Solar Energy Storage

Emerging Technologies, Markets and Applications

The current buzz surrounding solar energy storage has been gradually building for the last two years. How the storage market will grow and evolve, and how quickly, is not yet clear. However, one thing is certain—the solar industry is entering a dynamic new phase of solar storage market and application development. Established power electronics and battery vendors are positioning themselves for the expected business growth, and new start-ups fueled by successive rounds of funding are aiming to capture a piece of the anticipated market surge.

Today, industry conversations about solar storage often include references to “early market issues.” This may leave integrators who have been at it for a decade or two rather perplexed. Through the 1980s and most of the 1990s, if you were working in solar, you were working with batteries. The introduction of power electronics that allowed utility-interactive systems to operate without batteries was a key advancement that facilitated the mainstreaming of PV generation in the US over the last decade. However, by many accounts PV systems with integrated storage are starting to come full circle, and, in a sense, what is old is new again.

Utility rate structures, gradual shifts in how the utility grid is managed, maintained and upgraded, and regulatory changes are creating new applications and opportunities for PV systems with integrated storage. Furthermore, customer-sited and utility-scale storage will likely become a design requirement for renewables integration in regions with high distributed generation (DG) penetration levels to help manage the impact of variable energy sources on these regional utility grids.

For this article, I conducted interviews with industry stakeholders, including representatives of power electronics vendors, and design and integration firms, to compile a range of perspectives on solar storage, primarily related to utility-interactive applications. My goal was to identify the technological and market developments that are creating a predominantly bullish industry attitude toward the future of solar energy storage in North America.

Eric Carlson

Senior director of grid systems integration, SolarCity, solarcity.com

What markets and applications provide an optimal value proposition for PV systems with integrated storage? How will this evolve over time?

Battery energy storage devices clearly have capabilities that make them attractive as an energy and capacity resource. A PV and storage battery system can provide value on many levels. Storage can provide backup power to homes and businesses, or it can cut peak-demand charges. Energy storage can be used in addition to renewable generators to provide firm peak capacity to the grid. If a grid operator is looking at an area where it might need to replace or increase the capacity of equipment, it could put a battery or batteries in place to meet the demand instead of the traditional infrastructure. Energy storage can also provide frequency regulation and other services that offer value to the grid.

One of the most developed markets for grid-connected energy storage is in commercial retail peak-demand reduction. Because utility tariffs place a high value on reducing demand, especially at peak times, there is an economic incentive to deploy energy storage in certain locations. The optimal candidate for a PV system integrated with energy storage is a commercial site with peak demand occurring during or just after daylight hours and with a high-demand charge, typically from $12 to $20 per kW during peak hours. These customers are typically in either California or the Northeast US. However, across the US, demand charges are increasing at an even steeper rate than energy prices. As more utilities rely on demand charges to help smooth out customer load curves and recover costs, energy storage will become economically viable for more and more customers.

Is SolarCity seeing an increase in customer interest in storage systems? If so, what are the market drivers?

We’re in the pilot phase of our home energy storage system offering in California. We have more than 300 customers either installed or under contract to install storage within that limited pilot, and we hope to expand the scope soon. We see increasing interest in home storage systems, and the most common driving factor is the desire for backup power. As storms and other climate-related disasters have increased in intensity in recent years, more people are interested in securing their own energy to avoid hardships.

In December 2013, SolarCity launched its DemandLogic energy storage system for businesses. How does this system operate, and what is the value proposition for the customer?

SolarCity DemandLogic, developed with advanced battery technology from Tesla Motors, allows businesses to cut energy costs by using stored electricity to reduce peak demand. The solution can also provide backup power to mission-critical systems such as cash registers and select lighting in storefronts during grid outages. DemandLogic storage includes learning software that automates the discharge of stored energy to optimize utility savings for customers.

We currently offer our DemandLogic product in areas of California serviced by Pacific Gas & Electric and Southern California Edison, areas of Massachusetts serviced by NSTAR and areas of Connecticut served by Connecticut Light & Power. We chose these markets due to the high costs of demand charges in those areas.

Why does SolarCity utilize lithium-ion batteries in its utility-interactive solar storage systems? What is the price premium compared to valve-regulated lead-acid (VRLA) batteries?

Lithium-ion battery technology provides many advantages over VRLA. First of all, lithium-ion energy storage systems are typically able to achieve a greater number of charge and discharge cycles during their lifetime. This is particularly important in commercial applications where the battery may be cycled frequently to reduce site demand or provide ancillary services to the grid.

Another consideration when designing storage products, for both residential and commercial markets, is the physical size of the system. For residential customers, a product that can be wall mounted is critical to ease of installation and permitting. Our residential systems are almost all mounted on garage walls. SolarCity gives customers backup power without taking up valuable space. Space constraints are also a concern for commercial customers. The lithium-ion products provide a compact and self-contained solution that can be located indoors or outdoors. Additionally, lithium-ion batteries do not require regular servicing, making them a convenient solution from a customer perspective and much less expensive to maintain.

Although there is a price premium to lithium-ion batteries in the short term, the longer life span and increased cycles, the greater energy density and the limited ongoing costs make them preferable to VRLA for both commercial and residential applications.

What policy shifts or utility cost-structure changes will significantly impact the projected growth of storage systems in the US?

Because we are in the nascent stages of the market, incentives like the Self-Generation Incentive Program in California are critically important to drive scale, which will in turn bring costs down. However, the biggest policy changes that will drive the market for energy storage are the reduction of regulatory barriers to building and interconnecting energy storage systems. This includes streamlining the interconnection process, reducing undue technical burdens on system designs—which do not exist for PV alone or for any other generating technology—and reducing the excess fees and charges that many utilities are attempting to apply to projects that involve energy storage. Once these barriers are reduced, opening up ancillary service markets to aggregated storage capacity is critical to enable storage to offer its full value to the grid and to end customers.

