Storing solar power in batteries is an attractive concept to the homeowner who wants to achieve energy independence from the grid, or the commercial and utility-scale solar array owner that wants to hedge against high electricity prices. But right now, the high cost of batteries and the complications involved in setting them up to power homes and businesses has made the solar battery concept uneconomical in all but the most extreme cases -- or, for the most wealthy of individuals.

But in some markets, factors including falling solar panel prices, increasing grid power prices and policies and incentives that boost solar installations are starting to shift that equation in favor of energy storage for solar. In particular, Germany -- the world’s biggest distributed solar PV market -- may be primed for a wholesale shift to battery-backed solar on a large scale.

That’s the view of German solar analysts, experts and entrepreneurs at last week’s Intersolar conference in San Francisco, which dedicated a morning panel session to the convergence of solar power and energy storage. Despite the very real cost and integration challenges involved, “We think battery storage and photovoltaics are a perfect fit, especially if you look at residential and commercial applications,” Intersolar CEO Markus Elsaesser said.

In fact, prior to Germany’s feed-in tariff regime, almost all solar PV in the country was off-grid, according to Dr. Matthias Vetter of the Fraunhofer Institute. That required pretty much every solar installation to have some storage to provide power when the sun wasn’t shining, and those additional costs served as a bottleneck for the sizing and scope of off-grid deployments, he said.

With the emergence of feed-in tariffs in the early part of the previous decade, that situation reversed itself, as Germans were able to sell their solar power back to their utility at guaranteed high prices that exceeded the retail electricity prices they were paying by a significant margin, he said.

But as the country’s feed-in tariffs have slowly gone down in value and the country’s electricity prices have continued to climb, that situation has reversed itself yet again, making the storage option more attractive, he said. Once the price you’re getting for solar via FIT is less than the price you’re paying for electricity, it makes sense to use as much of it as possible at home -- or, if the price is right, to store it up for use later.

Meeting the Market Need With New Products, Business Models

At the same time, Germany’s solar industry is seeking to find ways to continue to grow and profit amidst the slow decline of FIT prices, said Markus Hoehner, CEO of Hoehner Research and Consulting Group and founder of the International Battery and Energy Storage Alliance, a recently formed trade group that now includes about 70 members.

As Hoehner put it, while the solar industry in the era of high feed-in tariffs was “all about making money,” the new era of falling feed-in tariffs and falling solar panel prices has shifted the emphasis -- “It’s all about saving money,” he said.

Greentech Media has been covering the growth of solar-storage combinations being marketed in Europe by such vendors as SolarWorld, Samsung, BYD, aleo solar, centrosolar, Bosch/voltwerk and Kyocera, to name a few. As we’ve noted, these vendors are hard-pressed to differentiate their products from the ultra-low-price competition from China, and storage can be one way to do that.

They’re also responding to a desire amongst the German solar-buying public for energy independence, according to Christoph Ostermann, CEO of Sonnenbatterie ("Solarbattery" in English). The privately funded German startup, founded in 2008, has built a software platform to integrate solar panels, lithium-ion batteries and home energy management systems into a working whole, successfully tested it in 2010, and has so far installed about 1,300 such systems in German homes, he said.

These systems range in price from about 10,000 euros ($13,000) for a 4.5-kilowatt-hour storage system to about 16,000 euros ($21,000) for a 10-kilowatt-hour system, he said. That sounds pretty expensive, but with an average reduction of about 75 percent in owners’ utility bills, it’s actually cost-effective, he said -- particularly when it’s replacing grid power that can cost about 30 euro-cents (40 cents) per kilowatt-hour, he noted.

And because the typical German home uses far less electricity than the typical U.S. home, 4.5 kilowatt-hours is enough to “keep the power on all night long,” he said. That’s important for a customer seeking energy independence as an end goal, rather than sizing their battery system merely for backup power when the grid fails, he noted.

Sonnenbatterie is working with partners like solar panel manufacturer Kyocera, as well as big European utilities RWE and E.ON, which sell the startup’s system under their own brand names.

Meeting Utility Needs With Distributed Solar Storage

The interest of utilities RWE and E.ON is twofold, he added: not only do they want new solar installation business, they want to manage those systems to better integrate all of that distributed solar power into the grid.

Utilities usually aren’t happy about customer-owned solar, first because they have to pay higher prices to buy the power it generates under FIT or net-metering regimes, and second because those solar systems can disrupt distribution grids that weren’t designed to take power flowing back from their customers, he said. In markets like Germany, California and Japan where rooftop solar is popular, these issues can grow into costly grid instability problems for utilities, even if the true scope of this emerging problem has yet to be fully revealed.  

In fact, the power coming from lots of rooftop solar panels at their peak power generation times, which is usually at midday in Germany, can lead to local electricity market prices dropping down to zero, or even dipping into negative numbers, Ostermann said, much as excess wind power can drive down overall prices in wind-rich markets like Texas. Growth in solar power can also provide excess generation capacity that drives down wholesale energy prices over the longer term, as has happened in Germany over the past twelve months or so, according to news reports

German utilities want to eliminate that problem, and see distributed storage systems hooked up to some kind of central control as a potential solution, Ostermann said. Sonnenbatterie is involved in piloting that kind of system with Trianel, a group of 29 German local utilities and regional energy firms, involving about 700 homes connected to a single distribution circuit, he said.

We’re seeing similar solar-grid integration projects using storage in places like California, with partnerships such as those between Tesla and SolarCity and Silent Power and Hanwha working on solar-battery combinations for residential customers, others working on commercial-scale or utility-scale storage for solar-grid integration.

In Germany, the government has launched a subsidy for PV-connected energy storage to deal with distributed problems like these. Unfortunately, according to Vetter and Ostermann, the program has proven to be very cumbersome for applicants, which has limited its uptake so far. 

As for how big energy storage for solar might grow, estimates are all over the map. Hoehner said that Germany's current combination of solar costs, FIT rates and energy prices can make solar-plus-storage attractive on an internal rate of return and net present value basis today, though not as attractive as solar alone. However, as feed-in tariffs continue to decline, that may soon change, he added.

Tags: batteries, california, energy storage, feed-in tariff, germany, grid integration, home energy, investors, policy, pv, renewable integration, smart grid, solar, solar storage