by Julian Spector
May 10, 2018

I’m not going to write about how storage was all over the place at GTM's Solar Summit, because I already did that column last year.

This time around, we’re seeing more actual execution on solar paired with storage. Where last year’s Solar Summit saw vague commitments to storage technology (Lynn Jurich said it “will be transformative for our globe and our children”), this year brought out concrete commitments.

Lightsource CCO Katherine Ryzhaya confirmed that “we’re not putting forward any proposals without storage, currently, to anybody west of the Colorado [River]."

Residential solar company Sunnova also confirmed that in Puerto Rico, it’s only selling rooftop solar with storage. Sunnova had thousands of solar customers on the island who lost power in the hurricane-induced outage nonetheless. The company doesn't want to let that happen again.

The battle for the future of the grid

If you follow us from the New York metropolitan area, come say hello May 21 at our first ever Energy Storage vs. Natural Gas Forum. I’ll be moderating a few panels, and the whole day will dig into the evolving storyline of how storage threatens the gas power market.

We've been addressing this topic a lot in the pages of Greentech Media, because if storage can break out of the shorter-duration frequency response market and eat into the gas market, it would represent a massive growth opportunity. There are also major implications for decarbonization and efficient grid investment.

This is starting to happen in some jurisdictions, but progress has been wildly uneven across the U.S. We'll examine why, and bring in storage and gas experts to hash out what's real and what's folly.

Squares who aren’t able to join in person can catch the livestream online. The content will be the same from afar, but the drinks will be harder to taste.

Turn on a Daimler

We got a reminder last week that big promises merit checking back in on.

To wit, we covered the splashy launch of Mercedes-Benz’s U.S. energy affiliate, created near the end of 2016 to sell stationary storage to U.S. customers.

On paper, it looked like the most likely Tesla challenger: a luxury brand with great name recognition and its own battery production supply chain. A few months later, it locked down a partnership with No. 3 rooftop solar installer Vivint to distribute its product, answering the challenge of SolarCity/Tesla and Sunrun/LG Chem.

And then it went silent. The big, splashy Mercedes-Benz booth disappeared from the conference circuit, and then the company stopped attending industry shows at all.

The reason, which we broke last week, is that the company has ceased to exist. Daimler corporate HQ pulled the plug.

Plenty of investors have scrutinized the residential storage industry and determined there’s not enough profit in it. Daimler wouldn’t be irrational for taking a skeptical approach to the U.S. market. The curious part is why it thought this was a good idea in 2016, and changed its mind within a year and a half after spending considerable cash to stand up the subsidiary.

My reporting uncovered that Mercedes-Benz Energy didn’t have a fully operational product for the U.S. market at the time it launched, but figured out the inverter pairings over the subsequent months. It couldn’t hit the ground running, which may have dampened Daimler's expectations of payback.

Coordinating with the corporate leadership back in Germany couldn’t have made things easier. The German storage market looks very different than the U.S., so business decisions that look clear from California would take some translation for an audience conditioned on northern European grid conditions.

Bottom line: Mercedes-Benz Energy has vanished. We must scrutinize claims that a vehicle battery business will translate easily into stationary storage business. The "Most Promising Tesla Challenger" title is back up for grabs.

And now all your questions will be answered

Throughout the conference, attendees peppered our digital question system with storage-related inquiries. We couldn’t get to them all while on stage, so I’ll keep last week’s interactive format rolling and dig into the tastiest leftovers in this week’s column.

Q: How do software-only storage companies compete with vertically integrated players like Tesla? It seems like everyone wants to control the software algorithms.

Vertical integration should ensure coherent interactions between storage equipment and the software that governs it, but that’s not guaranteed in practice.

The challenge is specialization: Making really good hardware doesn't mean you can also make really good software. Those tasks require different skill sets and align best with different kinds of companies and organizational structures.

The personal computing industry really took off once it bifurcated hardware and software and allowed more market entrants to innovate on specific components. Microsoft's operating system broke the mold of vertically integrated computer design that had kept costs high and penetration low (I analyzed what the solar industry could learn from this history here).

To succeed, a storage software company needs to do software better than a hardware vendor that adds on a software offering.

