Self-Consumption PV Systems

Regulatory changes and technical advances are beginning to push the deployment of self-consumption PV projects in the US. Will it remain a niche application or become a common system configuration nationwide? I reached out to several industry stakeholders to get their perspectives on the past, present and future of self-consumption and zero-export PV systems.

What were some of the first global markets for self-consumption PV systems?
What factors drove the initial development and deployment of these systems?

European nations, specifically Germany, drove the self-consumption market. Utility concern over dealing with high PV penetration led to a reduction of the feed-in tariff to below the customer cost for electricity, essentially ending PV overproduction’s free ride on the utility infrastructure. PV system owners faced the dilemma of selling their highest PV production during the middle of the day for a fraction of the cost of purchasing power from the utility. From a technology standpoint, the puzzle became how to maximize the use of a building’s PV production, and in countries such as Germany the best return was to shift loads to times of PV production. This involves smart meters watchdogging the connection with the grid and intelligently managing loads such as water heaters and other appliances. The next level of maximizing self-consumption includes energy storage, typically in the form of batteries. The associated metering and controls become even more intelligent, as they need to choose between load control, battery charging or exporting to the grid. Some of these systems use predictive features and weather forecasting to change the logic around how to best use the available PV generation.

Wes Kennedy, senior field application engineer, Fronius USA

The main driver is the intersection of two market events: an increase in markets with high levels of PV saturation and a decrease in solar and storage system prices. Today, locations that lead in the deployment of self-consumption systems, such as Germany and Hawaii, have high levels of PV saturation. In these markets, utilities have adjusted the rate for energy sold back to the grid. For example, in Germany the utilities decreased the feed-in tariff. In Hawaii, they lowered the net energy metering (NEM) rate paid for PV energy fed into the grid. In such markets, system owners pay a higher price for energy purchased from the grid than they receive for energy sold to the grid. This pricing gap financially motivates owners to self-consume their own energy at an effectively lower rate.

Peter Mathews, North America general manager, SolarEdge

Germany and Australia are two of the first global markets for self-consumption PV systems. The adoption of self-consumption PV in Germany escalated due to a combination of market factors: the desire of customers to gain autonomy from the utility, favorable economics for energy storage caused by a spread between the feed-in rate versus the retail rate, and the desire to have control and transparency of energy generation and consumption. The development of energy storage technology was key to controlling the generation and consumption of PV in Germany. The deregulated energy market in Germany also provided an opportunity for customers to buy and sell excess solar energy, leading to the creation of online solar energy exchange platforms such as the sonnenCommunity.

A similar scenario occurred in Australia, which has the highest penetration of residential solar combined with incredibly high utility peak pricing between 3 pm and 8 pm daily. Storage is key to enabling Australian customers to increase their consumption of solar energy and decrease the amount of energy they require from the utility grid in the waning afternoon hours, maximizing the use of solar energy and minimizing the need to use high-cost energy from the grid.

The US market is following a similar pathway to increasing distributed energy resources (both renewables and storage) and is undergoing the same uncertainty around the future of energy costs and policies. With the influx of renewables, grid operations, power markets and financial structures will need to evolve to take these new energy sources into account. Smart energy storage provides flexibility for customers and utilities to evolve in the face of changing feed-in tariffs, energy storage and renewable energy incentives, utility-rate tariffs and use cases for distributed resources.

Greg Smith, senior technical trainer, sonnen

Nonexporting PV systems have been around in the US for some time. Facilities deployed them to streamline interconnection for systems intended to offset some portion of a large facility’s daytime load. However, the real growth in self-consumption or self-supply systems took off first in Germany due to increasingly lopsided economics where energy exported to the grid under the feed-in tariff compensated suppliers at less than the retail rate of electricity. Grade-school economics tell us it’s not a desirable financial position to buy high and sell low, and this drove interest in increasing the portion of PV power consumed on-site.

