Integrated inverter-storage system supercharges solar
Integrated inverter-storage system supercharges solar installations, combining energy management software with storage to maximize on-site consumption.
According to the SMA website, the battery storage, with the home energy management software that optimizes use of solar production and the battery, can increase self-consumption from 30% to 55% of production based on German production and consumption parameters (including 5,000 annual kWh of consumption and solar production). In different situations where production and consumption are more correlated (air conditioning load, Australia), the results could be different or require more storage.
Still, it is interesting that a small amount of storage (2 kWh) can have a big impact. Australia does not have net metering and power fed back into the grid is now paid a relatively low price. If this advances fast enough, in the U.S. it could really blunt any pain that occurs when net metering goes away as well as represent a further reduction in utility sales.
See on reneweconomy.com.au
Financial firms, news firms, industry CEOs, real world experience, even bloggers have identified the coming sea-change to the electric industry. A new paper from Harvard says disruption now happens at warp speed. Why aren’t you doing something about it?
Very recently, many financial and news firms have written about the coming electric industry disruption that will be caused by onsite solar, including Deutsche Bank, UBS, Macquarie Group, and Reuters.
We have real world experience of disruption from onsite solar in Germany, Australia, and Hawaii.
Leaders of two large electric conglomerates (David Crane, NRG and Jim Rogers, Duke Energy) have publicly talked about the coming disruption to the industry, although they seem unable to get their company’s cultures on board.
I have previously written about corporate responses to disruption, referencing a Harvard Business Review article about newspapers and asking how much their dilemma sounded like what was going on with electric utilities and other electric industry participants (Clay Christensen, newspapers and the cliff of despair).
I have also written about the coming disruptive effect of onsite solar on the electric industry paradigm and on distribution utilities, and about what they need to do.
Now we have a new paper by Larry Downes and Paul F. Nunes in the March 2013 Harvard Business Review. After many years of analysis and study, they think the pace of disruption has changed and that the old playbook for incumbents will no longer work.
Giles Parkinson is a keen, if perhaps partisan, observer of the energy and climate change world, especially with regard to Australia. (Australia is, in many ways, the canary in the coal mine for the United States.) He receives copies of research reports from leading companies all over the world. He recently used a research report by Macquarie for a blog post: Macquarie says rooftop solar juggernaut is unstoppable. This report focuses on rooftop solar in Germany, but the implications translate to much of the developed world.
According to the Macquarie report, as reported by Mr. Parkinson, the two key drivers of the cost-effectiveness of rooftop solar in Germany are the drop in solar costs and the rise in retail prices.
“Macquarie notes that wholesale prices in Germany have fallen 29 per cent over the last five years, while retail prices have risen 31 per cent – both movements at least partly due to the impact of renewables. But those movements pale in comparison with the dramatic fall in the cost of rooftop solar PV.”
We know all the reasons solar costs have fallen and continue fall. Wholesale prices have dropped in Germany predominantly because of a huge increase in renewable capacity that has essentially zero variable costs (wind and solar). This capacity has been added to the bottom of the dispatch stack, effectively squeezing out higher variable cost units that set the wholesale market price as well as removing all surplus pricing capability from the suppliers.
But the real driver is the increase in retail prices, which now makes self-consumed solar power cost-effective with grid-supplied retail energy, i.e., grid parity. How did that happen?
What is load response and why is solar (with the battery) going to kill it?
Load response (LR, often also called demand response (DR) means that customers use less electricity at specified times and get paid for the electricity they did not consume. Originally, this meant classic DR, the reduction in usage by customers when there is a likelihood of insufficient supply to meet demand, typically during the peak hours of the year. Most wholesale markets pay DR program participants based on market capacity rates and the amount of capacity the participants supply during peak hours. Classic DR primarily targets capacity.
Relatively recently, people in the electric industry increasingly define LR to include both classic DR, and, more broadly, reductions in usage that address energy and ancillaries (see Constellation Load Response). PJM states:
PJM’s Economic Load Response program enables demand resources to voluntarily respond to PJM locational marginal prices (LMP) by reducing consumption and receiving a payment for the reduction. Using the day-ahead alternative, qualified market participants may offer to reduce the load they draw from the PJM system in advance of real-time operations and receive payments based on day-ahead LMP for the reductions. PJM Economic Load Response Description
LR has become big business. Many companies work with customers to enable them to participate in LR,either as their primary business (EnerNOC) or as a significant portion of business (Constellation, Direct Energy, Hess Energy). In turn, many customers can make a significant amount of money from participating in LR. So, both companies and customers have a vested interest in LR.
But,without high capacity market prices and a relatively small number of hours of supply demand imbalance, classic DR will become economically unattractive to customers. And without spikes in spot prices, economic load response in reaction to market prices will also become economically unattractive. So how will solar, on the roof, with the battery do this?
Utilities and generators face lower sales, lower prices, lower profits, disruption on all sides. What is a utility to do? It must identify and defend existing advantages and become a disruptor itself where there is no defense.
Technological change and regulatory requirements besiege utilities and independent generators today as never before. New means of delivering what customers want appear daily. Regulators increase demands to implement social programs, not always recognizing the full implications. Utilities struggle with a business organization designed for another time. Generators watch as lower demand leads to excess supply, leads to cratering prices, leads to capital destruction.
Most of utility / generator money is in assets, power plants and distribution. There is a huge incentive to protect their interests, to keep doing what they already know how to do. This means keeping the central station / distribution paradigm.
But the advent of new, distributed technologies eats away. Energy efficiency is already cost-effective, solar on rooftops increasingly so. Energy efficiency lowers sales. Solar on rooftops lowers sales. Lower sales mean lower prices and profits for generators without rate base regulation, lower profits for generators with rate base regulation, and lower sales and profits for all utilities.
Lower sales, lower prices, lower profits, disruption on all sides. What is a utility to do?