Tesla’s recent announcement of sleek, lower-cost battery storage options, cited as particularly helpful for solar, drew fanfare and was heralded as a game-changer for the energy sector.
Some people in the energy industry predict that, with improving battery storage, solar customers could go off the grid and produce energy entirely on their own for less, leading to a diminished role for utilities.
“The writing is essentially on the wall. You have a self-generation future at hand,” said Farid Dibachi, founder of JLM Energy, a renewable energy technology company based in California.
Other experts, and the utilities themselves, caution that battery technology still has a long road ahead until it’s fully financially and technologically viable. They say the grid, and therefore utility companies, will always be necessary.
“What these types of batteries are going to do is to create a greater interactivity with the grid, but not move in the direction of moving off the grid,” said Marc Romito, manager of renewable energy at Arizona Public Service.
Corporation Commission Chairman Susan Bitter Smith said the commissioners are keeping a close eye on storage technology, especially as it relates to the future of regulated monopoly utilities.
“Certainly it’s something that all the commissioners are looking at because it has the potential to be a game-changer, there’s no question,” Bitter Smith said.
There’s still likely a role for an electric grid, but there are tons of questions to be answered in the interim, including factors of reliability and cost, she said.
“How (the future grid) gets structured and what their services are and how they interact is still kind of a moving target that all of us across the country are talking about,” Bitter Smith said.
As utilities add fees and charges to solar customers, those customers will continue to adapt to try to make their solar systems make money, and storage offers one way to address that, Dibachi said.
Salt River Project approved a demand charge in February that charges solar customers based on highest energy usage during a half-hour period in peak hours, averaging about $50 per month. That charge can vary widely.
After SRP approved its fee, Dibachi said his company started getting calls from customers and installers in the utility’s territory looking to add battery storage to their systems. Dibachi will be in Phoenix to discuss ways to work with SRP’s demand charge with Arizona Solar Energy Industries Association members on May 19.
A local company, American Solar and Roofing, also started offering solar leases that include a lithium-ion battery storage component to help customers manage demand charges.
“What’s great about solar plus batteries on-site is that when a cloud passes by, the smart technology can tap into the stored energy to firm up what the home needs, all without compromising the customer’s lifestyle,” the company’s CEO, Joy Seitz, said in the announcement of the lease option.
The potential is there to disconnect from the grid, SRP spokesman Scott Harelson acknowledges, but right now, off-grid living would come with a significant price tag. Because of Arizona’s sweltering summers, going off the grid would require large battery systems, coupled with a large solar array and backup generators to charge the batteries, he said.
“Given storage economics, it’s more likely customers will use storage devices to shift usage away from relatively more expensive peak times than to disconnect from the grid,” Harelson said.
Tesla began pre-orders on its Powerwall, a residential battery priced at $3,500 that can store 10 kilowatt-hours of power, and Powerpack, a utility-scale battery, after its announcement on April 30. According to The Verge, Tesla reported 38,000 pre-orders for Powerwall as of May 6, and 2,500 for the Powerpack, leading Tesla CEO Elon Musk to call the response “crazy off the hook.”
Tesla is also building a battery factory in Nevada, dubbed the “Gigafactory,” that will produce the products faster and on a large-scale, likely driving costs down.
During the announcement, Musk showed photos of smokestacks and decried carbon emissions, saying battery storage would be the end of dirty energy production.
“It’s something that we must do, and we can do, and we will do,” Musk told the crowd.
While battery technology has already been available to solar customers, Tesla brings more attention and publicity to energy storage because the company has a dedicated following, experts told the Arizona Capitol Times.
“There will be people who buy energy storage for their homes right now simply because it’s cool,” said Troy Rule, director of Arizona State University’s Program on Law and Sustainability.
But it’s not just that Tesla is appealing, Rule said: Both battery and solar technology have been decreasing in price and increasing in availability, and it’s happening rapidly. Storage options are really the last frontier to microgrids or non-utility-owned grids in the coming years, he said.
“It’s not too far in the distant future. … It could be five years, it could be 20 years, but I think that’s the direction things are going,” Rule said.
Still, the technology will likely not be as reliable or cost-effective as energy from the grid for a long while, and customers need to know what they’re getting into before considering batteries, said Gary Yaquinto, president of the Arizona Investment Council. Over time, as costs come down, it might make sense for solar customers to be self-generating, but that’s likely decades off, he said.
“Consumers are overly optimistic about the capability of battery storage at this time. I think that that’s led to the real strong response that you’ve seen from consumers. Whether those (Tesla batteries) meet expectations remains to be seen,” Yaquinto said.
For Dibachi, whose company sells products similar to Tesla’s batteries, people have been calling and placing orders consistently since the announcement. Though the businesses are competing for customers, Dibachi welcomes Musk and Tesla as ambassadors for storage.
“Elon Musk seems to attract lots of people listening to what he has to say. … He’s preaching a very effective sermon,” Dibachi said.
Both SRP and APS told the Capitol Times that they’ve been researching utility-scale storage options and will continue to do so as they become more economically viable.
Currently, APS can serve customers around the clock, in real time, with no doubts about reliability, Romito said.
“Right now, that storage isn’t as cost effective. … But of course we have our eyes on it,” Romito said.
APS announced a pilot program in April with the Arizona Solar Deployment Alliance that will monitor 175 solar homes utilizing various degrees of smart technology, storage and rates to see how best to address the changing needs of solar customers.
The increasing technology isn’t a threat to utilities, but an opportunity, Romito said.
“This is nothing but good news, opportunity. We’ll see a more complicated, automated and intelligent grid meeting more automated and intelligent homes,” Romito said.
Batteries can’t yet compete with the cost and reliability of the power utility’s supply, so going off the grid would require customers to invest a lot of money and adjust to life without reliable power, SRP’s Harelson said.
“SRP’s number one product is reliability and that has served the vast majority of our customers well for more than a century, and likely will continue to do so for the foreseeable future,” he said.
But others say the utilities’ role will be lessened as storage picks up, and it’s natural that utilities wouldn’t like that.
There will likely always be a grid and monopoly utilities, and in the spirit of choice, customers should have that option, said Court Rich, an attorney with The Alliance for Solar Choice.
“(The utilities) are going to be smaller and they’re going to be different … The utilities don’t want to face a future where they may be smaller or less significant, and they’re fighting like heck against that,” Rich said.
Utilities will likely still hold dense urban areas and provide transmission and distribution to meet consumers’ service demands, Dibachi said, but he’s hoping batteries will change the way we think of energy.
“People think of the grid as the primary source of electricity and think of batteries as the backup. All we want to do is flip that,” Dibachi said.