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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 …
6
A. Energy Storage Market Trends
B. Market Drivers
C. Conclusion & Outlook
Topics
7
A. Energy Storage Market Trends
8
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
9
A. Status Quo – Energy Storage Market Trends
Classification of Storage Solutions
10
A. Status Quo – Energy Storage Market Trends
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
-
11
A. Status Quo – Energy Storage Market Trends
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
12
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%
B. Drivers – Economics of Energy Storage Systems
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%
B. Drivers – Economics of Energy Storage Systems
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%
B. Drivers – Economics of Energy Storage Systems
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
17
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
18
B. Drivers – New Business Cases
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.
19
B. Drivers – New Business Cases
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.
20
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
21
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
22
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
23
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.
24
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.
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
26
C. Conclusion & Outlook
27
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.
28
U.S. PV InstallerMonitor 2018/2019©
U.S. PV InstallerMonitor 2018/2019©
Surveys among installers regarding • Procurement • brand management • satisfaction & recommendation • market penetration & storage
solutions
This edition of the U.S. PV InstallerMonitor© provides comprehensive insights into the domestic PV and storage market.
Many evaluations are displayed on a brand level. Compare your position with those of your competitors and find out where and how to improve.
The information provided in the U.S. PV InstallerMonitor 2018/2019© will assist you in order to adapt your business strategies and your PV product portfolio.
29
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Thank you very much for your attention!