GTM Research released information this week predicting that energy storage balance-of-system costs are going to continue to fall over the next five years. And we’re not just talking about a gradual decline. We’re talking 41%. Yeah, that’s huge.
Let’s tease that out a bit. Balance-of-system costs is a term that refers to all of the costs surrounding energy storage installation. This includes hardware needed to get your energy storage system in place, as well as the cost of labor to set it up. Right now, grid-scale storage systems cost an average of $670 per kilowatt hour. By 2020, that cost is expected to fall below $400.
The energy storage market has been going crazy lately. Everything in the energy storage domain, especially batteries, are becoming widely popular. This major boost in popularity is coming from the new price tag. Solar panels and home batteries used to be a luxury that only wealthy households could afford. Now, home energy systems are more accessible than ever. Programs like the SGIP (Self-Generation Incentive Program) in California sweeten the deal by paying residents to deck their homes out with new energy storage systems like home batteries. As a result, home batteries are popping up everywhere, especially wherever solar panels or wind turbines are already installed.
Owners of renewable energy generators like solar panels and wind turbines are realizing that energy storage takes their systems to a whole new level. With energy storage, like residential home batteries, homes and businesses can enjoy the free, clean energy generated by their solar panels even after the sun goes down. Here’s how it works: solar panels soak up the sun during the day, generating a lot of electricity that you don’t need to use just yet. Instead of leaking this electricity back into the grid (where you can pay for it later), home batteries store the energy for you, so it’s ready for you when you need it… at night and the early morning, and especially during blackouts when the grid lets you down. If you want to really get in on all the advantages solar has to offer, home batteries are a must.
So why doesn’t everyone with solar panels have energy storage systems? Well, they’re starting to. Like with any new, awesome technology, there’s a learning curve. It takes people a while to get used to a new, innovative way of thinking about and using energy. But now that the word is spreading, more and more people are taking advantage of the low prices and incentives that are available now. Hello, price drops.
Luis Ortiz, a consultant with GTM Research, and the author of the newly released report we’re all excited about, says that the biggest price decline will come from one particular piece of hardware: the inverter. Currently the second most expensive part of any energy storage system (right behind the battery), inverters convert the alternating-current electricity into a direct current, the current you need to power your home. The inverters needed for energy storage systems are pretty complicated, since they need to be able to convert in both directions -- into the battery to make storage possible, and out of the battery, so you can turn on your lights.
Grid-scale projects need the same technology as residential home batteries. Utilities like Southern California Edison are getting in on the energy storage revolutions, signing contracts for huge orders of hardware. As the volume of production increases due to these high orders, prices will just keep going down. That’s business, folks. The same thing happened for solar panels themselves, and if the story arc of the solar industry is any indication, we’re in for a super-charged future for energy storage.
Hearing about declining prices might make you hold out for the best deal, right? We know it’s tempting, but here’s why you should install an energy storage system right now:
SGIP stands for Self Generation Incentive Program, a way to motivate consumers to use alternative energy sources to generate and store their own electricity. The SGIP hails from California, where it stands as the longest running and most successful programs of its kind in the country. In short, the program pays Californians for using certain renewable energy systems, like turbines, and also pays households with energy storage systems, like home batteries. We’re not talking about a few extra pennies, either. The SGIP pays energy storage users over a dollar per watt. This means that home battery owners in California not only enjoy backup power and blackout protection along with lower (or even non-existent) electricity bills… they also get paid. No matter how small of a renewable energy or energy storage system you’re looking at, you are eligible for money. Free money. After your incentive claim is completed and reviewed, Pacific Gas & Electric issues you a check within 30 days.
The SGIP was recently extended, but awesome funding like this is not going to last forever. If you’re on the fence about installing your own home battery system, the SGIP should tip you towards energy storage and everything that comes with it… including blackout protection.
Simply stated, the power grid is pretty unstable. We’ve all endured power outages because of bad weather, but natural disasters aren’t the only force that can take the power grid down. Humans could, too. Ted Koppel’s recent book, Lights Out, illuminated the growing threat of a disabled power grid. Though our country’s utilities are an invaluable resource, the systems still rely on 1970s era technology. Updating utility systems means interrupting service, so it’s rarely done. Our current power infrastructure wasn’t designed to stand up to modern threats. When it was originally designed, the concept of web hacking wasn’t there.
The electrical grid is particularly weak because its network is spread out over many installations that are miles apart. An infrastructure like that is difficult to protect. Targeting the power grid is also appealing because of the domino effect that disabling the grid would have on our country. In basic terms, electricity keeps all our other systems running. Take down this single system, and the rest will follow. We’ve backed ourselves into a situation where the technology we possess to detect and monitor infiltration of our power grid depends on the grid itself. Not ideal, right?
Fortunately, you don’t have to be at the mercy of a vulnerable grid. The weakness of the grid is the reason California’s offering the SGIP in the first place. Energy storage changes the entire conversation about grid vulnerability. We don’t have to talk about prolonged power outages as a impending probability, but a situation that can be avoided altogether. Home batteries put the power back into the hands of the consumer, and back into the appliances and systems we need to sustain our lives.
Households equipped with solar panels and energy storage in the form of home batteries will be completely protected from any utility company mishap, whether it be on a large or small scale. Home batteries allow households to power their own essential appliances like refrigerators, water pumps, and heating/cooling devices with stored electricity collected from renewable energy sources like solar panels. The grid may be vulnerable, but the sun? Not so much.
Like we said before, home batteries are essential for solar customers, because they store the energy you don’t need during the day, so you can use it after the sun checks out. Many utility companies let you sell this excess power back to the grid, giving you credits toward your bill. This seems like a good idea, but a lot of utility companies are talking about lowering the level of compensation for electricity sold back to the grid. In short, you might have to buy back the energy you sell to the grid for a higher price. Not cool. Kind of makes you want to dump the grid, doesn’t it? But energy storage systems like home batteries can help save you money, even if you and the grid stay together.
Home batteries give you the power to store power when it’s cheap. It’s 5:30 PM, and you’re ready to get things done at home. You need to charge your devices, take care of some household chores, and maybe catch up on podcasts. Your home needs power… and so does everyone else’s. The utility companies call this peak demand-- the times during the day, week, or even season when power is needed the most. Because high demand requires high (and hopefully consistent) power supply, your electric company may be charging you a higher price for the energy you are using.
So if prices are high when there’s high demand, does power cost less when people aren’t using it? Exactly. In the middle of the night when most televisions, dishwashers, and clothes dryers are shut down, the cost for electricity drops.
What if there was a way to use power during high-demand times, while getting charged low-demand prices?
That’s where a home battery comes in.
With a home battery, you can store energy when the cost is lowest, and use it whenever you need it. This is called time-of-use shifting, and it’s a great way to stick it to the power companies, and shave some money off of your bill.
Ready to jump in? Let us hook you up with a free evaluation.