This movement picked up steam in areas such as Australia and Hawaii, where interconnection constraints limited or eliminated the ability to export energy. The next factor is primarily a logistics challenge: most residential load does not align with solar production potential, so a curtailment-only system is limited in terms of how much benefit it can provide. Adding storage and an intelligent inverter substantially increases the potential benefit of the PV system, because the addressable load is now available 24/7.

Philip Undercuffler, director, strategic platforms, OutBack Power Technologies

The first markets to reach grid parity (meaning identical cost of grid-supplied energy and PV-generated energy) were Australia and Germany. With regulatory reduction of PV feed-in tariffs, the cost (benefit) of PV-generated energy becomes significantly lower than the cost of grid-supplied energy. By consuming self-generated PV energy, customers can reduce their energy bills, resulting in amortization of the investment for the PV system and profits from the subsequent savings. Due to low PV system cost, amortization periods have become reasonably short, so customers can realize direct savings within a foreseeable timeframe. This is the main driver for self-consumption in these countries. In countries or US states where net metering still is a common way of benefiting from PV generation, the drive for increased or enhanced self-consumption remains low.

Martin Volkmar, product manager, energy management solutions, business unit residential, SMA Solar Technology

What additional components and software are required for nonexport or curtailed residential PV systems without energy storage?
Is this equipment certified and available in the US market?
What are the basic modes of operation for these systems?

In theory, the systems and software are pretty simple. An energy meter at the interconnection measures the direction and quantity of energy in real time and feeds a controller that communicates with the inverters to maintain the energy import at or above zero. Unfortunately, I know of no off-the-shelf systems that can do this in the US. Installers can build custom control systems, but not at a cost that makes them affordable for the average residential system. Due to the load profile of the average residence, I do not see a cost-effective solution to implement a nonexport PV system without some type of storage, either thermal or electrical, since residential loads peak in the evening.

Marvin Hamon, PE, principal, Hamon Engineering

A smart meter is the main element needed. It monitors the current flow in service entrance feeders. As soon as PV production exceeds load and the feeder current drops to near zero, the import meter sends the PV inverter a simple power-curtail command. All modern smart inverters can move on the power curve, raising voltage and reducing current exported to zero at near-Voc conditions. This level of control is available in the US today, but requires some custom integration by the system installer.

Wes Kennedy, Fronius USA

In general, for PV systems to meet limited or nonexport requirements, the system must include a meter. However, each market or state has its own requirements. In Hawaii, for example, Rule 22 from the Hawaiian Electric Company requires the installation of a meter and an inverter that limits the amount of energy transferred to the grid. SolarEdge inverters are self-certified for Rule 22. In terms of operation, these systems limit PV production to a level no higher than the electrical demand of the site. If the system produces more power than the site can consume at the time, the energy is lost. To maximize the economic return of these installations, owners should try to match their demand profile with the PV production profile.

Peter Mathews, SolarEdge

The necessary components are a traditional grid-tied PV inverter with open communications and the ability to control power via communications, a power meter at the utility point of interconnection, and a system controller that communicates curtailment signals to the PV system based on the meter measurements. I am not aware of any US equipment specifically certified for nonexport as there is no applicable US certification standard.

Kent Sheldon, vice president of technology, Greensmith Energy Management Systems

Outside the US, SMA provides the Sunny Home Manager system, which incorporates the required power curtailment control function. Combined with the SMA Energy Meter for grid connection point measurement, the system complies with common requirements in Germany, Australia and some other European countries. The new generation of SMA inverters are compatible with the SMA Energy Meter and do not require the Sunny Home Manager. The SMA Energy Meter has the same regional availability as the Sunny Home Manager. SMA energy management systems will enter the US market in the future. Hawaii has announced regulation for customer self-supply with zero export, and the exact rules are in development. We expect other jurisdictions to follow in the future.

Martin Volkmar, SMA Solar Technology

What additional components and software are required for nonexport or curtailed residential PV systems with energy storage?
Is this equipment certified and available in the US market?
What are the basic modes of operation for these systems?

