As new utility rates result in higher bills, solar homeowners wonder if they’ve made the right choice. Here’s how solar plus PV energy storage is changing the game.
BY MICHAEL HIBSHMAN
These days, it seems like solar PV energy can’t grow fast enough. As a result of improving economics, increasing consumer preference, green building standards, and government incentives, solar PV is finally hitting its stride. 2019 has been a breakout year for solar PV both in the US and globally, and it seems like the trend will only continue.
With all of this growth in solar, however, a number of new dynamics begin to arise.
First, in places where the penetration rate of solar PV is especially high, utilities are witnessing the breakdown of their traditional pricing models. Whereas utilities used to cover the costs of generation, transmission, distribution, maintenance, etc. by selling kilowatt-hours, they now find themselves in a position where they need to introduce time-of-use rates or demand charge rates in order to appropriately recover their costs. This understandably leads to some measure of confusion and frustration for customers who are unused to such rates.
Second, utilities and grid operators are also facing down the dreaded duck curve, which is a product of all the solar PV production disappearing as the sun sets, giving the grid operator a very short window of time when they need to ramp from a low level of power generation to their daily maximum – an expensive and difficult challenge that gives coal-burning power plants a reason for being.
Finally, for homeowners who have invested in solar arrays, most are happily enjoying significantly lower electricity bills. However, some are frustrated that their new utility rates are resulting in electricity bills that look much like they used to, and still others are surprised to find that they’re living in the dark when grid power goes out, despite the solar array on their roof.
So, does this mean that we abandon solar and return to burning coal? Absolutely not. This is where energy storage comes into the picture – by storing the energy produced by solar PV and discharging it according to supply/demand conditions on the grid, energy storage effectively converts solar PV from a variable resource to a dispatchable resource. Whereas variable resources produce energy somewhat irregularly, or at least unpredictably, dispatchable sources are quite predictable and can be deployed on command. Think of it this way – a grid operator can press a button telling an energy storage system to discharge 10 MW back onto the grid, but the operator cannot command the sun to shine more intensely over a solar PV array to generate the same energy. That’s the difference between a variable and a dispatchable resource, and it’s absolutely critical to the future of solar energy.
At the residential level, homeowners are also procuring energy storage systems at an unprecedented rate. Of course, homeowners by and large aren’t thinking in terms of variable and dispatchable resources. They are primarily procuring storage systems to help protect against prolonged grid outages, take their homes off-grid entirely, reduce their dependence on grid power during peak pricing windows, and to invest in clean energy technology. In more extreme cases, where net-metering no longer exists or where PV curtailment is common, homeowners need to procure energy storage systems just to protect their investment in solar.
But the effect of residential energy storage is the same as utility-scale storage. If you add up all the residential solar PV energy arrays in a given utility, 5 kW at a time, you can arrive at a fairly large number that might match or exceed the output of a utility-scale solar PV plant. If all of these arrays lack energy storage, they are a collective variable resource – the source of major headaches for grid operators. However, if the systems are paired with energy storage, they collectively become a dispatchable resource that is actually quite valuable to the grid. If a utility notices that enough of their customers are procuring solar energy systems, they will likely react by publishing new tariffs, changing their net-metering policies, or otherwise protecting their cost recovery efforts. Homeowners without energy storage are likely to be the most ill-affected by these policy changes.
Fortunately, the grid-level benefits of residential energy storage systems can and do trickle down to individual homeowners. When a group of homes that are all outfitted with solar + storage bands together, they can form what’s called a virtual power plant. Virtual power plants function by commanding groups of residential energy storage systems to act in unison – if the grid needs more power, the virtual power plant triggers all the residential energy storage systems to discharge, which can add up to have a measurable impact on the grid. If the grid has too much power, the storage systems are commanded to hold their energy accordingly. For their participation in such programs, homeowners are usually compensated, either in the form of an energy storage system rebate program, lower overall system cost, or electricity bill credit.
In summary, besides the immediate benefits of energy storage systems (protection against extended grid outages, lower electricity bills, grid independence, etc.), pairing this technology with solar PV at the residential level has positive externalities that extend well beyond the home. Without PV energy storage, there’s a limit to the amount of solar PV that is truly beneficial to the grid. Paired with energy storage, that limit all but disappears, paving the way to high levels of solar PV penetration and a much cleaner energy future.
Look for part two on this topic in our upcoming blog post: “How Energy Management Completes the Solar + Storage Package.”
Michael Hibshman is Head of Product at Lumin.