How will financing mechanisms such as leases and PPAs impact the deployment of solar storage?

Financing storage systems is crucial to widespread deployment. SolarCity pioneered the solar lease, and we rolled out our DemandLogic commercial storage system with a similar leasing structure. The lease simply makes it possible for more customers to adopt solar, and now storage, without the hefty up-front costs of purchasing a system outright.

Darren Hammell

Cofounder and chief strategic officer, Princeton Power Systems, princetonpower.com

What products does Princeton Power Systems offer for utility-interactive PV with integrated storage?

We offer turnkey energy storage systems that combine advanced batteries, converters and controllers. Our power converters can integrate multiple battery banks, and solar, wind and fossil fuel generators with a single converter. The converters can export power and can also run off-grid in an islanded mode while still meeting UL 1741 requirements. Our inverters include many smart-grid features such as peak shaving algorithms, programmable demand response and frequency regulation. We also offer a site controller that aggregates multiple inverters and other assets, and allows a single point of monitoring and control. Our converters are available in power levels of 10 kW–500 kW and can be paralleled into multimegawatt systems.

What battery technologies are compatible with Princeton equipment?

We help our customers choose the best battery for their application and have existing systems in the field with advanced batteries from manufacturers such as Deka/East Penn, Dow Kokam, General Electric, Saft, Samsung, Tesla Motors, ViZn Energy and many others. Our converters are compatible with most chemistries due to their wide operating voltage range of 36 Vdc–600 Vdc.

Are you seeing any emerging trends in the battery technologies that the solar industry is deploying?

Most of the available battery types that are in reliable, cost-effective packages from reliable suppliers have been on the market for several years, though the costs have come down considerably. Many of the newer battery technologies that companies are heavily marketing are not yet ready for wide deployment.

Lithium-ion batteries are now widely available, have exceptional efficiency and performance, and have come down in price significantly over the last few years. The major manufacturers of electric vehicles have all chosen lithium-ion chemistries for their vehicles, which is driving costs down and increasing performance. Other unique chemistries, such as the GE Durathon battery, are also commercially available at attractive price points. Lead-acid batteries are still the most common since they have much lower initial costs, but there are many operating scenarios where their lifetime costs may be more expensive than those of other battery types.

What markets and applications provide an optimal value proposition for PV systems with integrated storage? How will this evolve over time?

PV with storage is ideal in on-grid settings where backup power and resiliency are important, such as community centers, municipalities, schools and other public settings. Adding storage to PV installations can create stand-alone microgrids that are critical to communities in the event of outages caused by storms, wildfires or other events. Grid-connected systems with storage can also provide peak demand reduction, demand response, frequency regulation or other lucrative services.

Where do you think the US solar storage market is headed?

Princeton Power Systems works in three main sectors—microgrids, energy storage systems and electric vehicle charging—that all utilize the same underlying platform. In 2013, we deployed more than 11 MW of these systems in commercial and industrial applications, and we expect this to increase dramatically in 2014. We believe that demand for residential systems may increase in 2014, but it will take longer for widespread adoption in this segment.

There is a huge interest in microgrid systems in the Northeast, especially after the devastation caused by Superstorm Sandy. There is also a large demand across California due to wildfires, high energy costs and other factors. Customers are becoming increasingly aware that one battery system can provide a number of different services. After recent FERC [Federal Energy Regulatory Commission] orders, legislation in California targeting stationary storage and resiliency efforts in the Northeast, we are on the verge of seeing an extraordinary increase in the demand for stationary storage systems with PV.

What are the major obstacles to the expansion of solar storage systems in the US?

Many new storage technologies are not yet ready for deployment. At the same time, many high-performing technologies have been tested and proven, and have recently achieved significant cost reductions and scale. Educating customers about what is available on the market and being able to show existing systems that have been operating in the field should go a long way toward accelerating deployment of energy storage. Costs must continue to come down, and customers must continue to demand access to DG in net metering scenarios without excessive tariffs on DG adoption. Regulations must continue to support storage and allow storage owners to be compensated for the benefits they provide.

To be attractive, energy storage must be cost effective and provide value. Understanding the various revenue streams available in particular applications, choosing the right technology to take advantage of them, and designing and operating the system properly are important. If the industry makes misleading performance claims or designs systems that do not operate as advertised, we risk alienating customers at an important point in market development.

Mark Hardin

Director of product marketing, Xtreme Power, xtremepower.com

What markets and applications provide an optimal value proposition for PV systems with integrated storage? How will this evolve over time?

To date, the majority of the market for PV systems integrated with an Xtreme Power Energy Storage System [ESS] has been island grids hoping to lower energy costs by displacing costly fossil-fueled energy with cleaner, less expensive renewable generation such as PV. These grids are usually smaller and less robust than mainland grids and cannot reliably absorb the rapid, uncontrollable fluctuations in power output associated with renewable generation. Therefore the island utilities require the renewable developers to include some method of reducing intermittency, or ramp control from the ESS, and provide grid-support functions such as frequency response and voltage support.

The value proposition is when the levelized cost of PV combined with an ESS is less than the cost of the fossil-fueled alternative generation and/or additional grid support services that may be required. Xtreme Power has seen this market grow from the Hawaiian Islands to include Alaska, Puerto Rico and various Caribbean locations. While this fractured market will continue to grow, new opportunities are taking shape in California and other mainland grids where forecasts indicate that the level of PV and renewable penetration will reach a tipping point that will require the unique operating attributes of energy storage systems. In addition, the increasing cost of demand charges and proliferation of behind-the-meter PV offer potentially lucrative savings for commercial and industrial customers interested in utilizing an ESS combined with PV to reduce metered demand and maximize the potential savings of PV generation.