There are generally two approaches for integrating storage into PV systems, whether for backup or for self-consumption applications. One is the new application of older, established technologies, which generally rely on two separate devices to manage either the PV or the battery bank. In ac-coupled systems, the two devices are inverters, one for the PV array and one for the battery bank. In dc-coupled systems, a PV controller regulates the battery charge, and an inverter uses energy stored in the battery to run loads. These systems have evolved over the last 10-plus years, primarily from the off-grid market, and have integrated increasing intelligence to meet the new demands of grid-tied applications. They have been available for many years.

What I find particularly exciting are the new generation of hybrid inverters that interface with both the PV array and the battery bank. These multiport inverters eliminate an entire piece of equipment and the associated cost of purchase, installation and maintenance. These advanced inverters must integrate the ability to change modes—from a current-source grid-following device to a voltage-source grid-forming device—based on the presence of the grid. This new generation of devices is either just entering or will soon be entering the US market. 2016 will be a big year for “Euro-style” self-consumption equipment.

Wes Kennedy, Fronius USA

With intelligent connected energy storage and advanced inverters, JuiceBox stores excess energy and shifts it for use in the evening when PV generation is low and homes have the highest load. JuiceBox Energy is one of a handful of products that are certified for this application and already installed in the US.

Neil Maguire, CEO and founder, JuiceBox

With a SolarEdge system, the integrator needs to install an energy meter and upgrade the SolarEdge dc-optimized inverter to a StorEdge inverter. These components are all certified. Once installed, the inverter runs in one of four modes of operation: self-consumption, load management, limited power production and, if there is a battery, storage.

Peter Mathews, SolarEdge

I am not aware of any storage system specifically certified for nonexport as there is no applicable US certification standard. This is a major obstacle for the installation of self-consumption systems in the US. Without certified nonexport products, utilities may require that integrators install a certified reverse-power relay between the PV energy storage system and the grid. However, this is usually cost-prohibitive for residential systems ($6,000–$10,000 per relay).

Kent Sheldon, Greensmith Energy Management Systems

The zero-export application is a built-in feature of the sonnenBatterie system. Sophisticated management control software is the key to managing residential PV-plus-storage for any energy profile in a smart home. The sonnenBatterie’s energy manager control software uses past household energy patterns (including energy generation and usage, time of day and historical weather data) in combination with self-learning forecasting software to predict usage and generation at the home, and then manages solar-plus-storage accordingly.

For example, if the software predicts that excess solar generation will occur during a low usage period, the energy manager will shed capacity in the battery ahead of time to absorb the excess solar peaks. Additionally, the sonnenBatterie system uses smart-home technology that can monitor large-load household appliances such as washing machines, pool pumps and dishwashers. If the storage system is at a maximum state of charge and the system is still generating energy, the energy manager will automatically operate the smart-plug–enabled appliances using the excess solar. Finally, sonnen products have the capability to control the inverters on the PV system (only after fulfilling household usage, storage usage and smart-plug appliance usage), which allows for reduced generation when needed, ensuring that excess solar does not get back-fed into the grid where prohibited.

The sonnenBatterie is available today. The product houses the battery inverter, lithium-ion batteries, 200 A automatic transfer switch and other components inside a single unit with a separate meter outside the enclosure. These energy storage systems meet all the required specifications currently in the marketplace, including UL 1741, UL 1973, UL 1998 and are developed to meet UL 9540 standards. 

The sonnenBatterie has two basic modes of operation: self-consumption and backup modes. These are critical modes for any residential energy storage system that provides zero export and PV curtailment. The sonnen energy storage system can also support multiple applications in one system, including solar self-consumption, emergency backup, off grid, rate arbitrage, demand-charge reduction and zero grid export. Given the ongoing growth of energy storage applications, another key feature for sustainable energy storage products is the capability to upgrade firmware and software remotely to take advantage of future applications and revenue streams. 

