Energy Storage-A Threat to Utilities?

California’s utilities are reluctant to link solar panel batteries to the grid.
Published: Mon 07 Apr 2014

US rooftop solar panel manufacturer, SolarCity Corp., has stopped efforts to apply for the installation and connection of solar panel-battery systems for power storage as utilities in California appear not to want to link them to the power grid.

High application costs for a slow process

The main reason why SolarCity has stopped applications is because it refuses to pay the application fee of US$800. The application process is also taking months to process. In addition to the application fee, utilities want a further US$600 to US$2,900 for new meters and utility fees before the battery system can be considered grid-ready.

So far, 11 Pacific Gas & Electric customers have received permission to grid-interconnect. SDG&E has approved only one customer, at an additional cost that is still being worked out. And Southern California Edison, which hasn't approved any of the ten applicants in its territory, is insisting on a US$2,900 fee for its separate metering system.

Of the roughly 500 customers that have signed up for the batteries, about 100 customers have received them, SolarCity says. But of those, only twelve customers have received permission to connect to the grid. The company has installed a total of 65 of the systems in areas overseen by PG&E Corp., Edison International’s Southern California Edison and Sempra Energy’s San Diego Gas & Electric.

The installations that are under contract will still be installed.

It’s been almost a year since California’s investor-owned utilities started to refuse grid interconnections for battery-connected solar systems. The California Public Utilities Commission has been promising a ruling that could resolve the issue but this has yet to be announced.

Utility’s traditional business model-under threat?

SolarCity is testing the units with photovoltaic panels to generate power and batteries that retain that energy for use when the sun isn’t shining.

This combination makes customers less reliant on local utilities and could be posing a direct threat to their traditional business model which is quickly becoming outdated. We discuss these aging business models in our article, Aging Business Models Cost Billions and Utility Business Model Transformation Requires a Holistic View.

Homeowners with rooftop panels are buying less electricity from the grid. Those with batteries will store excess power and will, as a result, use even less grid power.

The poor response from utilities has led SolarCity to stop submitting applications. Also, the process is proving to be quite onerous as utilities are demanding a series of applications and fees in order to follow through.

David Eisenhauer, a PG&E spokesman, says it takes about eight to 10 weeks to handle applications and the utility has processed eight of the 20 it has received. He adds that because battery installation is such a new technology, the utility is still working to find more efficiencies in processing the applications.

According to SolarCity, the applications that have been submitted to some utilities “haven’t gone anywhere.”

Utilities –fair pricing a concern

While utilities say they support the use of solar power and new technologies such as batteries that promote energy efficiency, they remain concerned about the relatively new capability and how to link it to the grid. Utilities say they need time to properly assess the technology and how best to add it to the grid at fair pricing.

Hanan Eisenman, a spokesman at San Diego Gas & Electric, says that there is “an ambiguity in the existing tariff language” regarding storage. The utility is apparently working with regulators to determine the appropriate fees.

The return to distributed generation is inevitable. See our guest article, Smart Energy-The Return To A Localised Energy System, written by Dr Jonathan Adey, Director of Smarter Futures. It is therefore essential that utilities make the transition easy for its customers since there is still a place for the utility in the future as long as they change their traditional business models. By supporting this transition, utilities will have the opportunity to win over their customers when they start offering ancillary services.