What customer requirements do utility-interactive solar storage systems meet? What are the key market drivers?

Typical customer requirements are ramp control, or reducing the volatility of the intermittent output from PV generation, and various grid-support applications such as frequency response, frequency regulation, voltage support and responsive reserves. Customers are interested in these applications primarily to meet requirements outlined in a PPA to connect the solar project and deliver power. They are also interested in improving grid stability and reducing wear and tear on conventional generators, by using the energy storage systems’ ability to deliver power quickly and accurately, to help with frequency or voltage fluctuations that high levels of renewable penetration may be causing.

However, in larger, more rigid grids with lower levels of renewable penetration, the customer may not request some applications. Future customer requirements will evolve to solve the issue most adeptly illustrated by the CA-ISO “duck chart” graph. This graph shows the very steep and large load ramp-up period utilities will face when solar generation is declining and load is increasing in the early evening hours. Utilities are already looking to flatten their load curve by charging up solar storage systems during solar peak output in the midday period, and discharging during the early evening hours when solar generation is dropping and load is increasing. This time-shifting application is well suited for solar energy storage systems.

What policy shifts or utility cost-structure changes will significantly impact the deployment of storage systems in the US?

Energy storage systems can be a great source for capacity in resource-constrained areas where additional generation is not feasible due to permitting, siting or other reasons, and a full-blown transmission or distribution build-out is highly cost prohibitive. However, to qualify for capacity, many utilities require a 4-hour duration that can make storage systems quite expensive. If the utilities alleviated the constraint to 1 or 2 hours, then the economics for this application could be very interesting, especially considering all the other grid-level services the system can provide. If the generic, one-size-fits-all requirement of 4 hours for capacity payments can be intelligently revised, developers and utilities may open an excellent market for PPA-type storage projects owned by the developer, and controlled and paid for on a fixed-price basis by the utility.

In addition, it will be interesting to see how utilities change tariff structures to compensate for lost revenue associated with the proliferation of DG. An increase in demand charges can play right into the hands of energy storage systems that can quickly discharge to reduce the metered maximum demand on the customer’s meter, and charge during periods of low demand to generate demand savings for the customer. If demand charges do continue to increase, the market for behind-the-meter energy storage will certainly see significant growth.

What are the major obstacles to the expansion of solar storage systems in the US?

An obvious obstacle is still the cost of the systems. This will continue to decline with improvements in battery technology. However, creating market structures that truly enable the unique benefits of energy storage systems to realize a monetary value is also critical. FERC Order 755 is a terrific example of how a market structure is being revised to truly value grid assets that can respond more quickly and accurately, such as energy storage systems, to provide frequency regulation.

[Editor’s note: Xtreme Power filed for bankruptcy protection after our interview was completed.]

Tristan Kreager

Manager of hybrid energy solutions, SMA America, sma-america.com

What products does SMA America offer for utility-interactive solar storage systems and stand-alone microgrids?

SMA manufactures the Sunny Island, a grid-forming,bidirectional, utility-interactive or stand-alone inverter/charger with a 48 Vdc battery bus. Each unit is rated at 4.5 kW or 6 kW and can be networked in various configurations to the MW scale. This solution works in either utility-interactive or stand-alone microgrids. Residential systems range from a single 4.5 kW Sunny Island up to a 24 kW Sunny Island cluster with a 30 kW PV array. Commercial solar storage systems are under development as the market matures. Currently, a single cluster of Sunny Islands in either a 3-phase or split-phase configuration is our fully UL-compliant limit [13.5 kW or 24 kW of load, 36 kW–48 kW of PV, 480 kWh of storage].

As system size increases, a piece of synchronizing switchgear called a Multicluster Box [MCB] is used. Currently, the MCB is not listed for utility interactivity. However, utilizing external transfer switches that are listed for that purpose makes large-scale projects feasible. In the US market, SMA offers the MCB12, which incorporates 12 Sunny Islands configured in four 3-phase clusters. This allows for system capacities of 72 kW of Sunny Islands, 110 kW of PV and nearly 2 MWh of batteries. For even larger projects, SMA offers the MCB36, which is configured for European grids [230/400 Vac, 50 or 60 HZ] and is CE listed. Using voltage transformers, US projects can be built with up to 216 kW of load, 360 kW of PV and 8 MWh of batteries. Our utility-scale storage solutions are custom engineered based on our Sunny Central technology and are primarily aimed at facilitating advanced grid-management requirements.

What markets and applications provide an optimal value proposition for PV systems with integrated storage?

Storage plays a role in many markets, but is most commonly applied in the residential and commercial space where it is most cost effective. In a general sense, that is any place where the cost of energy exceeds the life cycle cost of a PV and battery system. Historically, this meant off-grid or remote microgrids where the cost of transmission made PV and batteries the least expensive option. However, decreasing PV costs over the last several years opened new applications, with PV and batteries merging with diesel grids. Now the hurdle is battery costs. There are various battery technologies that are driving life cycles up and capital costs down, achieving better LCOE [levelized cost of energy]. Those are the macro market drivers.

Other ancillary attributes make energy storage worth considering regardless of least-cost economics, the biggest of which is backup power. In the residential market, it doesn’t matter if the grid is cheaper when the grid has failed, because backup power is about security, not economic payback. Economics are more of a concern in commercial applications. One exciting application in the commercial space utilizes energy storage to reduce peak-demand charges. Loads are monitored and, when a customer is near a penalty threshold, stored energy is pushed into the load center, keeping the customer under the penalty.