Greg Smith, sonnen

OutBack Power’s Radian and FXR inverters provide a unique, simple and effective self-supply option with our GridZero ac input mode. GridZero is a load-following self-supply profile, where the inverter operates in parallel with the grid and views every load as an opportunity to displace grid power with the customer’s own energy. GridZero has only two settings: the upper limit of how many amps of load the customer wants the system to take on, and the lower limit of how deeply they want to discharge the battery. In GridZero mode, the inverter never uses the grid to charge the battery, ensuring that solar always recharges it. In combination with OutBack Power’s EnergyCell Nano Carbon advanced lead-acid batteries optimized for partial state of charge applications, GridZero and solar can deliver reliable energy at a fraction of the retail utility rate in areas such as Hawaii. In addition, customers can also use the Radian and FXR under Hawaii’s zero-export (momentary parallel track) program, which eliminates interconnection hassles, minimizes solar fees and maximizes customer independence and autonomy. Both the Radian and FXR inverters are fully certified to UL 1741 and IEC 62109 as multimode inverters for both US and international markets.

Philip Undercuffler, OutBack Power Technologies

The SMA solution, including the Sunny Home Manager, supports PV systems with ac-coupled battery storage systems. In curtailed systems, batteries give the benefit of storing PV energy, which the system would otherwise need to dump. At times of no sun, the user can supply the load with the battery-stored energy.

Martin Volkmar, SMA Solar Technology

What is your perspective on regulatory changes impacting net energy metering in US locations such as Hawaii and Nevada?
Are these changes driving the deployment of self-consumption PV systems?

If a self-consumption system is the only way to install grid-tied PV and the financials come out positive, then people will continue to install systems. From the point of view of the customer, NEM is a free and 100% efficient energy storage system, and replacing it with another solution will always add to the system cost.

Marvin Hamon, PE, Hamon Engineering

NEM is under review in nearly every state, and I have mixed feelings about the attacks on it. In the short term, it’s a simple regulatory incentive to increase distributed PV. However, to step back a little, it is true that as PV penetration levels increase, the utility has increased problems maintaining grid integrity. PV system owners surely want the grid to be there when the sun isn’t shining, so the utility has to maintain the infrastructure as though PV isn’t there, while conversely having the flexibility to reduce grid production when PV generation is high. In addition, there is a basic disconnect between PV production and load, as illustrated by the fabled “duck curve” in California, where the utility has to go from very low midday production, driving wholesale markets for power negative, to the main peak of the day at 6 pm, a huge swing comprising GWs of capacity in a very short period of time. All this is to say that NEM doesn’t accurately reflect the utility costs of maintaining the grid’s stability. At some point, the utility rate structure should become transparent to the end users, with pricing based on the actual stressors on the grid. This transparency will drive innovative approaches to distributed PV, create an incentive for storage, and generally result in a more robust, flexible and resilient grid.

Wes Kennedy, Fronius USA

Changes in NEM are driving a movement toward self-consumption. NEM was great for kick-starting the solar industry and has helped create 200,000 jobs in this country. However, when PV penetration climbs as it has in Hawaii, significant numbers of people are essentially not paying for the luxury of being connected to the grid. It is fair for the owner of a solar home to pay  a reasonable fee for transmission and distribution assets, but the solar homeowner should not have to pay a tax to maintain aging fossil fuel generation assets.

Neil Maguire, JuiceBox

Changes to NEM will probably increase the deployment of self-consumption PV systems in the future, but not until the electric utilities start imposing and enforcing caps on the total amount of export-generating grid-connected distributed energy resources (DER). I do not anticipate customer self-supply, as it’s called here in Hawaii, taking off for several years until the utilities close the door to export-generating DER.

Marco Mangelsdorf, president, ProVision Solar

Because the typical energy usage of a homeowner does not match the daytime energy generation of a PV system, adjustments in NEM policies will likely promote more self-consumption with storage. With more than 70 PV markets in the US, grid structures vary throughout the country. We will likely see many variations in policy and rate structure. 

