Energy Storage Set for New Wave of Deployments

Regulatory, policy and market trends point to high growth in residential energy storage

Our recent announcement of a partnership with Swell Energy illustrates the growing importance of the residential energy storage market, but also underscores the overall evolution of renewable energy. While many states are actively working on legislation and in some cases, regulation, investments are pouring into the market to improve technological and economic capabilities, accelerating the shift towards new energy.

Following the money. With $548bn of investments to flow to batteries over the next 33 years, It is a matter of “when and how” not “if” wind, solar and battery technologies will disrupt electricity delivery all over the world. In the future electricity system, having to buy fuel will be a disadvantage. Cheap batteries mean that wind and solar will increasingly be able to run when the wind isn’t blowing and the sun isn’t shining. Renewables plus batteries operating together as virtual dispatchable units allow deeper renewables penetration and eat into the most valuable operating hours for coal, gas and nuclear. We expect 1,290GW of new batteries to be commissioned worldwide between now and 2050. In particular, the home energy storage market is gaining momentum as energy providers, grid managers and regulators recognize the multiple values enabled by grid-connected batteries.

In our partnership with Swell, our AutoGrid Flex™ flexibility energy management software will allow the Los Angeles-based home energy and solar company to manage an expanding distributed energy resources (DER) fleet. Swell has built a pipeline of more than 35 megawatt-hours (MWh) of residential energy storage projects in California, which it’s assembling into a virtual power plant to deliver grid services. Swell’s virtual power plant will include more than 2,500 homes across California, making it the largest fleet of home batteries in North America providing grid services.

Deployments of home energy storage systems like these in California, Hawaii and other states reached record levels in the first quarter of 2018. A recent report from GTM Research and the Energy Storage Association (ESA) noted that 36 MWh of grid-connected home battery systems were installed in the first quarter of the year—equal to all storage deployed in the prior three quarters.

Overall, the U.S. energy storage market grew 26 percent—from 100 MWh to 126 MWh—in the first quarter of 2018 compared with the same quarter of 2017. That includes both behind-the-meter and front-of-meter installations.

Growth in consumer demand for energy storage is a function of a host of regulatory, policy and market trends. Government subsidies, incentives and changing rate structures such as time-of-use rates and reductions in net-metering compensation motivate consumers to look for new ways to manage their demand. Meanwhile, driven by renewable energy portfolio standards and other policy goals, energy companies are working to integrate higher levels of renewables into their resource mix.

Other factors pushing momentum in home energy storage include falling battery system costs, the growing residential solar PV industry, greater consumer awareness of energy use through connected devices and utility communications, consumer demand for resiliency in the face of more frequent and severe storms, and increasing concerns about climate leading to greater interest in clean energy.

The upward trajectory of home energy storage will continue and even pick up steam, according to industry analysts. GTM Research predicts that residential energy storage systems will surpass the 1,000 MWh mark in 2020. The company expects the industry as a whole to grow by a factor of 17 by 2023.

At AutoGrid, we’re helping energy companies and partners to manage this growth through our Flex™ suite of flexible energy management applications. For example, our Distributed Energy Resources Management System (DERMS) module of the Flex platform allows operators to control not only behind-the-meter home batteries but also connected digital devices such as smart thermostats and to lower electricity demand through voluntary customer efforts—so-called behavioral demand-response (DR) programs. The cloud-based platform allows energy providers to enroll customers, manage DR programs, dispatch DR events and measure and verify curtailment performance from a single, unified system.