With the cost of batteries dropping and a bevy of solar companies now offering residential backup systems, it may seem like the “solar with storage” revolution is just getting started. In reality, batteries helped launch rooftop solar decades ago. When it comes to solar with storage, everything old is new again.
Primitive Batteries Jumpstart the Solar Movement
The solar revolution got its start in the 1970s when enthusiasts and “off-gridders,” spurred by the energy crises of the day, paired rooftop solar with old-school, lead-acid batteries. This state of affairs continued through the mid-1990s, when the spread of net metering made tying into the grid more attractive.
Lead-acid battery. Photo credit: Shaddack assumed (based on copyright claims). Public domain, via Wikimedia Commons.
Battery Adoption Sputters Amid Net Metering
Net metering appeared on the solar scene in the 1980s. The ability to sell excess energy to the utility solidified the economic case for residential solar but also reduced the need for personal storage.
1980: Utilities in Idaho begin to adopt net metering
1981: Utilities in Arizona begin to adopt net metering
1983: Minnesota passes the first statewide net metering law
1996: California passes its own law creating incentives for grid-tied solar
While the commercialization of lighter, more energy-dense lithium-ion batteries in the early 1990s represented a major advancement in storage, they were still too costly, complex, and impractical for widespread use. The Y2K scare temporarily spiked demand for storage systems, but interest dropped off after the supposed threat had passed. Batteries fell by the wayside as more and more states implemented net metering programs to incentivize solar uptake.
War on Net Metering Revives Interest in Battery Storage
Utilities have begun targeting net metering in recent years, charging that solar customers aren’t paying their fair share to use and maintain grid infrastructure. Some utilities have slapped new fees on solar, while others have sought to eviscerate state net metering programs altogether.
Net Metering Flip-Flops and Uncertainty in Nevada
Nevada is one example. Regulators there issued a decision to phase out net metering and increase fees on solar households in 2015. Following public outcry and legal action, the Public Utilities Commission of Nevada reinstated net metering the following year. Utility company NV Energy is challenging that decision.
Hawaii Halts Net Metering Program
Hawaii has experienced similar roadblocks. Abandoning the grid for solar with storage is a popular option in that state, where the need to import fossil fuels makes traditional energy 2-3 times more expensive. The state’s Public Utilities Commission ruled to close Hawaiian Electric Companies’ net metering program to new participants in 2015, accelerating battery adoption among solar customers.
Without net metering (or with additional fees), the savings from grid-tied solar are often anemic or nonexistent. The solar industry has taken a hit in states where utilities are pushing back against net metering as a result. By allowing solar customers to use their own excess energy instead of feeding it to the grid (and paying the utility for use of the infrastructure), affordable battery storage may salvage rooftop solar in those regions.
Battery Prices in Dramatic Decline
Recent improvements in battery technology have significantly trimmed the cost. Lithium-ion battery prices have fallen by nearly half since 2014 and by 11% from 2015 to 2016, largely due to the growing popularity of electric vehicles.
Musk Debuts the Tesla Powerwall and Powerpack
Storage finally became a reality for residential solar customers when Tesla announced the Powerwall and Powerpack in May 2015. Suddenly, home energy storage was affordable, simple, and sexy. The “star power” of Tesla CEO and serial entrepreneur Elon Musk was also instrumental in catapulting battery backup into the mainstream. The Powerwall sold out through the following year almost immediately. Sunrun, LG, Orison, Sunverge, Mercedes-Benz, German company Sonnen, and a handful of other companies currently offer comparable home battery storage units.
Gigafactories Driving Prices Down
Tesla’s gigafactory in Reno, Nevada—the world’s largest factory building—will been instrumental in scaling the technology and reducing prices further. While the factory only began producing battery cells for Powerwalls and Powerpacks in January 2017, Tesla already has plans to expand the facility. Once the factory is in full swing, Tesla expects production to drive down the per kilowatt hour cost of its battery pack by more than 30 percent.
In Tesla’s investor newsletter, Musk said: “This will allow us to achieve a major reduction in the cost of our battery packs and accelerate the pace of battery innovation. This will also allow us to address the solar power industry’s need for a massive volume of stationary battery packs.”
New Gigafactories on the Horizon
Earlier this year, Tesla said it plans to announce 2-4 new gigafactories in 2017, though it’s unclear whether they’ll produce solar panels, batteries, vehicle components, or a combination of those products to support their business plans. AES Corp. and Altagas Ltd. also opened their own battery factories in southern California in January. Unsurprising, that state is fully embracing battery technology; the government there has mandated that utilities add more than 1.32 gigawatts by 2020.
The well-timed drop in battery prices may be able to compensate for the loss of net metering, at least in part. Today, solar customers in areas fighting net metering can simply install one of several affordable home storage systems to provide their own backup and overnight power, bypassing the utility entirely.
One state is even encouraging residents to add battery storage. In a move to help homeowners cope with high energy costs, Maryland became the first state to pass a tax credit for installing energy storage in April 2017. If other states follow Maryland’s example, positive incentives may speed storage uptake.
The Future of Solar With Battery Storage
While battery storage has come a long way from its modest beginnings, the numbers still don’t add up for many businesses and homeowners. Its time is coming soon, however. The energy storage market will balloon to $250 billion by 2040, Bloomberg New Energy Finance (BNEF) predicts, and battery storage will automatically come with rooftop solar systems by the 2030s. When it does, solar may well become one of the dominant power sources in the global energy mix.
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