Peter Mathews, SolarEdge

NEM changes will absolutely drive the demand and installation of self-consumption PV systems, especially in regions with high energy prices. The US PV industry in these regions will shrink dramatically without self-consumption storage systems (we’ve already seen this happen in Hawaii). PV integrators will either have to install PV with storage or significantly reduce the size of traditional grid-tied PV systems to insure zero export during peak hours. Self-consumption systems will also become popular in markets that allow net power export without compensation, when the utility rates justify the price of the self-consumption system.

Kent Sheldon, Greensmith Energy Management Systems

Stability in regulatory frameworks and permitting guidelines for jurisdictions are beneficial to the entire energy industry. They allow the industry to drive efficiencies, lower costs and help create a framework that enables stakeholders to coexist and build their respective businesses. Grid operators and utilities need to consider the increasing challenges that the growing deployment of renewables poses. However, they need to address these challenges in ways that allow the use of technological solutions to mitigate these effects. Changes in NEM and retail rates in places such as Hawaii and Nevada have people looking for alternatives and better ways to increase self-consumption of renewables, which is where storage plays a key role. As seen in Germany, changes in tariffs will drive self-consumption and therefore increase the deployment of right-sized solar systems and solar systems with energy storage. Deploying distributed battery storage on the grid will also mitigate the challenges of large load and intermittent generation sources, helping grid operators and regulatory entities operate a more stable grid.

Greg Smith, sonnen

These tariff changes have created a different set of economic incentives for owners of many home solar systems that will make energy storage systems more attractive to a segment of consumers. For most consumers, even where available solar levels are quite high, storage is a vital component of a reliable self-consumption system.

Stu Statman, vice president of engineering, Sunverge Energy

Successful campaigns against solar are increasingly emboldening utilities. They quickly adopt the language and tactics that have proven successful in other regions, while the solar industry has not effectively countered the argument of a supposed cost shift from solar customers to other ratepayers. NEM is an accounting agreement that removes transactional friction by assuming all energy has the same value, whether bought or sold. The truth is that energy doesn’t always have the same value. We are already seeing negative midday wholesale pricing in California’s energy market due to the imbalance of load and generation, and the utilities point to this as proof that solar is overcompensated. However, the converse is also true. NEM undervalues solar by disincentivizing energy time-shifting or of delivering it as higher-value kW instead of volumetric kWh.

Ideally, as regions approach higher percentages of distributed generation, forward-looking utilities and utility commissions will create vibrant new markets in which distributed energy resources can participate by shifting loads and generation to balance supply and demand while providing ancillary services. Hawaii’s PUC envisions creating such a market, but has yet to concretely establish it. Nevada’s restructuring of the social contract without consideration of grandfathering existing systems creates massive disruption by gutting the economics of installed solar. Utilities in both states underestimate how easy it is to cut the cord today. As consumers do the math, adding the base charges, minimum bills, taxes and other fees to the volumetric rates, and compare that to independent solar, we’re seeing a shift beyond load defection to outright grid defection driven by pure economics, with a sprinkle of American independence on top.

Philip Undercuffler, OutBack Power Technologies

The absence of net metering, and penalties for feeding PV power into the grid, create a strong motivation to use self-generated power directly or store it locally.

Martin Volkmar, SMA Solar Technology

Do self-consumption requirements limit the maximum value that distributed PV generation can provide to utilities and regional transmission grids?

It depends on whether the utilities and regional grids attach any value to distributed PV in the first place. Many see it as a cost and not as a value generator. If they view it as a cost, then self-consumption simply lowers their cost.

Marvin Hamon, PE, Hamon Engineering

I am a big believer in incentives rather than absolutes. A requirement for self-consumption, such as zero sell-back, is a knee-jerk response from a panicked utility. The networked grid, with an unbundled utility rate structure and open protocol communications, will allow the birth of the prosumer: the producer and consumer who will be able to buy and sell not just kW but a whole host of grid support features in real time. This increases the reliability and resiliency of the grid, enables the smart grid of the future, and moves us toward the big picture goal of 24 hours of sun—a planet running on a 100% renewable energy basis.

