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How will recent advances in the energy storage market impact utilities?

This author no longer works for DNV GL.

It has been a while since I’ve had a chance to write about energy storage, but in that time there has been a tremendous amount of activity on the storage front which has given rise to some very topical issues. Today, I want to talk about Tesla, solar + storage, and the impact these two factors will have on utilities.  This sequence of connected issues was also discussed at DNV GL’s Utility of the Future Leadership Forum in early June.

Tesla once again has pushed the storage market forward with their announcement of the Powerwall storage device. The announcement is noteworthy for two reasons.  First, it has propelled the solar + storage application into the forefront.   They are not the first company to offer this product.  In fact, in 2014, the CEO for Solar City said “Every Solar City customer will get a battery back-up for their solar systems within 5-10 years.”  There are many reasons why a customer would want this, including reliability, shifting PV production to off hours, and participating in demand response programs.  However, the move by Tesla announces the deployment of solar + storage systems in a manner that all grid stakeholders hear.  Second, is that the initiative by Tesla and its distributors has told the market (of at least one location) where solar + storage will be deployed—on the customer side of the meter!  Whether this is the most optimum spot or not, there will be applications sited there and a segment of the customer class will demand to place it there.

What impact does this have? For utilities it can be somewhat dramatic.  Utilities have always wrestled with understanding the timing of “storage” on the system.  Actions such as California’s storage mandate may have removed skepticism on whether storage was going to be part of future grids or not, but it didn’t really say when. Translated into utility terms, the California action didn’t remove the “do nothing” alternative on storage.  Meaning, even with the increasing momentum, utilities could still wait for storage costs to decrease further and for more technologies to commercialize before taking action.  However, with the announcement, it became clear that utilities would need to take action sooner, either to place storage on their side of the meter or adjust to customer demands to place storage on the other side of the meter.

This is not a minor development.  Activities such as Oncor’s $5.2 Billion dollar call for storage to improve the resiliency of the Texas grid, and New York’s decision on REV (Reforming the Energy Vision), which carved out an exception for storage when the State ruled on whether utilities could own Distributed Energy Resources (DER).  The bottom line is that the dollars at stake, on whether storage is deployed on the customer side or the utility side is not small, but quite impactful.

Traditionally, utilities and customers have always battled on how to place and use traditional distributed generation (DG). Some have extended this same argument to solar + storage.  However, I don’t believe this will be the case.  The potential for the device to be a tool for modern grids coupled with the amount of funding that will most likely be behind the application hints at a more cooperative future.  However, no matter where, it is clear that utilities need to take action to understand where and how to deploy the technology—and this action will need to be sooner rather than later.

Related solar + storage information:

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