Self-generation incentives are helping to fuel market interest in small energy-storage systems designed for residences and small businesses in California.

Leading the charge is SolarCity, which, in partnership with Tesla Motors, recently began selling energy-storage systems to customers in California.

SolarCity has received orders for more than 200 systems, sized at either 5 KW or 50 KW, from customers in all three investor-owned utility service territories. The company has applied for incentives for the systems through the state's Self-Generation Incentive Program (SGIP). Incentives go to the customer, either directly in the form of a discount, or in the form of lower monthly payments if it's a leasing situation.

SolarCity's energy-storage units are designed either to couple with a rooftop solar system -- charging during peak solar-generation periods, for example, and discharging during times of peak energy use and outages -- or to operate in a stand-alone fashion, charging with power drawn from the grid.

The storage units are as small in size as a solar power inverter, and can be wall-mounted in a garage or outside a building near the electrical panel.

The cost for a "full service" 5-KW system is $20,000 including installation, software, repair service, monitoring and an inverter. The cost for the 50-KW system is $200,000.

SGIP incentives will make a significant dent in those costs. Last year, the CPUC approved a new $2/watt incentive for solar-coupled or stand-alone advanced energy-storage systems to help build the market for emerging storage technologies. Previously, the incentive was only available for systems coupled with wind generation or fuel cells.

There is also an added 20-percent incentive if the products come from a California supplier. SolarCity and Tesla qualify, because they are based in San Mateo and Palo Alto, respectively.

The applicable SGIP incentives drive down the cost of the 5-KW SolarCity energy-storage system to $8,000, while the incentive price for the 50-KW system is $80,000.

"We've installed some prototypes, and we plan to begin installing the SGIP-eligible systems later this year after reservations are confirmed," said SolarCity spokesman Jonathan Bass.

The partnership between SolarCity and Tesla makes synergistic sense. Elon Musk is chairman of both firms, and the energy-storage systems use the same lithium-ion battery technology that is used in Tesla's electric vehicles.

Finding other markets for Tesla battery packs will help drive down the cost of Tesla cars, which start at $49,900. And Tesla's wealthy, green-minded customers may also want to be early storage-technology adopters.

But thus far, most of the orders for the SolarCity/Tesla storage units have been placed by customers of SolarCity, Bass said.

SolarCity and Tesla are not the only entities hoping to profit from small-scale energy storage. "There are a lot companies that are going to this market," said Brian Warshay, a research associate at Lux Research.

Sunverge, with offices in San Francisco and Stockton, has submitted close to 50 SGIP applications for lithium-ion battery systems ranging in size from 4.5 KW to 27 KW. The installations will be at a variety of locations, including multi-family housing and school campuses.

One of the projects, slated to break ground May 31, entails co-locating energy-storage and solar systems at a planned 34-unit housing project in Sacramento. The energy-storage component will be used to help achieve a goal of net-zero energy efficiency at the site -- whereby each home will generate as much power as it uses.

"We're doing a lot of interesting stuff" in the small-storage sector, Sunverge President Ken Munson said.

While small-scale energy storage can provide a number of benefits behind the meter, such as backup power, home energy management and "time-of-use arbitrage," Munson said, the value is deeper on the utility side of the meter. Sunverge's storage units, he explained, can be aggregated to store and discharge energy based on the needs of the grid, to firm the power from intermittent renewables, and to reduce stress on the grid during times of peak demand.

"We feel pretty comfortable that a lot of the benefit is going to fall in favor of the utility," he added.

The Sacramento Municipal Utility District has been testing out small-scale energy storage in Rancho Cordova, at the Anatolia SolarSmart community.

According to SMUD, the project aims to evaluate the impacts and benefits of dispatchable energy storage in combination with distributed solar generation. Fifteen homes with 1.2-KW PV systems have been paired with 10-KW/8.8-KWh lithium-ion storage units for a behind-the-meter evaluation, and three 30-KW/30-KWh "community energy storage" units have been connected to neighborhood transformers to measure utility benefits.

"The units are actively monitored and controlled by the utility, either individually or as a fleet," SMUD noted in a description provided to Energy Prospects West.

The utility is also using technology to monitor PV output, and the strength of the solar resource. The utility varies the discharge from the storage units in response to the data it collects and as a way to firm the PV output.

SMUD has created dynamic pricing rates for the home sites in the study to see if time-of-use rates influence customer behavior and energy-use patterns.

Residential storage projects, Warshay said, "will really start to make sense when residential rates are more dynamic than they are now."

And if storage starts to make more sense, then energy storage could follow in the footsteps of solar -- going from the fringe to the mainstream.

"The experience curve" that happened with solar, Sunverge's Munson stated, "is the same thing that's going to happen with energy storage over time."

- Leora Broydo Vestel

© 2012 Energy NewsData

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