Areas of regulatory compliance, such as markets with heavy PV penetration on certain feeders as in Hawaii, are making energy storage attractive. Due to the intermittency of PV during weather events, some utility markets such as Puerto Rico are using energy storage to smooth power delivery. Europe is incentivizing the concept of “self-consumption,” utilizing modest battery banks and smart-load monitoring to increase the percentage of PV energy used locally, minimizing impact and fluctuations on the grid.

Do you have any insights on the status of the solar energy storage market in Germany?

Germany has incentivized storage as a way to increase renewable energy penetration. The primary driver in the German market isn’t security from storms, it’s pure economics. The German policy model has created a system where consumption of PV power generated on-site is financially more advantageous than selling the power back to the grid. This focus on home energy management utilizes storage to time shift consumption to times when it’s most economically viable for the consumer and most beneficial for the grid operator.

How are recent challenges to state net metering laws impacting the growth trajectory of solar storage?

Net metering has been a pillar of support for the US PV industry. It’s been critical to the growth of the grid-tied market. Should it go away or new policies affect its economics, on-site storage could become an alternative much in the way Germany’s market operates. In a paradoxical way, any erosion of net metering is good for the storage market. Any increase in cost or hassle makes the relative cost of adding storage seem more palatable.

How will California’s Assembly Bill 2514 impact the deployment of solar storage systems in the state?

The mandate of storage will obviously impact both the consumer and utility sides, as outlined within the bill. We have noticed that this bill has already accelerated deployment of solar storage systems. By establishing guidelines and securing a potential market, it allows investment in the segment, spurring technological advances and leading to real volumes.

What are the major obstacles to the rapid expansion of the sales and deployment of solar storage systems in the US?

Certainly, the industry must address the cost of batteries and associated maintenance concerns, through either policy support or financial mechanisms like PPAs or leases. Likewise, the industry needs to work with grid operators so utilities benefit from the application of storage technologies, whether they are residential, commercial or utility scale. Advancements in the integration of grid, loads and renewable energy control systems are necessary. Finally, most installers are still inexperienced in storage technologies and are reluctant to sell into that space.

Leesa Lee

Senior director of marketing, Stem, stem.com

What are the components of the Stem system? How does the system operate? 

The Stem system is a modular, integrated storage solution that includes predictive analytics and advanced energy storage to reduce electricity bills for commercial and industrial customers. The system works by predicting usage and strategically charging and discharging the on-site battery to reduce peak loads. Power is not exported to the utility grid. The Stem system is installed indoors behind the utility meter in parallel with a customer’s distribution equipment.

How does the Stem system assist grid-direct PV systems?

Stem helps PV customers in three ways. The system reduces demand charges, particularly with respect to the volatility of solar production. It provides energy during the “shoulder” peak periods when consumption is still high but PV production has diminished. Finally, it future-proofs against tariff changes.

In what markets and regions does Stem offer storage systems? What is the installed capacity?

Stem currently focuses on marketing to the Californian and Hawaiian markets and has more than 7 MW of storage under contract to be deployed. We’re also working with utilities to deploy aggregated storage.

What are the key drivers in customer interest?

Demand charges currently are the key driver. To reduce demand charges, businesses need to manage peak usage effectively. Despite detailed rate-structure information, it is challenging for even the most conscientious business owner to manage peak loads. Deploying PV can reduce base loads, but peaks that result in high demand charges can still occur, especially if the PV production is volatile. As utilities need to recoup more of their infrastructure costs through higher charges on peak loads, behind-the-meter storage can play a large role in addressing the resulting demand charges experienced by end customers.

What battery technology does the Stem system use? What is the expected cycle life of the battery pack? 

The Stem system uses lithium-ion phosphate batteries. They were chosen for their combination of energy density and safety. These batteries are under warranty for 10 years.

What financing opportunities are available for the Stem system?

The Stem Zero program offers zero-down financing. Customers can get a Stem system with no money down, a fixed, low monthly payment and flexible options after the term ends. Given the nascent nature of the solar storage space, customer awareness and education are the biggest tasks that we have ahead of us at Stem. Awareness among solar developers and installers is a vital part of our marketing efforts for 2014.

Tom Leyden

CEO, Solar Grid Storage, solargridstorage.com

What are the components of the Solar Grid Storage PowerFactor solar-plus-storage system?

Solar Grid Storage PowerFactor systems have building blocks of 250 kW and 500 kW. A combination of these can be deployed for PV projects with arrays starting at 150 kW and building up to the MW scale. Our enclosures include all the components needed for solar plus storage, including a dual-use inverter, battery storage, controls, disconnects and safety devices. We typically use lithium-ion batteries that can be sourced from several well-known and bankable suppliers such as LG, Panasonic and Samsung.

What markets and applications currently provide an optimal value proposition for PV systems with integrated storage? How do you see this evolving over time?

Solar-plus-storage systems add value to traditional solar arrays by enabling benefits such as emergency power, peak-demand reduction, improved power quality, ramp-rate control, load shifting and grid services. Optimizing a system’s capability depends on what market you’re in. California, for example, has high-demand charges that storage can mitigate, and PJM Interconnection’s ancillary-services market provides a premium for the fast-reacting power that batteries can provide. Many states are exploring what they can do to encourage distributed storage, and we expect opportunities to sprout up in these areas as well. Because solar plus storage is such a flexible asset, it will be well positioned to optimize value as the regulatory, utility and financial environments evolve over the next few years.

What is the unique value proposition of the Solar Grid Storage PowerFactor system?

