Utility participation key to driving residential storage growth
A Navigant Consulting study said the global residential storage sector will be a 3,773 MW market by 2025
sidential energy storage is a niche market now, but it is going to build momentum over the next 10 years, according to a new report from Navigant Consulting, opening opportunities for utilities to harness the technology.
The report’s authors see residential energy storage growing to a 3,773 MW market by 2025 from nearly 95 MW today. In that same time frame, they see the North American residential storage market rising 55%, hitting 800 MW from the current 15 MW.
Most of the growth will occur in Australia, Germany, Japan and the United States, said the authors, Alex Eller, research analyst, and Anissa Dehamna, principal research analyst at Navigant.
The growth will follow a slow gradual path and then shoot up in a “hockey stick pattern” after about 2020, Eller said.
The key factors driving the timing of that growth are utility practices and the growth of rooftop solar installations.
The residential storage industry mirrors the residential solar industry in many ways, said Eller, and the storage market is also reliant on the growth of rooftop solar. The economics of both technologies “can be greatly improved when the two systems are tied together,” he said.
With residential solar, however, utilities largely ignored its growth, viewing it as a flash in the pan or a challenge to their market position. But as residential solar penetration reached higher levels, utilities began to experience voltage issues, as well as contentious disputes with customers and regulators.
Until recently, residential energy storage has been mostly “ignored by utilities as a niche product for clean energy connoisseurs,” the authors said. But utilities are wary of repeating those mistakes and are waking up to the potential of residential storage, said Eller. Among the potential benefits is the ability of residential storage to reduce congestion on the network and limit the need for new peak capacity resources.
Some are finding ways to derive value directly from residential storage, as well as means of limiting opportunities for third parties to come between them and their customers, according to the report.
Opportunities for utilities in residential storage
That is where utility practices come in. Some recent utility practices have been designed to slow the growth of rooftop solar, but that also can have the effect of speeding the adoption of residential solar, said Eller.
Reducing or eliminating net metering practices, for example, can slow residential solar penetration, but customers seeking to replace those benefits are increasingly looking to storage systems that can store unused solar power that can be deployed later in the day when rates are higher.
That is an example of a utility practice that has an indirect or inadvertent effect on the growth of residential storage, but utilities can also play a more active role by designing rates that promote the adoption of storage, such as time-of-use rates.
Utilities are less concerned about grid related problems when solar and storage are combined and the homeowner is not exporting power back to the grid, said Eller.
