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The Tale of Parallel Industries: Energy Storage Should Prepare to Face the Same Trials as Solar

The atmosphere was electric at the 2014 Energy Storage Association Conference keynote in Washington D.C. last night. Attendees were eager to explore the burgeoning storage industry that has gained significant momentum in the past year. The conference itself has grown more than six-fold from its nascent beginnings. Today "more than $1 billion [will be] placed into contracts over the next 18 months,” noted EnerVault co-founder Craig Horne during the opening introductions.

The scene certainly seemed familiar, and may have caused many solar industry veterans to remember a similar atmosphere at solar trade shows of years past. It certainly triggered Sunpower CEO and keynote speaker Tom Werner’s memory, who reminisced about the year 2007, when Sunpower had an $11 billion market cap and couldn't make panels fast enough. 

We all know what happened in the years that followed — those prosperous days came to a screeching halt when too many players entered the game causing a supply glut.  Solar was “a terrible place to be.” In the last seven years, Sunpower’s market cap dropped to $300 million. “We’ve had a hell of a ride,” Werner said.

He then gave sharp words of warning for ESA attendees: “This will happen to you, and a few years from now you will remember me talking about this. There will be a boom period, and there will be a bust period. Plan on a bust period.”

Solar and Storage = BFFs

In order to help move both the storage and solar industries along and help storage survive its boom and bust period, Werner said that solar and storage must work together.

Since solar has already gone through death valley and gotten costs down, it can compete with conventional electricity. And since it is an intermittent technology, said Werner, the more that solar grows, the more it “destroys” the grid, making integration a huge issue. However, Werner believes that the combination of solar and storage will completely change the way people use energy. 

“Every time we put solar on the grid it increases the need for storage,” said Werner. “There is a [grid] penetration point when you need a solution, so the combination with storage makes complete sense. Solar growth is your friend…We will create demand for you.”

A major way that storage can compliment solar is to shave down peak energy costs, and what Werner called the “duck curve,” a term commonly used for California. As more solar enters the grid, it generates more power when the suns shine in the middle of the day. However, utilities need to ramp up power during peak usage at night. Storage can help flatten these drastic curves by storing energy during the day and allowing us to use that clean energy at night.

This "duck curve" shows the increased overgeneration risk and peak ramping needs (potentially 13 GW within three hours) that occur as more solar is added to the grid. Credit: CAISO

Betting on a Distributed Future

Werner said that Sunpower is also predicting that distributed generation will be the future for solar, not utility-scale, and said that net-metering cannot last forever. “Utilities hate it, and it isn’t economical in the long-run.” Hawaii is a perfect example if this, as it has been on an 11-year decline in energy demand — the more that people put big systems on their homes, which ultimately decreases energy demand, the more net metering is uneconomical.

As an alternative, people should start installing systems that reflect the amount of energy they consume, and can eventually install larger systems with storage. And with energy management improvements, homeowners are then a step closer to having complete control over their energy bill. He used Germany as a shining example of this, and noted that there are more than 4,000 residential storage systems in Germany, and it has the same modest solar resources as Alaska.

Looking to the future, Werner said that Sunpower is moving from a solar company to an energy service provider, with a focus on distributed generation. 

“In five years, customers will get total control of their energy. As an energy service provider, [we will optimize] a combination of solar, storage and energy management” for each customer based on their needs and what they are willing to pay.

Get Ready for Rapid Growth

Though Wenrer said he is confident that solar will experience huge growth in the coming years, storage will be even faster. He expects storage to become economical within the next five years.

“Together we need to figure out the right model for PV and storage that is self-reinforcing and mutually beneficial to customers and the grid,” he said. “As you get to scale you’ll get costs down, it will happen just like solar. There is a parallel — and as a company we’re banking on it.”

Lead image: Merging tracks via Shutterstock

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