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‘Solar Plus’ Key to Growth in U.S. Energy Storage Markets

By Bob Gibson

Electric energy storage has all the promise in the world, but profitable markets have been slow to develop.

Solar, with the right price signals, can be a big factor in expanding an economically viable investment in energy storage. However it is solar not in isolation, but as an element in a suite of technologies that allows customers to manage energy use to control costs.

Stem Commercial Installation
A Stem commercial energy storage installation.

Sonnenbatterie and Stem are two of the companies showcasing energy storage in their energy management offerings at Solar Power International (SPI), set for Sept. 14-17 in Anaheim. The number of storage companies exhibiting at the premier trade show has jumped 65 percent — from 48 in 2014 to 79 this year, organizers report — underlining the emerging “solar plus storage” market as an increasingly visible force in the sector.

Check out all the details on SPI here.

Sonnenbatterie has sold more than 8,000 “smart storage systems” in Germany since it opened for business in 2008. The company has focused on the booming distributed solar market in Germany, where the vast majority of the country’s 37 gigawatts of solar flows not from utility-scale systems but from the rooftops of homes, as well as commercial and farm buildings. In 2014, the company decided to enter the U.S. market and identified SPI 2015 as a prime event to develop market awareness and build business connections.

Ironically, it received a boost earlier this year from one of its U.S. competitors.

“The Tesla announcement (of its new Powerwall battery system in April) opened the floodgates for us as well,” said Stefanie Kohl, Marketing Director at Sonnenbatterie. “Not many (market) players have something readily available. We have it. It’s a good spot to be in.”

In Germany, most Sonnenbatterie customers buy systems to save money, storing excess solar production to offset the purchase of costlier retail electricity from the grid. Since U.S. electricity prices — with the exception of Hawaii — are far lower than those in Germany, Kohl said that the company does not expect savings to be an early driver here.

“The (residential) interest is predominately for backup power,” she said. “People are concerned about brownouts, about outages from weather events like Hurricane Sandy or the possibility of earthquakes in California.”

Sonnebatterie is also pursuing the demand response market, with a larger version of its system that can help commercial customers shave peaks and control demand charges. Such applications, Kohl said, play to the company’s strength.

“We’re really not a battery company; we’re a software company,” she said. “What we sell is grid connectivity.”

The company is committed to a strong future in the U.S., with pilot installations in California and Georgia, where it also has a research and development center. A manufacturing facility will open in the U.S. “very soon,” said Kohl.

A storage breakthrough in California

In business since 2009, Stem broke through as a significant participant in the emerging energy storage market when Southern California Edison (SCE) selected the Silicon Valley-based company to provide 85 megawatts (MW) of energy capacity from storage. The award came in response to the utility’s request for offers for local energy capacity to offset the loss of conventional power generation, most notably the shuttered San Onofre nuclear power plant.

Stem is planning to deliver the contracted capacity by deploying energy storage at hundreds of commercial customer sites. An initial portion of the storage sites will be online by the end of 2016, with all 85 MW in place by 2021.

SCE has signed contracts for more than 2,200 MW of new local capacity, to go online within the same time frame, including about 260 MW of storage. The Stem contract alone easily exceeds the minimum of 50 MW of energy storage SCE is required to procure under mandates from the California Public Utilities Commission.

How will solar-plus-storage affect wholesale energy markets? Read the new SEPA-Black & Veatch report here.

The Stem contract represents the largest amount of storage capacity delivered from distributed sources in the new SCE power portfolio, said Ted Ko, Director of Policy for Stem.

“It is one of the first examples of the use of energy storage to provide capacity as a grid service,” said Ko. “This puts us an order of magnitude beyond where we were before the award.”

Stem’s core business is energy management for commercial customers, with software that provides detailed visibility of energy consumption — real-time and forecasted — and hardware, including battery storage, that can manage use and control demand costs.

But as solar has grown, it has become a bigger part of Stem’s business, including a partnership with SunPower on a solar-plus-storage service, Ko said.

SCE’s request for local capacity resources provided Stem its first significant opportunity to bid customer-sited resources into the utility market.

“Solar cannot necessarily participate in those (utility capacity) markets on its own,” Ko said. “You likely want a portfolio of controllable technologies.”

In addition to California, Ko foresees expansion for Stem’s technology in states such as New York and Texas.

“Anywhere solar is growing, it will drive the creation of markets for storage,” he said.

Bob Gibson is Vice President of Knowledge for the Solar Electric Power Association (SEPA). He can be reached at [email protected].