environmental impact of your energy use.
It’s like giving residential solar+storage systems an ‘easy button’ for making hard decisions about how they interact with the broader electricity grids and the emissions impacts that go along with it. We’ve already shown how AER could be a crucial lever for reducing the emissions associated with stand-alone storage systems, such as in the California market.
Residential energy storage system manufacturers, solar+storage system installers, and developers should take note. Homeowners—and not just the eco-minded ones—are demanding features like AER, in part because it allows them to achieve the environmental benefits and self-determined control they’re ultimately after with solar+storage systems. The smart companies that roll this out sooner than later stand to gain competitive advantage and win more customers. With residential installations approaching 1 GW annually by around 2023, there’s a lot to gain—delivering easy-to-capture benefits while we’re at it that deliver on the ultimate promise of solar+storage systems.