Next generation tech – what will drive home battery systems in North America:

Growth Drivers In The North American Residential Energy Storage Markets

Summary

  • Technology, policy and cost reduction remain critical components.
  • Residential energy storage’s role in Net Metering 2.0 programs.
  • Different opportunities on how to play this emerging niche market.

A combination of low-cost solar PV systems, increasing number of electric vehicles being built, and changes in policies is encouraging the mass deployment of residential energy storage systems. Although the industry is still in its early days, all the necessary components have already begun to fall into place, ensuring a very bright future for the industry.

Until recently, solar PV could only be used to offset a home’s electric requirements when the sun was shining. Beyond this time frame, the home would need to call upon the electrical grid to fulfill the balance of its energy, and when the solar PV array would overproduce, additional electricity would be exported back into the grid. This setup makes it absolutely ideal to go solar.

However, a number of components are changing the face of the residential solar PV market. The three changing critical components are: technology cost, innovation, and policy.

Policy – Across the United States, there is a growing number of utilities which have hit their renewable energy requirements and have begun to push back against homeowners who want to export electricity when they are not home to use the power. Utilities across the board have begun to dismantle programs which incentivize homeowners to go solar. This is achieved by decreasing the value of the exported electricity which ultimately prolongs the payback period of a solar system. There are also a number of utilities which have introduced residential time of use and demand charges or no longer allow homeowners to export electricity back into the grid creating a net zero export limitation. The following are a number of scenarios which are driving sales today:

  • Net Metering 2.0 – Removal or change of net metering programs across the country and various Caribbean islands in order to control PV saturation, grid stability, a fair distribution of transmission cost, and utility revenue.
  • Devaluation of Exported Solar PV – A shift to wholesale or an avoided cost for exported electricity such as seen in muni, rural cooperatives, small and large utilities.
  • Net Zero Export Limitations – Hawaii has been the first market to adapt such standards due to high day time PV load penetration rate at certain feeders which is becoming increasingly common along with many areas in the Caribbean.
  • Time of Use Rate Structures – The implementation of various rate structures which will place the highest cost electricity during evening time frames until late in the evening.
  • Buy All, Sell All Programs – Several regions are moving towards a buy all electricity which is produced from homeowners which seriously devaluates the value of solar PV and forces the homeowner to sell his electricity for less than retail.
  • Residential Demand Charges – implementation of demand charges in the residential rates as first seen on a broader scale in the Phoenix Metro area.
  • Net Metering Credit Expiration – In some regions, net metering credits accumulated are non-transferable and expire at the end of the calendar year.
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