Behind the meter storage - the missing piece of the puzzle

Behind the meter storage supports the emergence of prosumers as active participants in the energy market.
Published: Mon 20 Mar 2017

Solar PV on rooftops has been around for a good many years but only now is it really coming its own with the availability of lower cost battery storage.

Instead of being obliged to either use home generated solar energy at the time of generation – normally in the middle of the working day – or perhaps exporting it to the grid via a feed-in tariff, homeowners now have other options. They can use the stored energy during peak hours or in the evening when the sun isn’t shining.

Depending on the local market and the presence of an aggregator they may be able to sell it into the ancillary service markets. Or in the future they may be able to trade it to a neighbour.

It is this battery along with an energy management system that turns consumers into prosumers – from passive to active energy market participants, having control over their energy production and consumption, even if they themselves aren’t physically monitoring and managing all those energy flows.

This is the vision of the distributed grid – the behind the meter battery the missing link (of course, along with the technologies utilities need to deploy and all the other details such as regulations and trading models that will enable these future networks and markets and the customer engagement and education that will support prosumer development).

Energy storage market

Behind the meter battery storage has been growing for a number of years but only now are the costs starting to reduce substantially. More manufacturers – both existing companies and new players – are releasing systems and increasing numbers of batteries are being produced – in large part for the growing electric vehicle (EV) market – resulting in growing economies of scale.

The ultimate in scale is expected to be Tesla’s Gigafactory in Nevada, with a projected output of 150GWh/yr at full production around 2020. And further Gigafactories are planned by both Tesla and others elsewhere in the US and in Europe (the latest is the Swedish startup Northvolt - formerly SGF Energy - which is currently identifiying a local site).

According to Tesla CEO Elon Musk in a National Geographic TV interview with Leonardo DiCaprio, 100 Gigafactories would be required to build the battery throughput to transition the world to sustainable energy.

What does the behind the meter residential storage market look like numerically? Navigant Research projects the market will grow from about 100MW in 2016 to 3,800MW in 2025. Currently the market is highly concentrated with the leading countries Australia, Germany, Japan and the United States.

These will lead the way for neighbouring countries in their regions, with Asia Pacific, Western Europe and North America forecast to account for almost the whole global market through 2026.

The commercial and industrial (C&I) behind the meter storage market, with its different drivers from the residential market, is much larger and projected to exceed 9,000MW by 2025. Concentrated in the same regions as the residential markets, Asia-Pacific, accounting for about 40%, is expected to be the largest regional market from 2021 on, followed by North America and Western Europe.

Developing the storage market

While the development of the C&I storage market is largely dependent on policy and regulation in terms of how it can contribute to the management of energy costs, in the case of the residential market, forward looking utilities are key, according to Navigant Research.

“Utilities see the prospect for innovative technologies to provide direct value as well as limit the opportunity for third parties to get between them and their customers. (They) see renewable storage as a new avenue to improve their services and relationships with customers at a time when new technologies are presenting a real risk of load defection.”

The result is that a number of utilities have launched pilot programmes to deploy and test battery storage on their networks. For example, last July Pacific Gas & Electric launched a pilot with SolarCity to investigate how storage can support the grid. In the UK several utility pilots are being conducted by ScottishPower and others.

New Zealand utility Vector has gone a step further, not only encouraging the use of batteries by customers but also becoming the distributor of Tesla Powerwall batteries in New Zealand.

“Vector has long understood that new energy technologies such as smart meters, batteries, solar panels, new software and energy management solutions and electric vehicles would disrupt and transform our industry. Rather than resist, we decided to embrace change,” writes Group Chief Executive Simon Mackenzie in the company's recent interim report.

He offers three key reasons – first, technology is providing Vector with alternative ways to enhance the network; second, technology is augmenting the ability to deliver solutions that customers want to manage their energy needs; and third, technology is facilitating Vector’s drive towards becoming a sustainable and environmentally responsible company.

Britain’s National Infrastructure Committee has estimated that if prices continue to fall, up to 15,000MW of storage could be deployed by 2030, up from around 3,000MW currently, contributing to flexibility savings to consumers estimated up to £8bn/year.

Quite simply, just as rooftop PV contributes to meeting renewables targets, behind the meter storage in homes and businesses will be crucial to meeting the network storage requirements.

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