How Difficult Is It to Make the Leap to Energy Storage?

Feb 10, 2021Blog

Energy storage in the world continues to grow. Globally, the residential energy storage market is projected to rise annually at a rate of 16% from 2019 to 2027, with the residential energy storage markets in North America projected to be the second-largest region for growth. From 2018 to 2019 the overall US energy storage market experienced a 232% year-on-year growth.

A number of American home and business owners are considering energy storage to reduce their utility bills. However, many have questions about the feasibility of making such an investment.

Solar + Storage

Given the powerful benefits of owning a solar + storage system, some owners of stand-alone residential and commercial PV solar arrays are considering adding storage to their systems. Whether or not energy storage will work with an existing solar system depends on a number of factors.

One important factor is whether the installed PV solar system is storage ready. This is partially dependent on the kind of inverter used. A solar system inverter converts the DC output of the solar panel into AC, a current that can be fed into a commercial electrical grid. An AC-coupled solar + storage system requires a separate inverter to charge the storage batteries. A DC-coupled system needs a switching system to break the panel strings into smaller groups that are compatible with a charge controller, a regulator that feeds the harvested power to the batteries.

Because of this, it can be difficult for homeowners to add storage to their existing solar system since their system inverter needs to be specifically designed for storage already. Additionally, 2019 code changes (which don’t impact ground-mounted and commercial systems) make it so that many residential rooftop PV systems, equipped with string inverters that convert power at the level of the entire array, are incompatible with a direct DC storage system. In fact, the new codes are even rendering many rooftop system string inverters obsolete, given that they will most likely need to be replaced to comply with the new standards.

Given these complications, for some homeowners with existing rooftop PV systems it may be better to install a separate battery storage system with a separate inverter-charger. This way if there is a power outage the batteries would provide limited power until they are exhausted. Companies like Tesla and Outback offer systems that switches from grid-tied power to solar and battery standby power during a power outage, complete with a separate subpanel to manage powering critical home systems for an indefinite amount of time. This allows the batteries to remain at full charge. However, these systems are not yet compatible with something called micro-inverters.

Micro-inverters certainly do play a role when looking at adding a storage system. Contrary to a string inverter, a solar micro-inverter makes the conversion of DC to AC at the panel (making them compatible with the 2019 code changes). If a PV solar system uses them, then an AC-coupled system is needed for adding storage given that the battery cannot be added into the DC lines prior to the AC-conversion. However, if the existing inverter is in storage-ready condition, adding an AC-coupling storage system to the PV solar array is as simple as installing a new battery-based inverter along with the batteries.

Other considerations are the make, model and age of the existing inverter. The inverter must be advanced enough to have control capability in order to regulate charging cycles. Additionally, certain storage systems require that their company’s battery-based inverter be used. Finally, the length of time the inverter has been in use, or the amount of time left on its warranty, may mean that the inverter needs to be replaced before adding storage.

The Importance of Location and Ownership

The location of the PV array needs to be considered. For example, the climate may have extreme temperatures that prevent the storage system from being installed outdoors or the state or utility may have rules or incentives that dictate the best system to use. System ownership is also relevant. While a PV solar system that is fully owned by the customer makes for easy updates, leased systems may have certain restrictions.

Compatibility with Generators

A question that comes up for some system owners is whether or not an energy storage system can work with a generator. Fortunately, most energy storage systems with microbial fuel cells (MFCs) are compatible. There has also been a recent effort in the industry to create “hybrid” generator systems. These are generators pre-packaged with power electronics, connections, and control platforms to integrate solar systems and batteries.

Generators working in tandem with PV solar and storage can be ideal because they can mitigate demand charges or arbitrage against grid power. They help shave peak power consumption and reduce capacity charge, or limit energy consumption during particular periods of time. Additionally, the falling cost of battery storage can mean opportunities to improve the efficiency and flexibility of existing generators. Thermal and electrical energy storage systems herald a reduction in wasted energy when tied to gas-powered combined heat and power systems. This can provide an attractive return on investment for customers.

Incentives for Energy Storage

Energy storage systems installed in conjunction with an existing PV solar system qualify for the 30% federal Investment Tax Credit (ITC) for the entire cost of the project installation. In California there is also the Self Generation Incentive Program (SGIP), a ratepayer-funded rebate program overseen by the California Public Utilities Commission (CPUC). This rebate is available to retail electric and gas customers of California investor-owned utilities.

Each year there is a certain amount set aside for this rebate. For example, in 2018-2019 the CPUC budgeted $202.6 million for energy storage rebates on existing and new distributed energy resources for behind the meter projects. It is important to get in the SGIP application early since the allotted amount for the program is limited and tiered (this year the application is due in May). As a result, the first to act receive the highest level of rebates because the levels gradually decline over time as more batteries are installed in the state.

In 2019, New York also instituted an incentive program for energy storage. The state budgeted $130 million for retail storage project incentives for customer-sited systems below 5 MW that have been installed alone or paired with an onsite generation system like PV solar.

In conclusion, there are a number of factors to consider when looking at adding energy storage to an existing PV solar system or installing a stand-alone energy storage system to your home or business. Some of these considerations can even help shape the decisions you make regarding the installation of a new PV solar system, with the intention of adding batteries in the future.