will the u.s. residential energy storage market start ...will the u.s. residential energy storage...

Will the U.S. Residential Energy Storage Market Start Booming Now?

September 24, 2018 Markus A.W. Hoehner, CEO & Founder, EuPD Research, IBESA – International Battery & Energy Storage Alliance

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The International Battery & Energy Storage Alliance

Proud Partners (Excerpt)

The International Battery & Energy Storage Alliance

Our global network: >6 years 14 countries 30 locations 150 events and more than 15,000 delegates

Events Organized by IBESA

3rd IBESA U.S. Storage Day

24 September 2018 | Anaheim, USA

ees & IBESA Summit France

24 October 2018 | Strasbourg, FR

Digital Solar & Storage 2018

4 - 5 December 2018 | Munich , GER

6th Exclusive Solar & Storage Business Circle - Middle East

16 January 2019 | Abu Dhabi, UAE

10th Solar & Energy Storage Market Briefing Europe

February 2019 | Frankfurt, GER

Electrical Energy Storage Forum @ ees Europe

15-17 May 2018 | Munich, GER

Much more to come …

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A. Energy Storage Market Trends

B. Market Drivers

C. Conclusion & Outlook

Topics

7

A. Energy Storage Market Trends

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A. Status Quo – Energy Storage Market Trends

Energy storage trends and challenges – opportunities for residential storage Rising Challenges: • Climate change, droughts and record heat triggers power

outages • Aging grid infrastructures are more vulnerable to blackouts • Result: climbing costs and rising losses Future Trends: • Crucial Goals: Reliability, Resilience, Flexibility • New disruptive proof network technologies: e.g. Virtual Power

Plant (VPP) • Prosumer Trend

Vorführender

Präsentationsnotizen

In July 2018 record-setting heat led to unprecedented peak electricity demand (high use of air conditioning) More than 15 million people in California were under excessive heat warnings in summer 2018 In Los Angeles 35.000 people were without power for more than 12 hours Due to high number of of small localized power outages Utilities needed 24 hours to restore power Increasing number and duration of power outages mean climbing costs and rising losses for Utilities, business and companies, households. Energy storage solutions in conjunction with new technologies like e.g. Virtual Power Plant (VPP) / Community Cloud Solutions can relieve the grid. The following Prosumer trend on residential level will increase the demand for residential energy storage.

9


Classification of Storage Solutions

10


Strong Market Growth, especially for Behind-the-Meter Technologies

0 MWh

500 MWh

1,000 MWh

1,500 MWh

2,000 MWh

2,500 MWh

3,000 MWh

3,500 MWh

4,000 MWh

2014 2015 2016 2017 2018e 2019e 2020e

Utility Non-Residential Residential

Source: GTM Research,EuPD Research 2018.

U.S. Energy Storage Annual Installations

-

Vorführender


35.8 MWh of residential storage deployed in Q1 2018

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Increasing Electricity Prices for Private Households in California

17.718.1

18.9

12.712.9 12.9

10 $Cent/ kWh

15 $Cent/ kWh

20 $Cent/ kWh

2016 2017 2018

California U.S. Total

Source: EIA 2018Electricity price for private households

5.0 $Cent/ kWh 5.2 $Cent/ kWh 6.0 $Cent/ kWh

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B. Market Drivers

13

Levelized Costs of PV-Storage

+ = 𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝑃𝑃𝑃𝑃

_ Storage Loss

PV Electricity Generated

Storage Costs PV System Costs

B. Drivers – Economics of Energy Storage Systems

14

Grid Parity of PV-Storage (California)

PV system (2018) Lithium ion battery (2018)System price 2,900 $/kW Battery price 1,000 $/kWhsystem size 5.0 kWp Battery size (nominal) 4.0 kWhYield per kWp 1400 kWh/ kWp Depth of discharge 95%Degradation 0.25% Battery size (effective) 3.8 kWhLife-span 25 years Battery efficiency 92%O&M PV system 1.0% Life-span battery 20 years

O&M battery 2.0%


15

Grid Parity of Photovoltaics (California) – already reached

PV system (2017)System price 2,800 $/kWsystem size 5.0 kWpYield per kWp 1800 kWh/ kWpDegradation 0.25%Life-span 25 yearsO&M PV system 1.0%


17.4 17.7 18.1 18.9

13.8 13.011.4

11.8

0 $Cent/ kWh

5 $Cent/ kWh

10 $Cent/ kWh

15 $Cent/ kWh

20 $Cent/ kWh

25 $Cent/ kWh

2015 2016 2017 2018

Electricity price (private households) LCOE residential PV

Sources: EuPD Research/ EIA 2018

16

Grid Parity of Photovoltaics (California) – already reached

PV system (2017)System price 2,800 $/kWsystem size 5.0 kWpYield per kWp 1800 kWh/ kWpDegradation 0.25%Life-span 25 yearsO&M PV system 1.0%