That's not easy, as evidenced by the fact that few companies besides Geli have survived squarely in the storage software space. The more typical route has been to start integrating and building projects in order to put one's software to work, a la Sunverge, Green Charge, Greensmith, Demand Energy, etc.

This route is more capital-intensive than pure-play software; most of those names have been acquired, while Geli just raised $5.5 million to continue growing.

One way the company builds trust with customers, according to co-founder Ryan Wartena: a demand-charge management performance guarantee that promises a year’s worth of software maintenance for free if it doesn’t accurately achieve its predicted benefits.

Q: Do you see any value for neighborhood thermal energy storage systems?

Neighborhood thermal storage technology exists and works, but the barrier (at least in the U.S.) is finding a legal and commercial pathway to deploy it.

The concept has been proven, as in the Drake Landing community, which keeps its residents warm through frigid Canadian winters using nothing but thermally stored solar energy. But I haven’t seen that pilot convert into a commercially viable business model.

District heating systems have gained more traction, but it’s hard to insert new ones into cities today.

The best hope may be that homebuilders learn to incorporate thermal storage into new-build communities; it’s a lot easier to insert it into greenfield development than to rip up existing residential streets or forge collective buy-in among existing homeowners.

We also need industry to step up and offer a product here. Only a handful of companies pursue thermal storage, and they've carved out different niches. Shell’s investment in Axiom Exergy this week indicates that big-money incumbents are getting more interested in thermal storage. If that momentum builds, we may see a broadening of the products on the market.

Q: Is avoidance of curtailment/generation shifting a strong enough value proposition for utility-scale solar-plus-storage?

I haven't heard of curtailment avoidance itself driving any deals yet. The early, large solar-plus-storage projects have combined several factors: midday oversupply of solar stressing the grid; threat of curtailment of that midday solar; and expensive evening peaks requiring capacity expansion.

Throwing away solar generation is easy; buying expensive evening power stings more for utilities, or at least for their customers. It just so happens that solar-plus-storage addresses both concerns.

These seeds have borne fruit in certain sunny geographies: Hawaii, California, Arizona. Elsewhere, the penetration of solar hasn’t grown to the point where curtailment becomes a serious concern.

At last year’s Solar Summit, Shayle Kann suggested 10 percent penetration as the rule of thumb for when oversupply of solar becomes a problem. That’s still a high bar for most markets.

Q: Do you feel that EV purchasing (especially on islands) will encourage or discourage solar+storage? Is there synergy there?

There’s a lot of synergy there. Island grids, due to their natural boundaries, have a tighter leash for balancing supply and demand. As they add more solar, having more electric vehicles charge up in the sunny hours puts that generation to good use and reduces the need for additional generation at night.

EV fast-charging creates a very spiky load, so storage attached to charging stations could provide considerable value in buffering the effects on the overall island grid.

All of this is unfolding against the backdrop of islands paying lots of money to import fossil fuels that burn smelly and dirty. Solar-plus-storage economics play really well in that environment.

Q: Comment on bankability and acceptance of technologies beyond lithium-ion. What technologies will meet the need for longer-duration storage?

There was a lot of interest in this topic throughout the summit, perhaps because there still isn’t a satisfying answer.

A pumped hydro renaissance would do the trick, if land-use requirements weren’t generally disqualifying.

Flow batteries sound great on paper: safe ingredients, zero degradation, cheap to scale up for long-duration uses. Actually selling them has proven difficult — look at ViZn Energy halting operations when a funder pulled out.

Keep an eye on NEXTracker’s solar-tracker-plus-flow-battery contraption, dubbed NX Flow. The company announced its first deal with this product last week: It will provide 1.1 megawatts of generation to the Maharishi University of Management in Fairfield, Iowa.

NX Flow puts that storage technology into a factory-built, easily replicable product, which makes it more likely to scale than any other flow system on the market currently. It’s not long-duration, yet, but could easily go that direction if the market calls for it.

Other possibilities, none currently guaranteed: The hydrogen fuel economy becomes a thing; transmission wires become politically palatable, leading to a vast expansion of the physical grid network; small modular nuclear reactors make zero-carbon energy available in more flexible increments.