Tesla (NASDAQ:TSLA) was supposed to be the big name in solar and energy storage, leveraging the Powerwall for homes and Powerpack for businesses and using its SolarCity operations to push systems out into the wild. But Tesla is shrinking its solar ambitions and doesn’t seem to have much interest in being a leader in anything but utility-scale energy storage.
That presents an opportunity for the rest of the industry, and SunPower (NASDAQ:SPWR) is taking a surprisingly aggressive approach to its energy storage ambitions. Long-term, it could be a huge differentiator for the company.
Rollout strategies matter in storage
It’s easy for a company to say it has an energy storage product, but rolling it out to customers is easier said than done. Tesla’s Powerwall was introduced in 2015, but there still haven’t been a meaningful number of the systems installed worldwide.
What drives energy storage installations is economics, whic is a big reason the Powerwall has flopped. Outside of Hawaii, there hasn’t been an economic case for home energy storagebecause customers with solar panels can just send their excess electricity to the grid and be paid the retail price for it, a practice known as net metering.
Where energy storage has been gaining traction for a few years is in commercial markets, where adoption is driven by economics. Commercial customers generally have bills split into usage and capacity components. The usage side of the bill is similar to residential bills, fluctuating based on how much electricity is used in a month. Capacity charges are based on the peak capacity used by a facility, even if it’s only for 10 or 15 minutes during a month. If energy storage can shave the peaks from this part of the bill, it can justify the storage system financially. Any other value adders, like shifting solar energy produced on-site from peak hours to evening hours, are gravy for the system.
This is why SunPower is investing in energy storage for its commercial projects. Management says it currently has $60 million in storage pipeline, and in 2018 half of its commercial installations could include storage. That’s a big statement for a company with the No. 1 position in the commercial market today.
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