Coping with COVID
All of us in the solar industry are feeling the economic effects of the worldwide coronavirus pandemic. With staggering job losses related to COVID-19, public interest in discretionary spending to “go solar” have waned. Nationwide stay at home and social-distancing guidelines have curtailed face to face activities vital to selling solar. We have had to learn how to promote renewable energy in a declining market while working remotely.
Energy Storage Adoption on the Rise
What can you do right now to sustain or even grow your business in these challenging times? One arrow to have in your solar quiver is Energy Storage. Even in the current downturn, the demand for energy storage is growing.
Room to Grow
Energy Storage paired with solar is expected to increase significantly over the next five years. According to the Solar Energy Industries Association (SEIA), less than 5% of behind-the-meter solar systems included storage in 2019, but by 2025, more than 25% will be solar+storage installations.
Source: SEIA/Wood Mackenzie Power & Renewables U.S. Solar Market Insight 2020 Q3
California Leads the Way
The California Solar + Storage Association (CalSSA) reports that a combined 138MW of energy storage in California alone was installed in 2019, up 27% from 2018. The residential sector had a 50% gain over the year before, and commercial installations with energy storage moved up 11% from 2018.
Source: California Solar + Solar Association (CalSSA)
From Sea to Shining Sea
While California leads the pack, the U.S. Energy Storage Association (ESA) reports that the overall U.S. Energy Storage market will expand from $712M (523MW) in 2019 to $7.2B (7.3GW) by 2025.
Around the World in 80% Lower Costs
According to UBS, over the next decade, energy storage costs will fall as much as 80%, and the global market for Energy Storage will grow to as much as $426 billion worldwide. A sixfold increase from the current market value.
Extreme Weather Driving Adoption
It’s a bit ironic that one of the core inspirations for adopting solar energy, fighting climate change, has become a strong motivator for grid-resilient Energy Storage. The demand for Energy Storage is skyrocketing due to more frequent extreme weather events, including:
Hurricanes along the East Coast and Puerto Rico
Ice storms in the North-West
Flooding across the Gulf States
Tornadoes throughout the Midwest
Wildfires (and Public Safety Power Shutoffs) in California and the West
Source: Chattanooga Times Free Press, Inc.
Driven by these extreme weather events, The Environmental Defense Fund (EDF) reports that US installations of small scale, behind-the-meter storage increased 138% in 2019. In Puerto Rico, only 5% of solar installations included Energy Storage before Hurricane Maria in 2017. Now 95% request this grid-resilient technology.
Code Changes Promote Energy Storage
From ice storms in rural New Hampshire to the hurricane-ravaged South Carolina coast, 15 states have recently enacted legislation that makes it easier and more affordable to invest in Energy Storage.
In California, CalSSA has proposed code language changes that will require all new homes to be ready to install energy storage resources. Like the “solar-ready” code requirements preceding the 2020 California Solar Mandate, this new proposal would require that all new homes in California be built “Storage-Ready.” It’s not too hard to imagine a similar “California Storage Mandate” in the near future.
Eligible for ITC Tax Credits
Tax incentives can help reel-in the ROI curve. The ITC renewable tax credit for 2020 is 26%, and then 22% in 2021. A $25,000 PV system with storage purchased in 2020 will net about $6,500 in tax credit, which can take a sizable bite out of the initial cost of buying a solar system and accelerate the ROI payback timeline.
To qualify, residential storage systems must only be charged by a renewable energy source such as PV or wind. Commercial systems get a little more leeway and must charge their storage components from renewable sources at least 75% of the time, and receive a proportional amount of ITC tax credit.
The energy storage system is expected to be installed at the same time as the renewable energy source. However, based on the precedent set by a 2012 private-letter ruling that permitted a wind farm owner to claim the ITC tax benefit for added energy storage, the National Renewable Energy Laboratory (NREL) believes that energy storage added to an existing renewable energy system will be eligible for the same benefit as a new system.
Note: The solar team at Renvu are not tax experts. Please consult your tax advisor before deciding which tax credits are applicable to your situation.
Advantages for Homeowners
Promoting Energy storage to homeowners includes a long list of benefits, including:
Energy management: Store energy for use at a later time
Power during grid outages: Added safety and convenience
TOU offset: Reduce peak-time consumption
Peak-shaving: Mitigate demand charges
Self-consumption: Reduce reliance on the grid, true energy-independence
These are all ways homeowners can optimize their energy use with storage. See our companion article, Benefits of Adding Energy Storage, for a more detailed discussion of these storage benefits for homeowners.
Lead Acquisition Costs are Low
As noted by several of the sources above, requests for solar+storage are significantly on the rise. This growing segment of interest makes finding new energy storage customers easier and less expensive. In addition, the entire client base of previous solar-only installations is open to approach for an AC-coupled battery upgrade.
The Bottom Line
With this strong upward trend in demand for storage, no matter where you call home or which geographical territory you service NOW is the time to add Energy Storage to your solar portfolio offering. It will expand your customer base and create new revenue streams to sustain and expand your solar installation business.