The company has developed a business model that allows batteries to be added to commercial PV installations while lowering costs and adding benefits. Our PowerFactor systems perform all standard PV functions while enabling innovative uses of solar energy, such as delivering emergency power during outages, reducing demand charges and helping grid operators balance power. We either sell our inverter/storage assets to the system owner or finance them separately, providing the inverter as a service. In both cases, Solar Grid Storage operates and maintains the system.

What policy shifts or utility cost-structure changes will significantly impact the growth of storage systems in the US?

FERC Orders 755 and 784 require grid operators and utilities to develop programs aimed at delivering fast-reacting services that help balance and stabilize the grid. The orders establish an equitable framework for on-grid energy storage to participate in the open-energy market. They outline compensation guidelines and evaluation strategies for independent system operators [ISOs], implementing technologies that balance the grid, stabilize power and improve resiliency. They also address market inequities that often favor older methods of balancing demand and mandate that ISOs and utilities take into account speed and accuracy when evaluating grid stabilization technologies.

Solar Grid Storage is advocating for other accommodating policies such as financial incentives for solar plus storage. We believe there is a good case to be made for regulated utilities to invest in solar-ready inverter/storage systems, which would allow the solar industry to plug into systems already paid for and interconnected by the utility.

What are the major obstacles to the expansion of the sales and deployment of solar storage systems in the US?

Many of the historic barriers to adding storage to solar are crumbling. The public’s keen interest in electric vehicles and the accompanying demand for robust, energy-dense and less expensive batteries is driving growth in battery sales and bringing the cost down. Add to that the emerging market in grid-level storage, and you have the conditions for profitable, rapid growth for battery suppliers. As we’ve seen in the solar industry, as costs go down, deployment goes up. Competition forces suppliers to produce better storage technologies that will last longer and cost less.

Barriers to large-scale deployment remain. While FERC is clearing the way on the grid-services regulatory front, local regulations can still prevent the solar-plus-storage connection. For example, there is some confusion about net metering with solar storage systems, particularly when a system also provides grid services. A bad interpretation of the codes could hold up revenue for underwriting the additional storage component of PV projects.

The final barriers to innovation are market based. How do you get the valuable new benefits of solar plus storage deployed cost effectively? The answer from our perspective is combining flexible technology with business models that find ways to monetize multiple benefits. This requires regulatory flexibility for sure, but also financial mechanisms that can attract capital at reasonable rates, even if the technology combinations are relatively new and untested. We believe the prospects for solar plus storage will improve with good operational experience, enabling funding sources to grow more comfortable with this new asset class.

David Love

Account executive, Ameresco Solar, amerescosolar.com

What is Ameresco Solar’s history with solar storage systems?

A significant portion of our business is battery based, from small single-battery systems to larger off-grid hybrid applications. While we certainly develop grid-tied systems, the more interesting projects tend to be battery based. For example, we recently completed a 67 kW off-grid project to operate a municipal water system near Peach Springs, Arizona. The remote ac-coupled system operates multiple pumps during daylight hours and also charges a 6,000 Ah at 48 Vdc VRLA battery bank to operate the pumps and controls overnight. We selected Deka Unigy II sealed AGM batteries due to the compact footprint and good product track record. The system pumps 20,000 gallons per day over a pipeline network that is more than 30 miles long.

How can financing mechanisms accelerate the deployment of solar storage systems?

In the past, a barrier to battery-based systems was finding lenders that would offer a loan with a long-enough term at a reasonable rate across all US states and territories. Ameresco Solar now offers a solar loan through our installers for all residential solar projects, including battery backup and off-grid applications. The term of up to 15 years with zero down allows for a reasonable monthly payment, especially compared to the operating costs of fossil-fueled generators.

What markets and applications currently provide an optimal value proposition for PV systems with integrated storage? How will this evolve over time?

Change is the only constant. Currently we see a desire for off-grid and battery-backup systems. With a change in utility pricing, policy or utility availability, however, we will see new markets appear. The promised new battery technology may find a place at the table as well. Emerging markets will be in Hawaii due to the high cost of utility power and grid saturation there, as well as in California. For some commercial customers with critical loads, I can see the advantages for a standby battery bank to bridge the load between the utility and a backup generator. These systems are often large, and the end user needs to value the continuous power and be willing to pay a premium for that service.

What are the major obstacles to the expansion of the sales and deployment of solar storage systems in the US?

One obstacle for residential and small commercial projects is simply training electricians and designers to size systems and set expectations for the end user. Most people do not understand the current limitations related to the size and cost of a lead-acid battery bank. While we see some newer battery technologies making progress on the size, weight and cycle life, standard lead-acid batteries are still an economical choice for many applications. People should not wait for the “magic battery” to appear, since it has been “just around the corner” for a long time. It’s better to complete the system now.

Tom McCalmont, PE

President, McCalmont Engineering, mccalmontengineering.com

What is McCalmont Engineering’s history with solar storage? Are you seeing an increase in customer interest in these systems?

As an engineering firm specializing in large-scale solar projects, we often see interest in integrating energy storage [ES] with PV projects. There has been a significant uptick in this interest during the last 2 years. We believe this increased interest is the result of three parallel drivers: need, cost and technology.

The obvious solar advantages of simplicity, no moving parts, lack of toxicity, and “free fuel” have recently been augmented by falling prices to bring great economics to solar projects. However, solar suffers from one significant disadvantage, which is intermittency. We categorize intermittency in terms of three distinct challenges:

First, intermittency that is associated with variable resources, such as clouds over solar arrays: This type of intermittency can introduce dramatic swings in solar power delivery in which anything from 1% to 90% of the resource can suddenly drop off or come back on line.

