Energy Infrastructures: Building from the Edge to the Whole

The primary enabler (IMHO) for transformation within the global energy infrastructure is the development of a managed, distributed generation/storage capability. Our reliance upon large, centralized generation and a managed transmission/distribution system is (again IMHO:) the primary driver for continuation of current policy and technology. But a realistic path toward Distributed Energy Resources (DER) will truly lead us toward a sustainable energy future. 

The discussion below, by Lux Research's Matthew Feinstein, points the way. And there may be significant momentum to be gained by looking at showcase deployments globally. 

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Solar plus storage: gaining steam on both supply and demand

By Matthew Feinstein

Though previously a high-priced fantasy, storage packaged with solar on a distributed 

basis is gaining momentum. From the supply side, installer/financier SolarCity is working with electric vehicle manufacturer Tesla – the two companies share a common Chairman, Elon Musk – on a distributed storage product for residential and commercial applications. To date, the companies have installed some beta systems. While still in development, the product will be a battery pack remotely monitored and controlled by SolarCity, with battery technology from Tesla.

Also on the supply side, Bosch plans to leverage its acquisition of Voltwerk Electronics from Conergy for storage products, and LG Chem expects to produce storage products for solar systems in 2013. Battery maker Saft has supplied residential storage systems for solar installations on France's island territories as part of the Millener project.

On the demand side, two countries that could pilot storage integration with solar areGermany and Japan – both markets that have publicly announced a move away from nuclear power. To lower ratepayers' increasing costs due to renewables integration, it's more likely that Germany looks to stabilize solar installations at 2 GW to 4 GW annually, while increasing the share of power derived from low-cost wind – another opportunity for storage integration.

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There are a number of factors that determine a market's need for storage, as detailed in Lux Research’s recent State of the Market Report "Grid Storage under the Microscope: Using Local Knowledge to Forecast Global Demand." In solar, don't simply look towards high volumes of installations – rather, storage is necessary to balance intermittency in markets with a high penetration level of solar in their overall electricity mix. Lux Research finds that emerging markets like Brazil, Chile and South Africa remain below 2% solar penetration through 2017, indicating that any storage adoption in those markets would come as a result of poor grid quality or generous incentives. A historically strong installation market pushes Germany to 15% penetration in 2017, indicating a much more pressing need for storage.

It's clear that the necessity for storage is increasing in markets that have adopted solar, particularly on the distributed generation side. However, suppliers be warned: The same price pressure that enacted – and prolonged – the solar shakeout will require low-cost battery packs, even in cases where storage can allow for smaller solar arrays optimized for building energy consumption.

Further, a major wild card is policy: In the U.S., it remains a debated issue whether storage is considered energy-generating equipment, and thus qualifies for the Investment Tax Credit (ITC). European solar feed-in tariff schemes incentivize power generated, but don't account for storage in most countries.

In any case, it's clear that storage is less of a high-priced fantasy and more of a probable reality for the solar industry as supply and demand begin making initial strides towards it.

Matthew Feinstein is a research associate for Lux Research, which provides strategic advice and on-going intelligence for emerging technologies. For more information, visit the Lux Research site.