The New York Times got it wrong.
  In a recent story about how Green Mountain Power (GMP) is rolling out solar-plus-storage systems in Vermont, the paper suggested the effort is noteworthy because it lets customers power their homes “entirely disconnected from the grid.”

Which is true, kind of. The 5 kW Tesla Powerwall units the utility is making available to its customers allow them to operate off-grid for several hours in times of emergency or if needed to balance supply and demand on the grid.

However, the real game-changer in the GMP program is that it requires customers to agree to shared access – that is, letting the utility monitor and, at times, control the storage units, which are installed behind their meters. GMP can then aggregate power stored in the batteries and use it, for example, to lower its need to buy electricity during times of peak demand, which in turn provides savings that can benefit all of its customers.

The program is still in its early stages, says Kristin Carlson, GMP’s vice president of strategic and external affairs, but 900 customers have already called in to express interest.

“This is the energy future we see, where every [new customer] gets a meter, and they get a battery,” she says.

Shared access has long been a sensitive issue in the utility industry – another point the Times article missed. Customers have tended to balk at allowing utility control of any device in their homes – hence the difficulty some utilities have had in getting residential customers to sign up for summertime air conditioning cycling programs.

Making shared access the default option – as GMP has done, with apparently little customer pushback – signals a paradigm shift with potentially far-reaching impacts.

  Grid defection is no longer the main narrative on residential solar-plus-storage. Rather, utilities, customers and technology developers are recognizing that the way to unlock the cost savings, energy reliability and resilience that solar-plus-storage can provide is through aggregation and collaboration. “Energy independence” is still an industry buzz term, but its meaning has shifted toward a focus on customer control and choice.

“People want to control their own destiny, whether 100 percent off grid or still connected but with more control,” says Bryan Christiansen, chief operating officer at Vivint Solar, a national installer now rolling out a residential storage offering in partnership with Mercedes-Benz. “[You can bring] more distributed energy resources into the marketplace and coordinate resources with utilities.”

“I think that is absolutely the smartest solution,” agrees Leia Guccione, a principal at the nonprofit Rocky Mountain Institute (RMI), which has published a number of reports on the role of storage as a tool for energy sector transformation.

“That creates the opportunity for customers and some third parties to be part of aggregated resources that will create a positive dynamic,” she says. “Solar, smart inverters, batteries [and] smarter appliances can be part of a virtual power plant. That is where the industry should be going; that will move the market fastest and help us reform the grid for everyone’s benefit.”

This holistic view of the market also turns up in discussions on whether utilities or third parties should be the actual aggregators, owning and accessing behind-the-meter equipment and data. Guccione sees it as an open question, with arguments to be made for both sides.

“I don’t think, at this point in time, one is better than the other,” she says. “Both are a change from what we have today. We think it is important to innovate around these ideas to get more information on what we should incentivize.”

Pacific Gas and Electric (PG&E) led the nation in new residential storage installations last year, according to the Smart Electric Power Alliance’s (SEPA) 2017 Utility Market Survey. The Northern California utility is now rolling out a pilot project – in partnership with Tesla Energy – to test the grid-support services that aggregated behind-the-meter storage can provide.

In this case, Tesla is being the third-party aggregator for the solar and storage systems it is installing on 30 homes in San Jose, says Alex Portilla, PG&E’s principal project manager for distributed energy management systems. But the utility is looking at other options, he says.

“There will be some cases where we have a more active role,” Portilla says. “We’re working out where it makes sense for us. Who is in the best position to create value or transactions in the wholesale market or use [storage] assets for distribution? Where do you need control, and who controls? Who is the conductor?”

A fundamentally different conversation

Creating value – and multiple revenue streams – is what the developing solar-plus-storage market is all about, across the residential, commercial and utility-scale segments.

Simply put, the pairing of solar and storage offers a range of cost-saving and grid-support benefits for customers, utilities and the grid. Consequently, for all their wariness and resistance to solar, utilities appear to be on a much faster learning and acceptance curve with storage, according to Matt Roberts, vice president of the Energy Storage Association.

“The conversation we’re having on energy storage is fundamentally different [from solar],” says Roberts. “This is a new era of the grid. Storage is a lot more similar to what the utility has always done. It helps you move energy across time. There are so many possibilities to extract the full value; it’s going to take customers and utilities working together to make it successful.”

The residential sector has, thus far, been the smallest and slowest part of the storage market, but some industry watchers see a number of factors that could accelerate growth.

SEPA’s 2017 Utility Market Survey found that 33 utilities put a total of 557 residential storage units on the grid last year, bringing the national total to 1,762 residential interconnections.

“When we looked at the raw data from the energy storage survey, it reminded us of our first solar market survey in 2007, when only a handful of utilities had any deployment to report,” says Nick Esch, the SEPA researcher who led the survey. “More than 40 percent of the 97 utilities who responded to this year’s survey didn’t have any energy storage online at the end of 2016.”

Even PG&E, the industry leader in SEPA’s findings on the residential sector, is seeing only a trickle. The utility interconnects about 5,000 rooftop solar systems per month, Portilla says, but this past June, it had only 25 storage interconnections, and several of those were part of the San Jose pilot project.