Wes Kennedy, Fronius USA

There is a difference between rate structures that encourage self-consumption and regulations that mandate no export to the grid. To maximize the value of distributed PV and storage, the technology should support the ability for consumers to opt in to demand response and other utility-run programs with a share of the value. In some utility territories, JuiceBox Energy systems interconnect with an allowance for export. Once the utilities define the residential demand response programs, customers can immediately opt in without any reworking of the physical interconnection.

Neil Maguire, JuiceBox

A utility open to working with the PV industry allows the creation of multiple value streams from PV systems coupled with storage. For example, demand management, time-of-use shifting and voltage regulation programs can create value for both homeowners and utilities. 

Peter Mathews, SolarEdge

Storage systems increase the value to utilities and transmission operators by offering them the ability to provide real-time, truly distributed ancillary services—including frequency regulation, frequency and voltage droop control, power-factor correction, and volt and VAR support—much faster than traditional spinning generation. Market mechanisms will need to be in place to provide incentives for end users and developers to offer these services to the grid.

Kent Sheldon, Greensmith Energy Management Systems

Self-consumption requirements do not limit the value distributed PV generation can provide to the grid. Aggregation of the excess energy generated by distributed systems can provide large-scale renewable energy to the grid. By deploying decentralized large-scale PV-plus-storage systems, utilities can relieve high-congestion areas and reduce interruptions in service without using peaker plants, which are costly to build and operate. Distributed energy storage resources are capable of providing additional services such as frequency regulation, grid management and balance demand response to bolster the grid without requiring large capital investments on the part of utilities. Finally, additional distributed PV with storage deployments gives the utilities renewable resources to fulfill customer load demand while helping them meet mandated clean energy goals.

Greg Smith, sonnen

Self-consumption systems aren’t for everyone. There are a variety of reasons why solar owners may choose to remain connected to the grid. Distributed PV offers great long-term value to both consumers and utilities through the aggregation of individual systems into virtual power plants (VPPs). These VPPs increase grid reliability, provide efficient distribution of locally generated power and reduce the need for utility investment in additional large-scale generation. This offers economic upsides to both PV owners and the local utility.

Stu Statman, Sunverge Energy

The answer depends on whether you consider self-supply systems a means to an end or a step along the path of market evolution. An imperfect analogy is cell phones. At first they were simply an alternative to hard-wired communication. With the advent of smart phones, they became indispensable in day-to-day life, and using them for phone calls is almost tertiary. Today, self-supply systems provide a powerful tool for increasing the ratio of energy independence, but they are essentially an electronic check valve—they allow energy flow in only one direction. To maximize the effectiveness of the grid infrastructure, especially in an increasingly decentralized grid, we need to balance supply and demand. Intelligent inverters with energy storage and generation can provide a powerful tool to deliver bidirectional energy flow of both generation and load when it’s most valuable. The tools exist, but the market and pricing signals to properly reward participation are in their infancy. With the Supreme Court’s ruling reaffirming FERC 745, the tools are going into place to create a market where customers can manage their generation and load in response to pricing signals, thereby increasing the utilization of the grid while returning a profit.

Philip Undercuffler, OutBack Power Technologies

Systems such as the Sunny Home Manager provide an interface to utilities and distribution network operators who can regulate the PV curtailment limit via direct data connection. In such cases, PV plant owners may receive reimbursement for their contribution to grid stability, in the form of incentives or monetary benefits.

Martin Volkmar, SMA Solar Technology

What is your perspective on grid defection?
Do you think this form of self-consumption will gain traction in certain markets?

It will gain traction if the PV financials are favorable to owners and if utilities continue to create an environment that promotes it. Overall, grid defection and load defection is not the direction we should be going in to increase our use of renewable energy; but if utility resistance to distributed PV continues, it will become a more viable option. I anticipate requirements where residential customers either cannot disconnect from the grid, as exist in Florida, or have to pay exit fees that make leaving the grid a costly decision. Exit fees are already common for commercial customers.

