Big batteries are quickly becoming the technology du jour in making the case for transitioning the nation to increasing amounts of solar energy and renewables.
But the time it will take to work out the cost and regulatory kinks to move the batteries to a wider market have not been figured out, say investors and academics examining the prospects for electric storage technology.
Electric vehicle company Tesla is expected to announce a new business venture later this week focused on marketing the big batteries, referred to as “energy storage,” for residential and commercial use.
The big lithium-ion batteries would be used as a backup energy supply for homeowners with solar panels that cannot generate electricity when the sun is not shining.
The batteries kick in when the sun goes down, or at times when electric power from the grid is expensive, acting to save consumers money on their electric bills. At least that’s what advocates want to happen.
For now, battery storage for renewables has a spotty market in the United States, investors and analysts say. And despite companies like Tesla espousing the technology’s potential, the debate over whether energy storage can make the leap from pilot projects to commercial use will continue for some time, experts suggest.
“I think at scale we are pretty far” away from seeing a device that can cost-effectively pair solar energy and storage for use in homes, said David Milner, CEO of NuGen Capital, a private equity firm that invests in clean energy and real estate. “But in sort of pockets, I think it is starting already,” he told a forum on renewable energy finance held by the Atlantic Council think tank in Washington on Friday.
Milner said much will depend on making the batteries more cost effective by producing them at higher volumes. Much will also depend on Tesla’s decision, and others like it, to drive down the price. Tesla plans to leverage the battery development it has done through its electric vehicle business to produce large lithium-ion batteries that can power homes and businesses when combined with solar energy.
Peter Dean, with the Rhode Island School of Design, told the forum that the ideas are worth pursuing, but advised “all of this is in its infancy.” He said regulatory hurdles need to be overcome for the technologies to work with the power grid.
“I think one of the struggles is that there is a lot of regulatory push that I think would be detrimental to the advancement of the technology,” Dean said.
Nevertheless, Milner says that once perfected, the combination of solar energy and energy storage could be a threat to conventional utilities. “I think the scariest thing for a traditional utility is the battery-and-solar combo,” he said. It would mean “cut[ting] the wires” of a utility, where a residence or business can become independent of the grid, he said.
“And so, if you had solar and a battery that kept your house up” and running, a house could be “more stable than the grid. Because if Hurricane Sandy comes through … as long as your panels don’t blow off your roof and as long as you’ve stored enough energy in your basement in your batteries, you can be better than the grid,” Milner said.
The director of the Atlantic Council’s Global Energy Center, Richard Morningstar, said Tesla is focused on reducing the cost of its vehicles, which in turn would improve the battery technology and reduce overall costs.
It will take time to reduce the cost of batteries, Milner said, comparing the expense to the costs of storing computer data in the 1970s and ’80s. Storage costs were astronomical in the early days of computing. “We’re not in the 1970s equivalent, but we’re probably in the ’80s of that.”
“The cost of batteries, and the efficiency of batteries,” along with the “cost of solar and efficiency of solar” will continue to improve, and “there is not historic reason for that not to continue,” Milner said.
This year is expected to see the largest increase in energy storage deployment so far, according to the Energy Storage Association trade group. Most of the new capacity is grid-based battery storage, as opposed to “behind-the-meter” storage in private residences or commercial buildings.
“The U.S. installed 61.9 [megawatts] of energy storage in 2014, up 40 percent from 2013, and completed 180 individual installations,” according to a presentation provided by an energy association consultant. This year “is expected to be the biggest year in the market’s history with 220 [megawatts] of deployments, two times the capacity installed in 2013 and 2014 combined.” Power customers in the Mid-Atlantic use an average of 641 kilowatt hours a month.
Still, the presentation underscores the growth is not widespread: “The vast majority of energy storage deployments in the U.S. take place in a small number of markets with the right policy, regulatory drivers and wholesale market designs.”
California is one of those markets, as the only state with an energy storage mandate. Tesla is catering to that, introducing a solar-battery pilot project for homeowners in the Golden State. The company Solar City, which is owned by Tesla, offered a limited number of the batteries to homeowners at limited cost. The pilot project is seen as the precursor to what Tesla is expected to announce this week.
