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Energy Storage Dialogue Continues as Tesla Announces New Strategy for Stationary Applications

May 08, 2015 by Megan Mercer

Behind-the-meter storage, also known as on-site distributed energy storage, is currently a small market. However, companies like Tesla are trying to make big waves in its deployment.

In October 2014, Tesla purchased land in Nevada to build a "gigafactory" intended to produce 500,000 battery packs a year, a quarter of which will likely be used in "stationary applications", according to Jaramillo Mateo of Tesla. But what does Tesla mean by stationary applications?

Tesla's Chief Executive Officer, Elon Musk, has revealed that the company plans to deploy the consumer battery for use in homes or businesses, a target outside of the company's better-known area of electric vehicles. Although consumer batteries are already on the market thanks to companies like Stem, Sunverge, Green Charge Networks, and Coda Energy, as well as Tesla's nearly 100 storage projects in the queue in California, this new "product line" is set to transform the relationship between residential and commercial energy consumers and their utility.[1]

Why the recent boom in storage technology? According to Tesla, the movement toward storage is not a result of renewables taking off, but of the realization that using natural gas peaking plants to meet energy needs is inefficient, and that storage is a more cost-effective way to provide grid reliability. According to Mateo, "If you are trying to target an end to peaking of natural gas [during times of high demand], then there are markets all over the country. Everywhere we look, there's an opportunity for storage."[2] There are also markets where high demand charges make storage deployment attractive. Given rising electric rates, high demand charges in the commercial sector, and a natural synergy with solar power, on-site batteries are set to grow steadily, according to GTM research, which also argues that the behind-the-meter battery sector will make up 45 percent of the storage market before the end of the decade.[3]

States Think about Solar and Storage on a Regulatory Level

California will likely see the most growth in solar energy storage by the end of the decade. The state explored solar and storage on a regulatory level for years, mandating investor-owned electric utilities to meet 1.3 gigawatts of storage by 2020 and allowing them to own no more than half of the storage assets they procure.[1] With California's state incentives and high demand charges, startups in behind-the-meter battery development are thriving.[4] SunEdison is even looking toward California to turn stored energy into revenue, which experts argue is key for the eventual deployment of on-site batteries in the residential sector.[5]

Hawaii, New York, Massachusetts, New Jersey, Pennsylvania, and Texas also share key characteristics, such as relatively high electricity rates and a growing share of power coming from customer-owned rooftop PV, that are driving solar-storage system market growth. New advancements in storage technology could see these states having regulatory debates similar to California in the future. As for utilities, Tesla and SolarCity have vowed to work in partnership with utility companies that decide to try out a new business model that integrates storage.

[1] Lacey, S. (April 2015). 3 Charts That Explain Why Tesla is Developing a Battery for Homes. GreentechMedia. Accessed May 5, 2015: http://www.greentechmedia.com/articles/read/three-charts-that-explain-why-tesla-is-developing-a-residential-battery

[2] "Tesla's Battery Storage Strategy Beyond Electric Cars." (2015). Interview. The Energy Gang. Accessed May 5, 2015: https://soundcloud.com/the-energy-gang/teslas-battery-storage-strategy

[3] Munsell, M. (March 2015). US Energy Storage Market to Grow 250% in 2015. GreentechMedia. Accessed May 5, 2015: http://www.greentechmedia.com/articles/read/us-energy-storage-market-grew-400-in-2014

[4] "California's Bold Move to Advance Energy Storage." (undated). Solar Electric Power Association. Accessed May 5, 2015: https://www.solarelectricpower.org/examine-issues/technology/energy-storage/californias-bold-move-to-advance-energy-storage.aspx

[5] St. John, J. (March 2015). SunEdison Buys Solar Grid Storage for Battery-Backed PV and Wind Power. GreentechMedia. Accessed May 5, 2015: http://www.greentechmedia.com/articles/read/sunedison-buys-solar-grid-storage-for-battery-backed-green-power

Tags: Utilities