Second, intermittency that is associated with variable load and demand spikes: Solar and renewables are designed to deliver energy, or kWh, but they do not do a good job of delivering power, or kW. In some cases, load is coincident with renewable generation, such as air conditioning loads, which generally peak when solar plants are producing the most. However, many loads are not coincident with solar. Demand peaks due to manufacturing or EV charging occur throughout the day or night, not necessarily when solar is delivering at maximum.

Third, ramp-ups and ramp-downs that occur during shoulder periods: ISOs in states with high renewable portfolio standards are very concerned with how to spin up and spin down reserve power plants in proportion to the fast increases or decreases in delivered renewable power, as large numbers of solar power plants either come on line in the morning or go off-line in the evening.

All three types of intermittency are growing problems for grid management as more solar comes on line. The use of conventional gas peaker plants to mitigate the intermittency is not a scalable solution for utilities and would require constructing new peaker plants in proportion to the growth of solar power plants, reducing the positive climate impacts of solar. The deployment of an ES system along with each solar power plant can address intermittency.

The second important driver is lowering the cost of delivered power. This takes two forms—the declining costs of both PV and ES systems, and the low capacity factors of solar systems.

As the market has demonstrated over the last 5 years, declining PV costs drive an ever-expanding market, creating economies of scale that lead to even further cost reductions. This same transformation is occurring for ES systems, although the market is still in its early stages. We believe battery and ES system prices will continue to decline over the next decade as the market continues to grow and drive down costs further.

A second, more subtle form of cost reduction is the possibility of increasing the energy capacity available through combined PV plus ES systems. Solar power plants are notoriously underutilized. Given the daily and seasonal bell curves of solar production, solar systems are designed for close to their maximum potential energy generation annually. For example, a 100 MW solar power plant is typically designed for no more than 120%–130% of that figure at its dc inputs, and it will operate at the full 100 MW only a relatively few hours out of a year. Throughout a typical year—including nighttime hours—a typical solar plant may produce no more than 15%–20% of its theoretical maximum energy yield, or its capacity factor. Contrast that with a large coal or nuclear power plant, which may operate at a capacity factor of 50%–80%. However, if you were to augment that PV plant with an ES system, it gives you the opportunity to increase its capacity factor—to operate the plant for more hours of the year—in effect reducing its cost per kWh. This idea is still relatively new, but shows promise for further innovation.

New battery and storage technologies are moving out of the lab into the real world, and these will improve performance and drive down costs simultaneously. In addition, new approaches for delivery of the combined energy from PV and ES systems with algorithms and applications that manage the energy delivery of both in an integral fashion are being developed.

For example, with a combined PV and ES system, it’s possible to square off the shoulder periods of a typical solar day from the traditional Gaussian bell-shaped curve to one that looks more like a square wave. With such a production curve, it is much simpler for ISOs and utilities to manage ramp-up and ramp-down periods in the mornings and evenings. If they can predictably and reliably determine when the PV system will come on line or go off-line, utilities can turn off or dispatch their peaker plants accordingly. There is less chance of a sudden load demand creating a brownout, because the transition from peaker power to solar power can happen within a few minutes rather than over an hour or two.

What kinds of battery technologies are you specifying in solar storage systems?

Systems must be designed and specified based on the application they are designed to serve. For backup power and off-grid applications, for instance, lead-acid batteries are still one of the best choices. They have a relatively short cycle life of typically 1,000 cycles or less, but they do extremely well in situations for which you need large amounts of reserve power at low cost. Lead-acid batteries can last for approximately 7–10 years if they are operated and maintained well.

Lithium-ion batteries, however, with their much longer cycle life—typically 10,000 cycles or more—and tolerance to “short” cycles, are ideally suited to applications that require frequent partial discharging and charging, such as demand reduction or frequency response applications in which you may discharge and recharge the batteries more often than once per day. In such applications, lithium-ion batteries can also last for 10 years or more, if well cared for. And while they are more expensive than lead-acid batteries in initial  capital outlay, they are, in fact, quite comparable in cost when measured in dollars per kWh delivered over their lifetime.

How will California’s Assembly Bill 2514 impact the deployment of solar storage systems in the state? Does it have any nation-wide implications?

AB 2514 should prove to be the right ignition source for the market at the right time, much like the California Solar Initiative [CSI] program created a runway for driving down costs and increasing system adoption for the PV industry from 2007 through 2013. This effect won’t be immediate, and as was the case with the CSI, the early market will develop more slowly than the later market. As with many things that start in California, the rest of the country learns from our mistakes and successes, and adopts the ideas that work. This trend should prove true for ES systems as well, as the many benefits of their deployment are further proved economically and logistically.

What new business models will be required to accelerate the deployment of solar storage systems?

It may not be so much a shift to new business models as it will be an emergence of new technologies that are deployed through well-understood existing business models. We believe the approaches to ES that have been the standard-bearers for the past 20 years lack imagination. Traditional ES approaches have emerged out of what was technologically possible and affordable two decades ago. Therefore, the traditional ES approach is primarily for off-grid and backup applications based on lead-acid batteries. New approaches and technologies are rapidly supplanting and augmenting this approach, including new types of batteries with longer cycle lives, new applications like demand reduction and frequency regulation, and evolutions in technology that are driving down costs.

Ben Peters

Director of solar finance and policy, REC Solar, recsolar.com

What is REC Solar’s history with solar storage? Are you seeing an increase in customer interest in these systems?

When our company was founded in 1997, solar plus battery storage was one of our primary system types. With the increase in severe storms and questions of grid resiliency, many customers have asked about incorporating storage into their solar project, and this trend will continue.

