Energy storage has always been a natural complement to solar energy systems, but the two never seem to find a successful way to work together in practice. Tesla’s (NASDAQ: TSLA) Powerwall was supposed to be a natural product to go with Tesla solar systems, but adoption has been weak because it’s still essentially an expensive toy.
Sunrun (NASDAQ: RUN) is one of the companies trying to change this dynamic and find ways for its Brightbox energy storage system to contribute to solar installations. Energy storage may not be the asset homeowners find the most value in, but it could still boost value after all.
Sunrun’s move in Oakland
Last week, the East Bay Community Energy (EBCE) board of directors agreed to replace a jet-fuel powered plant in Oakland, CA with home solar and energy storage systems from Sunrun in low-income housing in West Oakland and Alameda County. The project will string together thousands of energy storage systems in homes to form what’s known as a virtual power plant.
But it’s the financial mechanism behind those storage systems that make this such a big deal. Sunrun will build 500 kilowatts of power and 2 megawatt-hours of storage capacity, and offer capacity to the EBCE on a 10-year contract. What the utility is looking for is available capacity on days when the rest of the grid is stretched, like hot days when air conditioners are on high or days when there’s an outage in another part of the grid. Utilities usually pay for extra power plants to be available at those times — known as “capacity” — but energy storage might be able to take over this important role in the grid’s infrastructure.
How customers will see energy storage
The details aren’t all worked out, but the money Sunrun is making from the virtual power plant could offset some of the cost of a residential solar and storage system. Customers could be offered a discount up front or a reduced contract price over time if they participate in the capacity side of the energy storage deal.
The downside is that would give Sunrun more control over a homeowner’s energy storage system. If someone wants to use primarily energy they produce on-site, this would reduce its availability for that purpose. It may also reduce capacity available for backup power for homes.
However, that doesn’t mean there isn’t enough value for homeowners to still go forward with an installation. At the end of the day, few customers are intimately involved with how their solar or energy storage systems work, so they’ll be looking at the dollars and cents in savings being offered. Sunrun is hoping this capacity contract will help make solar and energy storage more economical for customers.
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