In many markets, solar PV is already at grid parity. So why aren’t we seeing greater adoption? What is holding the PV industry at bay?
Since the energy generation of a PV system does not match the typical homeowner’s energy usage, the industry relies on rate structures to deal with energy produced, but not consumed. In most solar markets, these structures are typically net-energy metering (NEM) agreements or feed-in tariffs (FIT). With a NEM and FIT, the homeowner receives a credit from the utility for excess energy production. These credits help lower the homeowner’s electricity bill. This approach means that while achieving grid parity is important, a large factor in achieving PV proliferation is still dependent on rate designers.
Rate designers have historically created a value for solar energy to be equal to or greater than the value of grid-delivered electricity. Wanting to evolve past NEM and FIT markets, rate designers are now incorporating new concepts like time-of-use (TOU), demand charges, zero export, and varying rates paid by utilities for PV production. As they evolve, the payment for electricity pushed to the grid may not be the same at all hours of the day and may vary from the cost of electricity purchased from the grid.
These differences can lower the value of solar energy if it is immediately pushed to the grid. But with behind-the-meter technology, such as smart inverters and low-cost storage, the industry can overcome this hurdle and system owners can put the control of their energy into their own hands.
By adding behind-the-meter functionality to their PV systems, system owners are able to increase self-consumption and gain energy independence. There are a number of ways for system owners to achieve this goal. Adding a battery to a PV system is one of the best ways to increase the amount of self-consumption. In a PV plus storage system, the smart inverter coordinates PV generation, load consumption, and battery charging to generate the maximum economic return.
Depending upon the rate structure, the inverter will decide whether to feed energy to the grid or to store it for later use. For example, our energy storage solution is programmed to discharge the battery in an optimal manner to meet its programmed goal, such as electric bill reduction, TOU gain, or maximizing self-consumption. Newer, more complex rate structures reward system owners who can intelligently store PV energy for daily on-grid applications.
While backup power is not central to behind-the-meter functionality, batteries can offer superior convenience when the grid is down. Natural disasters and grid instability can cause power outages that have severe consequences, such as frozen water pipes, dark nights, spoiled food, no electric heat, no means to charge mobile communication devices, and more.
After Hurricane Sandy, New York utilities restored power to 95 percent of customers 13 days after peak outage. During such scenarios, backup power can be supplied day or night by a combination of PV and battery to enable families to receive basic needs until full power is restored. In this type of scenario, PV power can both supply the house with energy and charge the battery, so that the battery can supply energy to backed up loads during the night.
Another key component needed in a behind-the-meter system is the meter itself. The meter is responsible for monitoring import and export of energy to the grid and load consumption. Based on these readings, the inverter manages PV production and the battery charge/discharge. Without the meter, the inverter does not know if it is pushing energy to the grid or just to the home. Installing a meter also gives the homeowner insight into self-consumption patterns, as the information can be displayed in our monitoring platform. It is important to note that for backup functionality, a meter is not needed.
Even without a battery, system owners can offset the effect of rate design and increase their self-consumption. One of the simplest ways for system owners to self-consume more is through load management — shifting consumption patterns to match peak PV production to loads, such as water heaters, air conditioners and pool pumps. System owners can take control of their energy usage via load control solutions that direct PV energy to appliances when home demand is low or rates are low. Smart inverters now offer load management control that can be coordinated with a homeowner’s PV production.
As much as system owners benefit from behind-the-meter functionality, if the utility is open to working with the PV industry, then there are additional value streams that can be created. The first and most apparent benefit is grid stabilization. Voltage regulation, frequency control and power supply/reservoirs are all possible value streams. For example, by creating distributed PV “power stations” coupled with storage, load can be reduced from the grid at peak times. This approach lessens the need for utility investments in generation, transmission and distribution.
While traditional power generation is built on large single sources for energy production and storage, future power generation may look much different. This is where behind-the-meter functionality plays a role and distributed generation can become a reality. New technologies enable a decentralized model with mini-power stations and offer more value by placing energy production and storage at the same location as the load.
Coupled with advances in communication infrastructure, inverter controls, computing power, and smart inverter technology, there are many additional opportunities for behind-the-meter generation and storage. These technologies could finally be the missing link of technology that unlocks solar energy’s grid parity potential.
Lead image: Digital power meter. Credit: Shutterstock.