17.417.7

18.1 18.9

13.8

13.011.4

11.8

22.019.4

15.9 16.4

0 $Cent/ kWh

5 $Cent/ kWh

10 $Cent/ kWh

15 $Cent/ kWh

20 $Cent/ kWh

25 $Cent/ kWh

2015 2016 2017 2018

Electricity price (private households) LCOE residential PV LCOS residential PV

Sources: EuPD Research/ EIA 2018

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B. Drivers – New Business Cases

Applications for Storage Systems – Focus Residential PV & Storage

Application area Effect Market driver

Self-consumption Minimization of grid power procurement High electricity prices Maximization of the ROI No feed-in tariff Maximization of self-consumption No feed-in to the grid possible

price arbitrage/ time-of-use

Benefit from home energy storage during peak hours when utility electricity rates are at their highest

Electricity tariffs with fluctuating prices during the day (time-of-use-rates)

None / reduced net metering

Maximizing the value of the energy generated at customers property

$/kWh for electricity supply by utility is higher than $/kWh credit for electricity sent back to grid by homeowner/ customer

Backup & Emergency power

Maintaining of the electricity supply when the grid breaks down

Vulnerable electricity supply / power outages

Demand charges Usage of energy storage to reduce the power input of consumption from utility/ the grid

Avoiding higher fees in specific electricity tariffs

Vorführender


Basically: the availability of each business case shown above depends heavily on State regulation/ Regional Public Utility Commission/ Regional Utility Price Arbitrage (time-of-use-rates): benefit from home energy storage during high electricity rates during peak hours (example next slide) Reduced Net Metering: e.g. if customer with PV pays 0.11$/kWh for electricity from utility but gets only 0.04$ credit for electricity sent back to grid, customers solar electricity will be worth 0.07$ less -> incentive for energy storage at home Demand Charges: e.g. Seasonal tariff for homeowners with PV: June – August 15$/ kW and September – May 5$/kW extra charge when receiving electricity from utility (San Diego Gas & Electric has currently 2 residential seasonal demand charges under authorization procedure by California Public Utilities Commission)

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Time-Of-Use Residential Rate (Example)

• With residential PV and energy storage the customer can avoid or reduce higher electricity rates during the daytime (8am-10pm)

Source: Southern California Edison 2018.

Vorführender


Time-Of-Use Residential Rate for low and medium energy users, less than 700 kWh/month Features different rates for summer and winter month Minimum daily charge: $0.34 Baseline credit: $0.08 per kWh up to monthly baseline allocation. Example: if monthly allocation is 200 kWh, customer receives 16$ credit

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Source: National Renewable Energy Laboratory based on Utility Rate Database 2017.

Demand Charges – already adopted for commercial customers

• In regions with high utility demand charges, behind-the-meter storage may yield bill savings by shaving loads during peaks with energy storage facilities.

• In more than 20 States utilities are considering residential demand charges.

Vorführender


Map shows that demand charges for commercial/ industrial customers are utilized in all States. About 20 Utilities considering or have already adopted residential demand charges for solar customers with up to 9$/kWh extra fees in summer months (e.g. Kansas City Power & Light). -> High market potential for residential energy storage.

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B. Drivers – Tax Incentives

Homeowners can benefit from the Solar Investment Tax Credit (ITC) for energy storage: • An existing solar-ITC is applicable to battery/ energy storage

systems if charged 100% by on-site PV-systems • Eligible for new installations and as addition to existing PV-

systems • Until 2019 the tax credit remains at 30% of the cost of the

system, 2020: 26%, 2021: 22% -> Major driver for the current and upcoming growth in residential energy storage -> Pull forward effect for residential energy storage

Vorführender


ITC requirements: Claimable for PV and storage hardware costs, properly allocable labor/ installation costs as well. When PV and storage system is installed at once, 30% ITC on the entire price. When PV installed in Year 1 and storage system in Year 2, both installations qualified for 30% ITC each. Residential: Claiming the ITC for adding energy storage system to an existing solar energy system is confirmed by IRS (Internal Revenue Service) and National Energy Laboraty (NREL). Customer has to own the existing PV system. A further extension of the ITC from 2022 onwards might be possible. The „Energy Storage Tax Incentive and Deployment Act of 2016“ is introduced to Congress, but no final decision so far. Modified Accelerated Cost Recovery System (MACRS) as 2nd national level incentive program: Focus on Commercial Use.

