By Steve Minnihan

 

Residential energy storage (around 5 kWh) and community energy storage (around

100 kWh) offer  levelized cost of electricity below retail rates and favorable in a small number of large-volume regional markets, including Japan and the United Kingdom.

 

This leaves many wondering why residential-level energy storage accounts for only 30 MWh of installed capacity on the grid as of December 31, 2011.

 

The painful truth is that residential and community energy storage are facing the same channel-to-market issues that home energy management systems have encountered. Simply put – the homeowner doesn't understand the product, while the electric utility doesn't see the value.

 

The first approach is to sell energy storage systems directly to the homeowner through a number of market channels. However, residential customers across the globe have proven ignorant, risk-adverse, and unengaged with cost- and energy-saving technologies.

For example, demand response programs, programmable lighting and air conditioning systems, and low-energy light bulbs offer residential customers strong returns and

respectable payback periods, but customer demand has grown remarkably slowly as residential customers are reluctant to change their electricity consumption hardware or behavior patterns. Control4, AlertMe, and Blueline Innovations felt this as they struggled to generate demand by selling their home energy management hardware and systems directly to the homeowner. It takes a tremendous amount of time and effort to generate awareness, trust, branding, and finally demand for energy-management or energy-storage systems if suppliers are targeting the homeowner directly.

 

Energy-management companies have circumvented this issue by using a second approach, selling their systems and services through the retail electric utility. Storage developers are already pursuing this avenue, including Saft, which sold residential storage units through a pilot with Sacramento Municipal Utility District (SMUD). However, utilities are still not convinced that distributed storage systems offer the most economical means to shave peak load and balance intermittent renewables, while bulk storage and real-time demand management are proving much easier and more cost-effective at mitigating these issues.

 

In summary, residential energy storage still has a long battle to fight. Homeowners in select regions stand to benefit from storage, but they will require time and attention before they are ready to purchase their own units. Utilities, on the other hand, are not convinced that costly, potentially volatile, distributed assets are the answer to their problems. Therefore, while economic demand is high, actual market growth may be delayed by years, making residential storage a long-term bet instead of a near-term growth opportunity.

 

Steven Minnihan is an analyst for Lux Research, which provides strategic advice and on-going intelligence for emerging technologies. For more information, visit the Lux Research site.

 

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Distributed Storage

Storage of all forms is simply too expensive, and available price information makes it practically impossible to generate operating profits from a storage device, let alone recover the capital cost. When the price of durable, long-lasting distributed storage falls below $100-150/kWh and when suitable either dynamic or TOU pricing is generally available, storage could start flying off the shelves. Until that time, it's just not going anywhere fast no matter how much wishful thinking there is.

Jack Ellis - 05/02/2012 - 06:34

Residential Storage

1. The price of residential storage must come down. 2. The residential owners need to see some additional value besides small rate reductions. One solution to both of the above - is to repurpose the storage batteries from Hybrid/EV cars when the battery is only able to hold an 80% charge. Move the battery into a small 10KW generate like chassis that is managed via the smartgrid to help level the demand. Make it attractive to the residential customer by adding a transfer switch in the mix such that in the event of a power outage - they have stored power for several days. Add to that the ability to use a smaller portable generator to charge the battery when a disaster occurs and the grid is not available. With the right combination the cost will come down, the electric utility can use it to smooth the loads in a neighborhood, the consumer sees a lower rate, plus the value of standby power.

Dennis Heidner - 05/02/2012 - 10:09

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