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Storing Solar Energy: A great idea caught on contested ground

Combining solar power systems with energy storage promises cost-savings and value enhancements achievable for both technologies, but in key states utilities' protection of their bottom lines is getting in the way

4 min read
A series of three gray cabinets about the size of a filing cabinet attached to one larger gray cabinet
State rules preclude Green Charge Networks from wiring PV power into its lithium battery energy storage units
Photo: Green Charge Networks

Adding energy storage to sites with rooftop solar power generation offers a range of potential benefits. A battery can help smooth out solar’s inherently variable supply of power to the local grid, and even keep buildings powered during blackouts. Consequently, power-conversion innovators are developing a host of new products designed to reduce the cost and improve the efficiency of integrated solar-storage systems. 

Some analysts project a boom in the co-location of solar and energy storage. GTM Research, for example, foresees that co-located PV and storage will grow from $42 million in 2014 to more than $1 billion by 2018. However, the market is moving slower than it might thanks to a little-discussed regulatory roadblock in the United States.

According to Vic Shao, CEO for the Santa Clara, California-based energy storage startup Green Charge Networks, tightly integrating storage with photovoltaics in some key states—including Hawaii and California—runs afoul of the “net metering” rules by which PV owners earn lucrative retail rates for the surplus power they feed to the grid. Adding storage can disqualify solar systems for net metering, in which utilities can pay their owners wholesale power rates that are several times lower than retail. “That is obviously a pretty big problem for anybody considering solar. That could kill a lot of projects,” says Shao.

The fulcrum for both technical integration and this regulatory hangup are the electronic converters that enable batteries and solar panels—which are direct current (DC) technologies—to exchange power with the grid, which carries alternating current (AC). Using one converter to interface with both distributed energy systems should be cheaper than equipping each with its own converter, and it should also boost operating efficiency.

Efficiency comes from streamlining the transfer of solar power to the battery. Today most co-located PV and storage systems use one converter to turn their DC solar power into AC, then use a second converter to turn the resulting AC solar power back to DC for the battery. Advanced dual-use converters that make a direct DC-DC conversion can, according to an estimate by Green Charge Networks, cut power losses by up to 6 percent. 

This technology is ready for deployment, says Shao, pointing to a dual-use converter developed by converter startup Ideal Power. The Austin, Texas-based Ideal Power’s 30-kilowatt device is set to begin shipping in May and will cost about 30 percent less than a pair of conventional converters, according to Ryan O’Keefe, Ideal Power’s senior vp for business development.

However, there’s a problem, says Shao, in that utilities in Hawaii and California are using net metering tariff regulations to block dual-use converters. Utilities across the country are trying to restrain or repeal net-metering for solar systems, which threaten to cut into their bottom line. In California and Hawaii they are fighting efforts to extend net metering to storage, and the integration of storage and PV is caught in the crossfire.

Under the states’ existing tariffs, power from batteries does not qualify for net metering, and utilities enforce this by limiting the output of storage systems to no more than a customer’s minimum power demand. “They look at the maximum output power of the battery converter to make sure we’re never exporting power,” says Shao.

Dual-use inverters would make it impossible to distinguish stored power from PV power, hence the utilities’ refusal to allow their use. “We’re doing a number of installations with solar and storage at the same time, but they go through separate converters,” says Shao.

This is not a major impediment to Green Charge Networks’ primary business, which is installing batteries to reduce monthly “demand charges” that its commercial and industrial customers pay to utilities. Demand charges are payments to utilities to ensure that a utility can meet a customers’ peak appetite for power. Shao’s firm uses its lithium battery systems to absorb a site’s demand spikes, thus lowering customers’ peak power draw from the local utility and hence their demand charges. 

But Shao says the utilities’ converter rules increase costs for systems that combine PV and storage and are thus a disincentive for installations that would benefit both Green Charge Network’s customers and the utilities. In such installations the same battery that absorbs a site’s demand spikes can simultaneously aid the utilities by moderating dips and surges in solar output that occur as clouds pass overhead. 

Combined solar and storage systems could even step in en masse to cover power demand if a conventional power plant goes down. In contrast, so-called smart inverters phasing into use in California and in Hawaii can limit surges in solar output but, without storage, they can not increase power supply to the grid.

To break the impasse over dual-use converters, Green Charge Networks has proposed a demonstration project, under a California research grant program, to explore the benefits of dual-use converters. Their partners on the proposed collaborations include Ideal Power and utility giant Southern California Edison.

Dual-use converters are likely to find plenty of demand elsewhere in the mean time. O’Keefe at Ideal Power expects its dual-use converter will be particularly attractive for offgrid and microgrid applications: “There’s a ton of island market opportunities, such as resorts running on diesel generators where adding PV and batteries will reduce the cost of energy and the environmental footprint. The markets are enormous.”

O’Keefe says the converter—a soft-switching buck-boost converter—will initially sell for 40 percent more than a single-use converter, but he expects its premium to drop to 20-to-25 percent with sales volume.

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