The most significant growth will come from customer-sited commercial projects. The key factor driving this interest is not the desire to pay for backup power, but the ability to reduce the electric bill with a financed technology package. The continual increase in commercial demand charges requires a new way of designing solar systems. Co-locating storage technology with a solar project significantly expands the portions of a customer’s electric bill that we are able to reduce or eliminate entirely once the system is installed and producing electricity.

The final growth segment is in developing DG-sized projects that incorporate energy storage. These projects are typically less than 20 MW and directly interconnected to the distribution system. Programs mandated by the CPUC [California Public Utilities Commission], PJM grid operators and most recently the Puerto Rico Electric Power Authority are the start of what should be a significant redesign of our electric infrastructure.

What markets and applications currently provide an optimal value proposition for PV systems with integrated storage? How will this evolve over time?

Current technology and project economics for solar-plus-storage technology are well suited for mid-market commercial customers and those with relatively low kWh usage or high demand charges. Another subset of customers has a desire to utilize renewable energy, but is not able to site large enough PV arrays at their locations. We are able to increase our value proposition by including additional savings and customer benefits that could not be achieved with a traditional grid-direct net-metered system. A good example are the projects we are designing in Hawaii and Puerto Rico, which allow us to incorporate larger dc systems and generation potential, but still maintain the ability to comply with strict interconnection requirements. Our ability to quickly and cost-effectively install systems on these island grids will be the first step in the continued evolution and availability of microgrid solutions that are powered by clean energy.

What policy shifts or utility cost-structure changes will significantly impact the projected growth of storage systems in the US?

The fastest growth in storage systems will come from behind-the-meter commercial applications. The growth in storage will continue as long as the current trend in utility-rate tariff regulation is maintained. Solar does an excellent job of eliminating energy charges but needs storage technology to guarantee demand-charge reduction. Policies and rate changes that have occurred over the last several years have shifted much of a commercial customer’s utility cost onto demand- and capacity-related charges, and now we have a technology solution to address that. Industrial- and residential-rate tariffs can follow this trend, and a good example is the debate surrounding net energy metering policies. If the savings value of a net energy metering credit is compromised, the value of a storage-coupled system will be even more compelling.

Our industry needs to ensure that we have continued access to the grid and that solar customers are not penalized for the advantages they provide to our utility system. As technology is implemented to provide real-time capacity benefits, we need a policy and regulatory framework to ensure these benefits are fairly valued. The ability to participate in a capacity market or a fast-response frequency regulation program are good examples of policies that the solar industry needs to support.

How can financing mechanisms accelerate the deployment of solar storage systems?

Financing for solar-plus-storage systems is available and will be a major portion of the market. The long-term benefits of storage technology can outweigh the capital investment. It is simply a matter of having the right partners who understand the best application and use of the technology. Fortunately, we are working with several experienced parties to address this evolution within the solar industry. Guaranteed demand reduction is a compelling offer for our customers, and now we can attack most parts of an electric bill and offer significant savings with a simple financing program.

Guaranteeing demand-charge reduction will allow companies to make inroads with customers. This concept is similar to a production guarantee, which is now an industry standard. Solar companies must adapt to meet the needs of their customers, most of whom are primarily looking to save money on their utility bill without the up-front cost of ownership. Solar-plus-storage technologies will enable solar companies to offer demand charge reduction guarantees while maintaining the bankability required by the investment community.

What are the major obstacles to the expansion of the sales and deployment of solar storage systems in the US?

The biggest obstacle to greater storage deployment is the lack of companies that have a fully integrated technology solution that is cost effective and ready for financing. Most customers are not willing to host design experiments, and our industry needs to sell the tangible benefits of this technology. We have been successful with the REC Solar Storage Partnership Program, educating our solar customers on the benefits of solar plus storage, and working with companies to handle different aspects of the project, from a design, construction, finance or management perspective. This value-added services package is one way to address early stage deployment barriers. Our solar customers are becoming increasingly sophisticated in understanding the savings potential of additional technology solutions, and our industry needs the ability to offer a bankable solution from a familiar brand and a well-known provider.

Phil Undercuffler

Director of strategic platforms, OutBack Power, outbackpower.com

What products does OutBack Power offer for utility-interactive solar storage systems?

OutBack Power manufactures the Radian inverter series for grid-interactive battery-backup applications and off-grid systems, as well as several models of our grid-interactive FX Series inverter/chargers. Two specific Radian models, the soon-to-be-released GS8048A (8 kW) and GS4048A (4 kW) utility-interactive multimode inverter/chargers, include an advanced GridZero AC input mode for self-generation and self-consumption programs. In 2013, we introduced an AC-Coupling Center that provides stable electromechanical coupling of grid-direct string and microinverters with OutBack’s Radian battery-based inverters. OutBack also offers two VRLA battery lines and integrated battery racks with code-compliant string disconnecting means.

What markets and applications currently provide an optimal value proposition for PV systems with integrated storage?

PV integrated with energy storage has existed since the very beginning of solar, providing power beyond the reach of the grid. Although during the last decade the grid-connected PV market eclipsed this market in size, it remains strong and healthy, with solid growth driven by the true cost of energy rather than by easily disrupted incentives, financial structures and regulatory barriers. As an example, with the expanding need for data, Internet connectivity and cellular service, we’ve seen strong growth in the industrial off-grid market, since the costs of PV energy are a fraction of that of diesel-fueled generation.

When it comes to the grid-connected market, most designers have considered grid-tied with battery backup [GTBB] to be the only option for a system consisting of PV, grid and batteries. Certainly, with increasing numbers of extreme weather events, more homeowners are requesting solar with backup to achieve both power stability and reliability. As more designers learn about the easy-to-install options available for GTBB, we’ve seen increasing growth into the grid-connected market. However, OutBack Power believes the greatest opportunity is in the growth of systems that provide benefits every day for both the grid and the system owner, rather than only in the event of a utility outage or future disaster.