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B. Drivers – Behind-the-Meter Policy

Behind-the-Meter Policies in states and cities supporting residential storage (examples): • California: Self-Generation Incentive Program (SGIP) • Maryland: solar battery tax credit worth up to 5000 $ on

a residential level • Indianapolis Power & Light: target of 50 MW customer-

sited storage

-> More than 20 states are engaged in certain energy storage incentive projects -> Additional pull-forward effect for residential storage

Vorführender


California is „early adopter“ within behind-the-meter policy as support. Well-known Self Generation Incentive Program (SGIP) SGIP started in 2001 to support various behind-the-meter technologies installed at homes or businesses (e.g. PV, fuel cells etc.). Extended by further $830 million funding until 2025 Thereof 15% exclusively residential storage = $125 million Value of per-kWh incentive depends on size and changes the more storage systems are installed (example next slide) Also other States starting incentive programs: e.g. Maryland, Massachusetts, Hawaii

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B. Drivers – Maximizing Incentives

Combination of SGIP + ITC:

https://news.energysage.com/california-energy-storage-incentives-sgip-explained/

-> Cost reduction up to 30-60%

Tesla Powerwall Savings

Components Estimated Cost

Powerwall Battery $5,900

Installation cost $2,000 to $4,000

Shipping, components, fees $3,000 to $4,000

SGIP value - $4,640

ITC value - $3,270 to -$4,170

Total cost (approximate) $2,990 to $5,090

Vorführender


SGIP Value (2nd. gen Tesla Powerwall 13,2 kWh capacity): First 10 kWh receive $400/kWh incentive, remaing 3,2 kWh receive $200/kWh: total $4640 ITC include hardware and installation cost -> flexible value










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B. Drivers – Necessity of Backup Power Comparatively high level of power outages of Californian utilities illustrates the strong need of backup power, which could be provided by on-site residential energy storage.

0

50

100

150

200

250

300

350

400

2011 2012 2013 2014 2015 2016

Bear Valley Electric Service Liberty (CalPeco) Pacific Gas & ElectricPacifiCorp San Diego Gas and Electric SoCal EdisonGermany

SAIDI: total minutes every customer was without power due to sustained outages

Source: EuPD Research based on California Public Utilities Commission, Bundesnetzagentur, 2018.

Vorführender


SAIDI: total minutes every customer was without power due to sustained outages per year Utilities in California 2016: San Diego Gas & Electric: 72,7 min PacifiCorp: 142,7 min Liberty Utilities (CalPeco Electric): 213 min Germany: 12,8 min

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B. Drivers – Increasing Number of Electric Vehicles (EV)

Consistent Rise in U.S. and California Electric Vehicle Sales.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50,000

250,000

450,000

650,000

850,000

1,050,000

1,250,000

1,450,000

1,650,000

1,850,000

2,050,000

2016 2017 2018e 2019e 2020e 2021e 2022e 2023eCalif. EV Sales US EV Sales Calif. EV % of Auto Sales US EV % of Auto Sales

US & California Electric Vehicle Sales & Market Share Projections

Source: EuPD Research based on IHS Markit, EVAdoption.com 2018.

Vorführender


Rise of Electric Vehicles provide an additional demand for residential energy storage. California is early adopter: in 2018 50% of U.S. electric vehicles are registered in California. In 2023 ca. 40% - rest of USA will catch up.

25

B. Drivers – Homeowners with storage are linked to EV

Market Insight from Germany: Homeowners with PV + Energy Storage are interested in Electric Vehicles.

9%

12%

28%

51%

in 2018 in 2019

from 2020 no intention to buy

Source: EuPD Research 2018 Are you currently intending on purchasing an electric vehicle within the following time frames?

n = 541

Home-owners with the intention of

buying an electric vehicle in 2018

54%

31%

6%

in 2018 in 2019 from 2020

buying intention photovoltaic system

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C. Conclusion & Outlook

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C. Conclusion & Outlook US Residential Energy Storage

+ Based on decreasing PV system and storage prices grid parity of PV storage solutions has already been achieved.

+ More and more electric utilities improving their rate policy. Within these new business cases with high flexibility (e.g. time-of-use-rates) customers can optimize their energy demand by using residential PV & energy storage solutions.

+ Apart from economic aspects, storage installations in the U.S. market are driven by topics such as backup power. Weather phenomena such as hurricanes show the up-to-dateness of this issue.

+ Increasing number of state incentive programs and investment tax credits will support the demand on residential energy storage systems.

+ Electric vehicles as push factor: The increasing share of electric vehicles will boost the demand for residential energy storage.

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will the u.s. residential energy storage market start ...will the u.s. residential energy storage...

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