ADVANCED STORAGE BATTERY TECHNOLOGY PROVIDES FOUNDATION FOR A NEW ENERGY PARADIGM
By Jim Petersen, CEO, PetersenDean Roofing & Solar
We are on the cusp of a new generation of energy, both on the residential and large-scale utility fronts. With advanced digital technology and materials such as a new generation of lithium ion batteries, the future for storage battery technology gets brighter every day.
Just look at what’s happening in California, where the state’s Public Utilities Commission approved an energy target requiring the state’s three largest investor-owned utilities, aggregators, and other energy service providers to procure 1.3 gigawatts of energy storage by 2020. In response, Southern California Edison announced that it will build a 20-megawatt storage project with a power capacity of 80 megawatt hours at the utility’s Pomona Facility in the east Los Angeles Basin of Southern California. The SCE announcement came a week after San Diego Gas & Electric announced that it plans to build 37.5 MW of storage projects on utility-owned property in Escondido and El Cajon.
The importance of storage batteries on a larger scale is recognized by the Department of Energy. According to the DOE, enhanced energy storage can provide multiple benefits to both the power industry and its customers. Among these are:
- Improved value of renewable energy generation such as solar;
- Improved power quality and the reliable delivery of electricity to customers;
- Improved stability and reliability of transmission and distribution systems;
- Increased use of existing equipment, thereby deferring or eliminating costly upgrades;
- Improved availability and increased market value of distributed generation sources; and
- Cost reductions through capacity and transmission payment deferral.
Now at its threshold, the energy storage market is being driven by improved energy efficiency, the declining cost of solar equipment, and higher capacity energy storage that is made possible by improved battery technology such as lithium ion. This creates a huge benefit to consumers of electric power, especially with federal incentives that can cover a significant portion of the total cost of a storage battery system.
MAKING ITS MARK
In the solar energy sector, the rapidly growing residential battery marketplace is making its mark. By combining solar and batteries with smart software, a home energy management system can analyze the occupant’s historic energy consumption trends. With this data, the software can then develop efficiency recommendations that include the optimal combination of stored and renewable energy required to power a home while also limiting energy demand.
This makes it possible for homeowners to use stored solar energy during peak times when utility rates are at their highest, resulting in lower bills, or financial gain by selling their excess energy back to the grid. In light of all the changes imposed by utilities and regulatory agencies, this transformational storage technology provides consumers more choices and control in their efforts to save money and to help our environment by using renewable energy.
Another key benefit of battery storage is that it can help make a solar homeowner as close to being energy independent as possible and can minimize the effects on their energy bills of ever changing utility company rules, regulations and billing rates.
Even without a solar power system, a residential battery can make sense for the homeowner by providing the capacity to store less expensive electricity for use during the peak periods. Additionally, the battery system can protect the homeowner from a “brownout” or “blackout.”
Going a step further, electric utilities such as SCE and SDG&E understand the value of storage battery technology for creating a smarter grid that, among other benefits, can give utilities better control over managing peak demand and thus improving system reliability and reducing the cost of electricity to customers.
What are the costs? Residential battery systems cost between $1,300 and $2,000 a kilowatt-hour of storage, or $8,320 and $12,800 for a battery system with a 6.4 kilowatt-hour system, according to GTM. Costs vary widely based on battery quality, integrated software technology as well as functionality and warranty level. The wholesale price for a home battery sometimes excludes the operating software, labor and other installation costs as well as the inverter, which converts direct current into alternating current. Homeowners who connect batteries to their solar panels can claim a federal tax credit equal to 30 percent of the total cost of both systems.
THE NEW PARADIGM
No question that this new energy paradigm is a win-win for California consumers as well as for its utilities, and our environment. By investing in solar power coupled with energy storage and management systems, homeowners can help support the conservation efforts of utilities and reduce the impact of energy disruptions such as the massive Aliso Canyon natural gas leak north of Northwood, CA, and the decommissioning of the San Onofre Nuclear Power Plant south of San Clemente, CA.
On a national scale, the U.S. energy storage industry includes hundreds of companies and thousands of American workers building commercial energy storage systems throughout the country with substantial growth on the horizon. The market research firm IHS Markit projects that the energy storage market is set to expand from an initial base of only 0.34 gigawatts installed in 2012 and 2013 to an annual installation size of six gigawatts in 2017 and more than 40 GW by 2022.
Dollar-wise, an IMS Research report expects the market for storing power from solar panels – which was less than $200 million in 2012 – will catapult to $19 billion by 2017. New government programs, such as a push at the federal level to extend renewable energy subsidies, are projected to help fuel the increase.
No wonder the industry is growing at a rapid pace. According to IHS Markit, over the next decade, lithium ion batteries will become the mainstream energy storage technology, with more than 80 percent of global energy storage installations including it by 2025. This year alone, the global energy storage market is expected to double, from 1.4 gigawatt hours (GWh or billion watt hours) added in 2015 to 2.9GWh. Half of all energy storage installations will occur behind the meter, meaning in homes and businesses, driven by self-consumption and back-up needs.
“Energy storage is set to grow as fast as solar photovoltaic energy has in recent years, sparking strong interest from a wide range of players and underscored by recent mergers and acquisitions among car manufacturers, major oil and gas companies, and conventional power suppliers,” Marianne Boust, an IHS principal analyst, said in a statement.
DOE ENERGY PRIORITY
The growth and advancement of storage batteries is a priority of the U.S. Department of Energy’s Advanced Research Projects Agency-Energy. The agency recently announced $37 million in funding for 16 innovative projects as part of a new ARPA-E program paving the way for technologies that overcome the limitations of current battery and fuel cell products.
“While battery technologies have improved by leaps and bounds over the past few years, there remain some imposing physical and chemical barriers that have stifled further innovation,” said ARPA-E Director Dr. Ellen D. Williams. “Solid ion conductors made of affordable, easily produced materials could replace today’s mostly liquid electrolytes and expensive fuel cell parts, helping create a next generation of batteries and fuel cells that are low-cost, durable, and more efficient.”
Low costs, durability and efficiency will continue to drive the industry. Even as the debate over use of fossil fuels vs. renewables to generate electric power continues unabated, an emerging collaboration that combines solar power with advanced storage battery technology brings to the forefront a new energy paradigm that is gaining significant attention as a way to supplement the electric grid, reduce global warming, and protect our environment.
About the author: Jim Petersen is CEO PetersenDean, which he founded in 1984. Fremont, CA-based PetersenDean is the largest, full-service, privately-held roofing and solar company in the United States specializing in new residential and commercial construction. PetersenDean works with some of the nation’s largest builders and developers and operates in seven states: Arizona, California, Colorado, Florida, Nevada, Oklahoma and Texas. Please visit http://www.petersendean.com/ for more details.