Installed solar photovoltaics (PV) in the United States has grown by 418 percent between 2010 and 2014, according to the U.S. Energy Information Administration’s April 2014 Electricity Monthly Update. In 2010, U.S. solar installations were just 2,326 megawatts (MW), however by February 2014, 12,057 MW of solar electricity had been installed, a gain of 9,731 MW in generating capacity.
Although solar’s total generating capacity for the U.S. remains small at an estimated 1.13 percent, all signs point to continued growth. Pricing for solar equipment has continued to decrease, solar installers have become more efficient, and more and more consumers in the residential and commercial segments see the proven value of solar’s benefits and cost efficiencies.
With solar installations continuing to grow in the residential, commercial and utility segments, one of the biggest criticisms of solar technology — that it is an intermittent source of power and does not generate electricity once the sun has set — is now coming up against the benefits and values of combining battery storage with solar PV systems. Combining banks of batteries with solar systems has primarily been an application occurring in the off grid market for those buyers living in more remote areas who have not had access to centralized electricity grid service.
The market for combining battery storage with solar has historically remained small due to, among other things, a lack of integration of varying parts of solar with storage systems. Another reason for the market’s small size is the belief that electricity pricing from electric utilities will remain reasonable and power from the grid will remain reliable.
But current events have begun to seriously challenge the ongoing belief in reasonably priced and reliability delivered electricity from the grid. Recent high-profile severe weather storms such as Super Storm Sandy, increasing demand charges for commercial meter accounts, and the upcoming retirement of a number of U.S. coal plants to comply with clean air requirements now have electric utilities in high-population urban centers dealing with increasing costs and growing concerns about power reliability.
In response to these developments, the independent grid operators in California, New York, Massachusetts, the Pennsylvania/New Jersey/Maryland region, and Texas have joined forces with state regulators to drive more energy efficiency and energy storage initiatives at overstrained electricity grids facing more and more maintenance and repair from ongoing storm damage. Long term costs for electricity generation from traditional sources such as coal, nuclear and natural gas are also expected to rise in cost over the next decade. Natural gas now accounts for more than 30 percent of electricity generation, and despite the claims of new and abundant suppliers, it’s an energy commodity with a long and volatile history of rapid price spikes.
With recent advancements in battery chemistry such as advanced lithium ion batteries, major improvements in power electronic inverters, and software systems to monitor and control battery installations, storage is an energy technology whose time has come — particularly when combined with solar systems.
As was the case for the early adoption of solar among everyday users, Germany now leads the way again with a historic new energy storage incentive program which now allows owners of solar systems to install a bank of batteries on their properties and to use the stored electricity of the batteries in the evening after the sun has gone down.
Informally known as “self consumption,” the storage incentive program comes from Germany’s Federal Environment Ministry and KfW who in mid-2013 made available of €25 million (USD33.5 million) through the state bank to provide financial incentives for installed battery banks with solar systems. This incentive program has continued through 2014 with an additional €25 million having been made available, and it is focused primarily on residential owners of solar systems. It’s a powerful incentive that may soon yield strong results.
The benefits of combining battery storage with solar systems are many and provide benefits to the solar system owner, the electric utilities, and local governments. Using stored battery power on the property encourages energy savings and efficiencies while at the same time providing a reliable source of backup power over multiple days. This is paramount when facing the power outages experienced during Hurricane Irene in 2011, Super Storm Sandy in 2012, and the polar vortex in winter 2014. Additionally, fuel demands and sustainability are eased when more users rely on PV solar with battery storage in response to the fuel shortages and inability of service stations to pump gas due to power failure.
The value of combining PV solar with battery storage also is of great benefit for commercial property owners whose electric utility billing agreements require them to pay expensive demand charges for taking power during time of peak use. More than 50 U.S. electric utilities now offer some type of financial incentives for commercial users to not take power from the electric grid during peak demand. It’s an effort to maintain needed power reserve margins during weather driven heat waves and grid damage during ice and snow storms.
As with the estimated continued growth in installed PV solar systems, battery storage is estimated to play and increasingly important role in the U.S. energy mix. According to New York City-based technology research firm Lux Research, the market for stationary energy storage applications found in the residential and commercial segments will be worth USD 2.8 billion over the next several years as cost breakthroughs and technology advances continue.
The market today for battery storage appears very much dlike the state of the PV solar industry in the mid-2000s, right before the industry really began to take off. With battery storage amplifying and accelerating the benefits of solar power generated electricity, we may well see yet another round of rapid growth for the industry.