Marvin Hamon, PE, Hamon Engineering

Grid defection is an emotional response rooted in frustration with utility policy. Producing all your own power 24 hours a day, 365 days a year is a big job and isn’t easily compatible with the typical modern lifestyle. Hawaii is probably the easiest place in the US to do so, but even Hawaii has clouds. Do we really want backup generators running all over the islands when a storm rolls through? The Rocky Mountain Institute differentiates between grid defection (cutting the cord) and load defection (reducing the reliance on the grid). Most folks will want to build out their solar-plus-storage system yet remain connected to the grid, as long as the utilities wise up and don’t institute punitive shortsighted rate structures that drive distributed solar off the grid.

Wes Kennedy, Fronius USA

We hear from a lot of people who don’t like their utilities and want to take their 4,000-square-foot home with dual air conditioning units off grid. These homes can consume 100 kWh per day. In this scenario, the answer is not to couple solar with massive storage or to add a large dirty gas generator. The best solution is typically to stay grid tied and to add solar and storage for self-consumption and critical emergency power.

Neil Maguire, JuiceBox

It’s a hell of a lot of hype and spin at present. In the near term at least (6–36 months), formerly grid-tied, battery-based off-grid systems will be very few and far between, at least in my market in Hawaii. 

Marco Mangelsdorf, ProVision Solar

Today, off grid is only a small part of the US PV market. It is still more cost-effective for homeowners to stay connected to the grid and to use the PV and grid resources interchangeably. With combined PV and storage, homeowners can increase their level of energy independence, in many cases producing and storing all the energy they need. However, to be fully disconnected from the grid does incur added costs and lifestyle changes.

Peter Mathews, SolarEdge

This seems to be a universal fear of most utility companies. They are suffering from allowing various companies to get between them and their customers with PPA contracts. Now they are overreacting to the prospect of PV plus storage, which could enable their customers to disconnect and become their own utility companies. Unless utilities dramatically increase their general service charges, it would be foolish to isolate your property from the option of maintaining access to convenient utility power via an infrastructure that is already in place. I prefer to think of the utility service as a cheap backup generator when there isn’t enough PV generation or when there is a problem with your distributed generation system.

I do think this form of self-generation will become popular in markets with extremely high utility-tariff rates. We are already seeing demand grow in many island markets, including Hawaii. In some markets, the local governments are incentivizing relatively small, isolated village power systems rather than funding expensive transmission projects to serve remote villages. Some village power projects have successfully integrated PV, wind, batteries and backup generators. These applications are becoming more commonplace, given the reduction in PV and battery prices, combined with the increase of utility power prices.

Kent Sheldon, Greensmith Energy Management Systems

Grid defection is happening on a small scale. Now that the storage technology exists to increase self-consumption, customers have greater control over their energy choices. In certain markets such as Hawaii, self-consumption will increase because the right technology and tariff structures exist. In addition, smart storage in combination with solar generation allows customers a real option to go completely off grid in regions where grid services are cost-prohibitive or unavailable.

Greg Smith, sonnen

Self-consumption works for some consumers but not for others. So many factors affect that decision, which is driven largely by economic considerations but also by practicality and reliability. There will be an increased deployment of intelligent systems that can be effectively aggregated into virtual power plants and that offer economic benefits and increased reliability on both sides of the meter. These systems will become an important factor in the self-consumption decision.

Stu Statman, Sunverge Energy

OutBack has been successfully enabling grid defection for 15 years, and this is a large and growing portion of our market. The economics and benefits of energy independence have never been better; and as utilities increasingly rely on penalizing solar with minimum bills and access charges, we see customers doing the math and cutting the cord.

Philip Undercuffler, OutBack Power Technologies

Grid defection will almost certainly increase as a result of new technology and lower system costs, but it will still be limited to a small group of individuals. While some are able to accept the more modest lifestyle required for grid defection, most US consumers would not compromise. The most likely markets to see some rise in grid defection are Hawaii (among other island markets) and other areas of the US where the electricity rates are steadily increasing, such as California and Arizona.

