Third party ownership in energy storage: the scaling of downstream storage
By Dean Frankel
Lux Research has covered the nexus of solar and energy storage, most notably in "Batteries Included: Gauging Near-Term Prospect for Solar/Energy Storage Systems.” While the report does mention third-party ownership rollouts such as SolarCity (via its partnership with Tesla), a number of companies are beginning to offer third-party financed energy storage systems across residential and commercial sectors.
Earlier this month, SolarCity and Tesla expanded their partnership to combine storage and solar systems for customers in California, Massachusetts, and Connecticut. SolarCity will offer the combined system as a lease which is expected to be priced 20% below the projected demand charge savings. Previously, the two companies were deploying combined systems through grant funds.
SolarCity is not the only company offering third-party owned combined systems, but smaller companies without access to large pools of capital may be at a competitive disadvantage if they incur a higher cost of capital. SolarCity has been offering third-party financed solar systems since 2006, and is just now tapping alternative forms of capital like securitizing their assets. While third-party financed systems are being extended to energy storage, securitization is unlikely to occur for energy storage systems until fund performance can be demonstrated over a number of years.
Sunverge is offering a utility or third-party controlled and financed combined system for the residential sector. The company has rolled out 1 MWh of batteries to date and while it doesn’t have committed funds for installations, it does ensure that its partners finance the product on the customer’s behalf. Solar Grid Storage has raised a fund to finance commercial scale installations. The company is working with AllCellTechnologies to provide its containerized 250 kW/125 kWh solar connected storage system. The Storage-as-a-Service model is being rolled out primarily in Maryland and New Jersey, although the company is actively monitoring other markets.