Morgan Stanley: US solar PV and solar-with-storage installs to skyrocket

Investment bank Morgan Stanley says the addressable market for solar PV in the US is way bigger than anyone had previously imagined; and battery storage costs could fall way quicker than thought.

This combination of solar and storage will have big implications for the utility industry, which tries to tackle a rampant new technology in the same way that telecom companies had to deal with the emergence of wireless more than a decade ago.

Morgan Stanley says its “base case” addressable market for distributed solar in the US is 240GW within five years. In its bull case – where a 10% investment tax credit remains and there are lower grid charges, it estimates the addressable solar market at 415GW. That compares to just 6.2GW of residential and commercial solar installed to date.

It also says that battery costs could fall by more than half – courtesy of the ‘GigaFactory‘ proposed by electric vehicle maker Tesla. This, combined with the move to make higher fixed grid charges, are likely to inspire more consumers and businesses to go off the grid.

“There may be a “tipping point” that causes customers to seek an off-grid approach,” Morgan Stanley writes in a report. “The more customers move to solar, the remaining utility customer bill will rise, creating even further “headroom” for Tesla’s off-grid approach.”

Morgan Stanley expects customers to take one of three potential approaches – and they are remarkably similar to the scenarios painted by the CSIRO, in its Future Grid Forum publication on Australia.

The first is solar customers staying on the grid, but net zero grid power usage. In this scenario, a customer produces more power than needed during the day, but draws from the grid at night time.

Under this approach, homeowners might not use batteries to a large extent, because the grid is effectively acting as a battery and power management system, ensuring customers have power when they need it. However, Morgan Stanley says this will likely push up bills for remaining utility customers, creating more “rate headroom” for off-grid approaches.

The second scenario is using no grid power, even at night, but having the ability to seek emergency grid service in the event of a home power system failure. In this approach, the homeowner would purchase significant battery storage capacity to draw down power at night stored in their batteries that was produced during the day from their solar panels. Customers would, however, remain connected to the grid, and could seek “emergency power service” from the utility in the event that the home power system fails.

The interesting question about this approach is the cost of that service. It would be likely, Morgan Stanley says, that the utilities would set a high emergency access fee, providing a further incentive for customers to go fully off-grid.
That leads to the third approach – Fully off the grid. Customers choose this approach because to have any grid access would require a large non-bypassable, fixed-grid charge.

© 2014 Solar Choice Pty Ltd

Giles Parkinson