One significant trend in the electric utility market that is beginning to gather momentum is residential energy storage (RES). Like many renewable initiatives, California is the trailblazing state for RES. In 2006, Governor Schwarzenegger signed into law the so-called California Solar Initiative. The plan calls for a million solar roofs which will add 3 gigawatts of clean energy and is estimated to reduce greenhouse gas emissions by 3 million tons, all by 2018.
Fast-forward four years. The momentum of the California Solar Initiative is beginning to manifest itself into opportunities for residential energy storage. What is the value of energy storage distributed at the residential level? Overall, it augments a solar-only installation by firming a non-dispatchable resource at the point of consumption. Energy storage allows charging during off-peak times, when energy prices are low, and then discharging during peak times when the cost of energy is high, all of which equates to savings for customers.
Recently, Sacramento Municipal Utility District (SMUD) initiated a $5.9 million pilot project to evaluate how energy storage enhances the value of distributed solar. The project was awarded to a consortium that includes Saft, Silent Power, GridPoint and SunPower. Saft will provide the lithium ion batteries and Silent Power will provide the home energy appliance that houses the lithium ion battery. The appliance will be integrated with GridPoint’s power monitoring and dispatch software. Interestingly, the energy storage system is being bundled with the inverter and other balance of system components to leverage the California Self Generation Incentive Program (SGIP), as well as the Federal Investment Tax Credit (FITC). The SGIP provides a $2/watt incentive for deployment of advanced energy storage so long as it is coupled with eligible self generation technology such as solar. The FITC applies to 30 percent of the net cost of the integrated system. The SMUD concept will showcase how energy storage adoption can be spurred through incentives that put it on a level playing field with generation technologies such as solar.
So how big is the residential energy storage opportunity? According to Pike Research, distributed residential solar deployments are forecasted to reach nearly 3 gigawatts by 2020. If residential energy storage penetrates just 10 percent of that market it creates an annual 300 megawatt opportunity for energy storage. If lithium ion costs drop to $345/kW installed, this market could represent a $100 million annual opportunity for lithium ion batteries by 2020.
Article by David Link, appearing courtesy Matter Network.