After creating highly successful online payment systems (PayPal), electric sports cars (Tesla Motors), commercial space travel (SpaceX) and more recently, the largest US residential PV installation company (SolarCity), billionaire Elon Musk has now set his sights on grid storage.
SolarCity is now offering Li-ion based battery storage – the kind that Tesla Motors uses in its cars – with commercial PV systems. The system is currently only being offered to businesses, who have a greater appetite for PV-storage systems. This is because commercial users not only consume more energy than residential users, but also tend to have higher peak power consumption. And the utilities often make them pay for it through ‘demand charges’.
Says SolarCity CEO, Lyndon Rive, “We know this is a long-term problem, so we are investing in it now”. To ensure shorter cost pay-back times, the company is initially offering their storage solution (called ‘DemandLogic’) to users with high demand charges, particularly in states such as California, Connecticut and Massachusetts, which have higher electricity tariffs.
SolarCity says it expects to start installing its first DemandLogic systems for businesses in mid-2014. Eric Carlson, senior director of grid integration for SolarCity, says “We are currently piloting our residential storage offering to provide back-up power in the event of a grid outage, and power at night when homeowner’s solar systems aren’t producing energy. We’re offering the pilot in California to several hundred residential customers initially.”
They hope to eventually launch a similar system for households. However, says Carlson, “Residential customers have a different use case than major corporate customers since they aren’t hit with demand charges”.
Given SolarCity’s dominance in the US residential PV sector and Tesla’s expertise in Lithium-ion battery technology, this offering is a logical merger of Elon Musk’s two main commercial interests.
However, analysts are unsure about the impact this has on the broader energy market. Sam Jaffe, an analyst from Navigant research group, stresses that Lithium-ion battery prices are still too high at the moment for such PV-storage systems to be profitable without subsidies. He says, “This kind of product is taking advantage of significant US federal subsidies and because of that, they are able to sell the system at a price point that allows you to do demand charge reduction.”
Nevertheless, Jaffe is positive that falling battery prices will slowly increase that fraction. He stresses that Li-ion electric car batteries now cost half what they used to two years ago. Smaller Li-ion batteries used in laptops and phones cost even less, dropping in price by 80% in three years.
Energy storage currently accounts for only 3% of the world’s annual energy generation capacity, but the outlook for growth is positive. As M J Shiao, a solar analyst at GTM Research, says “We’re still very much in the infancy of storage. But when you have big companies like SolarCity doing this, it helps move the conversation forward.”
Top image via SolarCity
© 2014 Solar Choice Pty Ltd
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