The grid-connected solar market traditionally has focused on energy production and lowering the overall LCOE. However, what the grid and therefore we as a society face today is a variability or intermittency issue—intermittency of both production and load. The value of PV-generated kWh has become commoditized and is decreasing in value, while cost impacts of variability are rapidly increasing. For instance, the value of a kWh is measured in pennies, where the impact of demand charges is measured in dollars. Energy storage can provide designers the ability to reduce the impact of demand charges due to load surges or solar variability, in addition to being able to sell traditional kWh. That increases the value of a traditional PV system, providing developers a robust mechanism to improve the economics of PV.

How will California’s Assembly Bill 2514 impact the deployment of solar storage systems in the state?

This is a great opportunity. California has a clear mandate to reduce greenhouse gas [GHG], and solar is a key component in meeting that goal. However, we need to address many issues to achieve this goal, one of which is solar variability. The traditional way for utilities to meet variability in load is to add more spinning reserve to the grid. We cannot generate our way out of solar variability. Aside from the additional GHG emissions that would result, there is a point of diminishing returns that cannot be avoided. A 250 kW energy storage device can provide the same performance benefit to the grid as a MW turbine because it can operate as both a generator and a load, and it can operate at full-rated capacity in either direction.

How are recent challenges to state net metering laws impacting the growth trajectory of solar storage?

It’s no secret that the electric utilities view solar as a disruptive challenge, and many have been active both politically in framing existing net metering programs as “cross-subsidies” that shift the burden onto ratepayers without solar, as well as logistically in terms of creating new barriers to PV interconnection. This is unfortunate, as energy storage can provide a substantial benefit to the utilities by optimizing operations of their network and reducing variability caused by solar and loads, a point some utilities have admitted themselves. Many regions are approaching the point of grid parity. Some areas like Hawaii have surpassed grid parity, with the LCOE of PV power well below the cost of utility power. The more utilities create barriers to solar, the more likely customers are to look for other options. Thirty years ago, a regulated monopoly provided phone service, and the only options available were wall mount and desktop. Today, customers have multiple options for telecommunication, and many customers no longer choose to have a landline phone service. Will energy follow a similar path?

You recently met with utility representatives in Hawaii to discuss the impact of high DG penetration. Can you share any insight from these meetings?

It’s clear that the Hawaiian utilities want to solve this problem. More than any other region, they are buffeted by variability, due to their island grid, changes in solar insolation and wind, and exposure to diesel-fuel price volatility. There is a great opportunity to learn from the developments happening in Germany, California and Hawaii, share lessons, and explore opportunities to increase renewables, as well as provide greater reliability by incorporating solutions that reduce variability on the grid.

Sau Ngosi, PE

Director of off-grid engineering, Schneider Electric Solar Business, schneider-electric.com

Joe Vosburgh

Director of marketing and product management for utility-scale inverters, Schneider Electric Solar Business

What products does Schneider Electric currently offer for utility-interactive solar storage systems?

SN: Schneider offers the Conext XW platform of inverter/chargers and charge controllers for PV-hybrid storage systems. System capacities are scalable from 4.5 kW to 36 KW and well suited for both residential and commercial applications.

Does Schneider Electric have plans to develop high-capacity power conditioning equipment for large commercial and utility-scale solar storage applications in the US?

JV: Yes. Schneider Electric is focused on delivering a complete solution that enables the utility customer to employ MW-scale energy storage in support of a full range of DG and advanced grid services applications.

Do you have any insights on the status of solar energy storage in Germany? What is driving the deployment of solar storage there?

SN: Germany’s grid storage subsidy is a drop in the ocean compared to its now scaled-down FIT [feed-in tariff] incentive scheme. Uptake has been modest at best, with about 1,720 applications for funding by the end of 2013. The biggest perceived obstacle to adoption is how the program is structured to require an interface for external system access for grid operators to affect grid loading and unloading functions. According to PV Magazine, installers are reporting that up to 75% of consumers installing battery-based systems are opting out of the subsidy due to their objections to the requirement for external control. This is a potential barrier to increased deployment.

How will California’s Assembly Bill 2514 impact the deployment of solar storage systems in the state?

SN: Though AB 2514 has set the stage to bootstrap what could be the addition of significant storage-based capacity to the Californian grid, the three targeted investor-owned utilities [IOUs] are still in the process of working out implementation interconnection requirements specific to energy storage systems to allow connection to the grid. The CPUC regulates these policies with each respective IOU, and once they are in place, there should be significant uptake in deployment of storage systems for the IOUs to meet procurement targets set forth in the bill.

What are some recent developments in solar storage in locations with high DG penetration, such asr Hawaii?

JV: Hawaii is actively exploring and piloting MW-scale energy storage applied specifically to frequency regulation and renewables integration. They have a very unique challenge with respect to a range of island grids and a very high penetration of renewables. Therefore, they are one of the jurisdictions in the US that stands to gain the most benefit from the implementation of MW-scale energy storage for not only frequency regulation, but also load management, voltage support, reactive power support, power ramping and voltage, and frequency ride-through.

What markets and applications currently provide an optimal value proposition for PV systems with integrated storage?

JV: Frequency regulation combined with renewables smoothing and shifting will dominate the early storage deployment landscape and currently offers the most demonstrable value proposition. This is largely due to a range of recent FERC orders that monetize—or define an asset class and market for—energy storage systems for use in these applications. As penetration and deployment for these core applications occurs, and as price per kWh continues to come down for advanced battery technologies, and cyclic life and reliability continue to improve, applications will expand to include peak-load management and advanced ancillary services.

CONTACT:

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

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