Two new reports show customer-sited energy storage is one of America’s fastest-growing energy technologies, with record-breaking installations in the second quarter of 2017. Energy storage could soon become a standard offering for U.S. utilities looking to diversify their business models and improve grid resiliency in the face of increasing extreme storms like Hurricanes Harvey and Irma.
GTM Research reports 443 on-site residential and commercial energy storage systems were deployed in Q2 2017, the most ever in one quarter, and expects 591 megawatt-hours (MWh) capacity to be deployed by the end of 2017. In addition, the Smart Electric Power Alliance reports 72 percent of utilities plan on offering on-site energy storage to residential customers, and 80 percent plan on offering on-site energy storage to commercial and industrial customers.
Fortunately, this trend could have an even larger impact beyond the bottom line for utilities and consumers in an era of extreme weather. Embracing energy storage paired with distributed generation can protect critical infrastructure, help businesses stay open, and keep the lights on during power outages caused by severe storms.
Utilities, Consumers Adding On-Site Energy Storage At Record Pace
SEPA reports utilities added 75.5 MWh customer-sited storage (out of 257 MWh total capacity) in 2016, with the vast majority of capacity (68.2 MWh) going to non-residential customers. California, Indiana, and Ohio utilities added the most energy storage last year, and Illinois, Pennsylvania, Texas, and Hawaii round out the list for most cumulative energy storage deployment.
This pace is speeding up, according to GTM Research. 32 MWh of total capacity was installed in Q2 2017 – the most customer-sited residential and commercial ever installed in a single quarter. Residential growth surged in California and Hawaii, and non-residential deployments grew 151% over Q1 2017, led by California and New York.
Fast-declining technology prices and smart policy have enabled this growth. Battery costs have fallen from $1,000 per kilowatt-hour (kWh) in 2010 to less than $230/kWh in 2016, and could fall to $100/kWh in 2019 – a faster decline than wind turbine or solar photovoltaic (PV) technologies. By some accounts, batteries’ downward cost trend could make solar-plus-storage systems cheaper in the U.S. than even standalone solar PV by 2020.
Forward-looking utilities are embracing this trend by exploring how to offer standalone storage projects and solar-plus-storage to customers as a line of business through sales, leasing, and operations-and-maintenance. Green Mountain Power became the first U.S. utility to offer its customers a solar-plus-storage off-grid service package in December 2016, saying “our energy future is one where more of our energy is generated closer to where it is needed and is home, business, and community-based.” Instead of viewing storage as a competitor for demand, the technology is becoming a way for utilities to expand their relationship with customers and meet shifting demands, which increasingly includes resilient power supplies during extreme weather.
Extreme Weather Creates Extreme Need For Grid Resilience
Hurricane Harvey’s impact on Texas’ energy infrastructure was significant, to say the least. Roughly 300,000 customers lost power during the storm’s peak impact, and while the region’s three main utilities worked around the clock to restore service, they expect rural areas to remain out of service for weeks. Two major transmission lines and about 7,500 MW of baseload generation capacity, enough to serve around 375,000 homes, were still out of service as of September 5.
This threat of extreme weather disrupting service is even more significant with Hurricane Irma, which is the most powerful hurricane ever recorded in the Atlantic Ocean. In Puerto Rico, more than 1 million residents lost power when the storm hit, and officials warned blackouts could last for months on parts of the island.
On the mainland U.S., more than 7 million homes and businesses were without power as of September 11 – despite $3 billion in recent Florida grid upgrades – and Florida Power & Light is warning its five million customers “to prepare for potentially prolonged power outages” across half of the state.
Long-distance power transmission lines and critical distribution-level grid infrastructure are both susceptible to extreme winds and flooding, and an outage on one part of the grid can create cascading failures because of each component’s interdependence on the others. These infrastructure outages have major economic impacts.
On-Site Generation And Storage Protect Against Power Outages
A 2013 U.S. Department of Energy study found power outages caused by extreme weather had an average economy-wide cost of $18-$33 billion from 2003-2012, and urged investments in resilient infrastructure to strengthen the grid against the increasingly frequent and intense severe weather. Because of technology cost reductions, siting on-site generation and energy storage closer to customers is now cost-effective, allowing electricity service to continue uninterrupted in homes and at core infrastructure sites.
For instance, downtown Houston’s Texas Medical Center and a Houston-area supermarket chain relied on on-site generation and storage to keep operating during Harvey despite record flooding. These systems rely upon natural gas to operate, putting them beyond the financial reach of smaller businesses and homeowners. By comparison solar-plus-storage projects keep getting cheaper, can generate revenue by sending excess power back to the grid, have no need to refuel, and will keep generating on their own – usually without maintenance.
Unlike floodwaters, the risk of historic storms isn’t going to recede . Warmer atmospheric and ocean temperatures due to greenhouse gas emissions means heavier rainfall from greater amounts of moisture in the air and worse storm surges from higher sea levels. These two factors worsened Harvey’s impact in Texas – water levels were roughly a half foot higher and one degree warmer than just a couple decades ago – and scientists say warmer air and oceans have made Irma much more powerful.
Fortunately, lessons from past storms provide clues for utilities and their customers on improving grid resiliency. During Superstorm Sandy, which knocked out power for 6 million people across 24 states and caused $50 billion in damages, customer-sited generation kept power running for the largest U.S. residential development, at New York University, and across Princeton, New Jersey.
Sandy led New York State to begin its Reforming the Energy Vision proceeding to invest $30 billion to establish a cleaner and more resilient distributed grid, and spurred New Jersey to invest in distributed clean energy generation and storage at critical state facilities and along transportation infrastructure, including a first-of-its-kind system designed to keep passenger trains operational in a grid failure.
The need for local distributed energy and microgrids increases with every “historic” storm that hits the U.S. and its utilities, but technological advances combined with price declines mean energy storage is acutely positioned to fill this gap. By embracing new technologies and clean energy generation, utilities can improve their bottom lines while making the communities they serve more resilient.
By Silvio Marcacci, Communications Director at Energy Innovation, where he leads all public relations and communications efforts.