What will change that trickle to a steadier stream is, of course, economics coupled with consumer demand. The growing electric vehicle market is expected to provide the economies of scale that will keep battery prices spiraling down.

Guccione notes that both storage and solar prices are falling faster than RMI projected in a 2014 study that estimated going off grid with solar-plus-storage would be economically feasible in a growing number of states in 10 to 30 years.

Rate increases or restructuring will also likely be a factor as residential rates go up or time-of-use rates or demand charges are rolled out, as some utilities are now proposing.

“We can say with pretty high confidence, if anything, the full [grid] defection and partial defection scenarios are going to be economically viable sooner than forecast,” Guccione says.

But, just because going off grid is economically feasible, it doesn’t mean utilities will face massive grid defections, she says. Echoing Vivint’s Christiansen, Olaf Lohr, director of business development for sonnen Inc., says that customers understand energy or utility “independence” as a measure of choice or control.

sonnen, a Germany-based storage company focused wholly on the residential market, has also partnered with GMP, providing the storage units paired with rooftop solar at a low-income mobile home park in Waltham, Vt.

“You are trying to keep as much energy in the microcosm of your home, drawing as little from the grid, exporting as little to the grid,” he says, noting that sonnen’s customers can hit levels up to 70% or even 90% of their energy use. Customer demand is building, Christiansen says. Vivint made its decision to move ahead with storage based on market research showing that 52% of current residential solar customers are interested in battery storage, he says. Similarly, 51% of those looking to go solar within the next five years said they would be interested in including storage in any new installation.

Such figures are drawing utility interest, as well. SEPA’s utility storage market survey found that while only 9% of responding utilities currently offer a residential storage program, 72% are researching, planning or considering one.

“Storage may not yet be a mainstream utility resource, as solar is rapidly becoming, but clearly, many in the industry can see the point on the horizon where that starts happening,” says Tanuj Deora, SEPA’s executive vice president and chief content officer. “They understand storage will be deeply disruptive and transformative in the value it brings to the grid – even more so than solar – and they need to start preparing for those changes now.”

Visibility, cybersecurity and ease of use

The caveats in all of this are the technical and strategic issues that still need to be addressed, says Beth Chacon, utility Xcel Energy’s director of grid storage and emerging technologies.

“The market is new, and I think everyone is trying to figure it out,” she says. “What is it you want to accomplish with your batteries? We do need visibility; we do need cybersecurity; we have to work through all these things.”

Xcel is moving forward with a pilot program in Colorado that, like PG&E’s, will test the grid-support capabilities of storage, Chacon says. However, in this case, the storage will be installed both behind the meter and on distribution feeders. As at GMP, customer interest is high, she says.

But whether interest translates into technology adoption, program participation and, ultimately, market growth may depend on ease of use. Many of the solar-plus-storage systems now being launched have “set it and forget it” energy management systems that provide both the shared access utilities need for aggregation and the control and emergency backup power important to customers.

“We’re finding our customers don’t want to be told to do laundry at 2 a.m.,” says GMP’s Carlson. “They don’t want to be inconvenienced. What’s critical is to use these innovations to make people’s lives easier and make the pricing such that it makes sense for people.”

GMP’s storage program is set up so that customers pay $15 per month for the Powerwall units in their homes, she says. Guccione agrees financing must be simple, but she argues, value may also be a key factor in customer acceptance.

“Keep in mind, smartphones are a lot more complicated than landline phones because they have so much value,” she says. “Customers had very few barriers to learning how to use them. We need to take that kind of dynamic into consideration. If we provide enough value, complexity is not that big a barrier for customers.”

sonnen is going to put that concept to the test later this year when it brings its sonnenCommunity program to the U.S., Lohr says. Basically, the system is a community-level platform that allows residential customers with solar and storage to buy and sell power among themselves. In Germany, thousands have signed up to participate.

The U.S. version will be connected to the grid, he says, so it can also offer grid-support services, and participants will get credits on their bills for excess energy they make available to others on the platform, he says.

While Lohr would not divulge the location or other details on the rollout, he did say sonnen has partners and is investing its own resources to get the program off the ground in the U.S.

He believes getting residential storage into the energy mainstream will not be linked to absolute penetration levels, but to specific applications reaching a critical mass in different areas, based on the value and benefits they deliver. Rather like what’s happening at GMP.

“We are on the edge of this innovation and this technology that is happening in storage,” Carlson says. “There will be innovation that comes out next year; there will be something we can’t imagine. We want to be nimble enough for our customers to take advantage.”

Of course, the growth of residential solar-plus-storage with shared access is part of the much larger changes going on in the energy industry as more distributed energy resources, on both sides of the meter, come onto the grid. Keeping pace with technological change – and the unpredictability it brings – will require a commitment to cross-industry collaboration and finding solutions that optimize benefits for customers, technology providers, utilities and the grid.   

K Kaufmann is communications manager for the Smart Electric Power Alliance. She can be reached at kkaufmann@sepapower.org.