Martin Volkmar, SMA Solar Technology

How will the US market for self-consumption PV systems, and the equipment used in these systems, evolve over the next 5 years?

It’s impossible to tell since it is driven by utility decisions that are difficult to predict and system costs that are experiencing a downward trend. If utilities continue to create environments that promote self-consumption instead of reasonable grid energy exchange, and energy storage costs continue to decline, the number of consumers who choose to install these systems will increase.

Marvin Hamon, PE, Hamon Engineering

The next 5 years will be a time of rapid development in integration and ease of deployment of plug-and-play smart meters; smart hybrid inverters; battery banks that are modular, safe and robust; and networked appliances and home controls. Software will offer intuitive visualization and insight into real-time market signals that allow prosumers to participate fully in supporting and receiving benefits from the networked smart grid.

Wes Kennedy, Fronius USA

We will see one state after another move away from NEM and to a rate structure that encourages self-consumption.

Neil Maguire, JuiceBox

The last few years have seen a decline in battery and PV product prices and an increase in smart inverter capabilities. This allows smart energy management both on a micro level for individual households and at a macro level for the utilities. If this trend continues, evolving technologies and grid requirements will make many new financial models possible, self-consumption being one of them.

Peter Mathews, SolarEdge

Self-consumption will first evolve in Hawaii because of very high utility prices and an unstable grid caused by high penetration of PV and wind. Allowing further deployments of PV and wind on these grids requires self-consumption. Hawaii will also require PV and storage systems to take a more active role in grid support functions.

I see self-consumption indirectly evolving on the continental US through the installation of PV and storage systems to reduce demand charges and participate in ancillary services. As energy rates increase and more NEM programs disappear, these systems will transition to performing voluntary self-consumption due to simple economic forces.

Kent Sheldon, Greensmith Energy Management Systems

Considering what happened in Germany with changes to feed-in tariffs and higher utility-rate tariffs, you can expect similar regulatory changes to have an impact on PV systems in the US. Some markets have already seen dramatic changes on the regulatory side, and residential demand charges and distribution access charges are likely to become a reality. Storage systems will continue to provide solutions that help future-proof customers. The number of storage system installations will increase, not only because of potential regulatory changes and customer desire to consume more of the solar energy they produce, but also because of the declining cost of energy storage technology. Storage will become a standard part of the solar installation, instead of an add-on.

Greg Smith, sonnen

Sunverge Energy just announced its next-generation system, which offers more lithium-ion battery chemistry options than before, in a smaller footprint and at a reduced price. Systems will continue to improve and become more attractive to consumers. At the same time, the most important advances are in the intelligence of the systems and the control platform in the cloud, which will make possible this transition to power as a service, as well as much more intelligent, automatic and efficient management of distributed power resources.

Stu Statman, Sunverge Energy

Today’s market is in its infancy. Installers are kitting together solutions using the products and tools available, few of which were designed specifically for grid-tied self-consumption systems. As the market develops, inverters will likely transition from a narrow focus on energy production to a broader perspective of energy management. Systems will become easier to design and install as designers learn from the lessons of the PV industry in terms of modularity and repeatability.

Philip Undercuffler, OutBack Power Technologies

Due to rising PV system saturation, net-metering schemes will end in more and more US states. This will give momentum to the paradigm change in using PV systems—from earning money through high feed-in rates or net metering, to energy cost reduction through enhanced self-consumption rates and higher self-sufficiency levels for households with PV systems, including storage.

The rising number of smart homes in the US will contribute to using self-generated PV energy more efficiently. With a network of appliances in the smart home, load shifting will become an easy-to-realize standard for energy efficiency measures in the near future. Appliances will automatically use power when the sun provides it at sufficient levels.

Martin Volkmar, SMA Solar Technology

Contact:

Joe Schwartz / SolarPro / Ashland, OR / solarprofessional.com

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