The energy storage industry is finally venturing out — into the smart home.
For a while now, smart home devices have appeared as trendy tech in search of a purpose. Programmable lights are cool and all, but they’re still lights. Smart thermostats are cool, but they’re just thermostats that can operate when you’re not around to adjust them by hand.
Energy home automation promises something more substantive. If all the major energy-consuming devices in a home can communicate with each other, and with batteries and solar panels and electric car chargers, they can turn the house into a fully controllable miniature power plant.
That horizon is not as distant as I thought. Last month, I went down to see sonnen unveil its ecoLinx product at the swanky Custom Electronics Design and Installation Association Expo in San Diego — it’s like the Solar Power International of people who install high-end controllable devices in fancy homes.
The displays of wall-sized high-definition home theaters and invisibly camouflaged high-fidelity speakers brought to mind an observation attributed to the science fiction writer William Gibson: “The future has arrived — it’s just not evenly distributed yet.”
That's true of the cleantech sector, where technology breakthroughs are not accessible to many consumers.
For this week’s Storage Plus, I'm going to examine how the smart home could influence the storage industry.
The tech-savvy are on to something
The CEDIA industry, as far as I could tell, owes its existence to two axioms of affluence:
- If you can afford it, exert control over everything in your home.
- Exerting control is hard; hire someone else to do it for you.
The homeowners that CEDIA serves don’t want lightbulbs you have to buy in a store; they want recessed, wirelessly controlled, super-efficient LEDs. And they want a pro integrator to program a design and color scheme that maximally complements the art installations and water features.
That's really not far from how residential storage vendors talk about their customers: Don't make them think too hard; let them set it and forget it.
The lesson of CEDIA is that the industry can be more ambitious in what it sets and forgets. Don’t just task a battery with juggling time-of-use rates for a customer, tell it to bring the other major appliances along for the ride. Instead of backing up the whole house in a blackout, tell it to shed unnecessary loads before and after the outage to prolong its capacity. Batteries connected to other devices in the home present an opportunity to be very creative with offerings.
The battery is not enough
Once you see a connected battery operating in all its orchestral splendor, it gets hard to work up excitement about a pre-automation battery that just sits there, receiving energy from a solar array and perhaps checking a rate schedule a few times a day.
Sonnen’s ecoLinx illustrates a technological leap similar in structure (though not in world-altering impact) to the jump from early cellphones to smartphones, from a device that just makes calls to a device that communicates with a host of applications and services.
The home automation battery can prepare a home for a blackout by reducing loads pre-emptively and closing blinds and adjusting the thermostat to precool the house.
The ecoLinx leverages new “smart breakers” from Eaton that allow it to shed loads dynamically in a blackout, so the battery doesn’t run itself out keeping a hot tub cycling; then, when grid power comes back, it can reset all the home appliances to where they were before the storm hit.
Beyond the backup application, sonnen’s Senior Vice President Blake Richetta told me the expanded coordination of a home’s energy consumption makes it more attractive to utilities as a distributed grid asset. If they had a choice between a network of home batteries versus a network of batteries connected to every major energy-consuming device in a home, with minutely granular consumption data supplied by the smart breakers, utilities would rather have the latter.
The company has not yet announced any utility partnerships to bear out this argument. For that matter, the list of “conventional” virtual power plants remains exceedingly short. But it stands to reason that if cautious utilities are going to dabble in home energy assets for grid services, they would rather have more data and more control.
Smart home capacity will be bigger than home storage capacity
Networked home appliances could prove much more valuable to the grid in the long run than storage by itself.
New research from Wood Mackenzie combined datasets for the leading home energy technologies — solar, storage, smart thermostats and electric vehicle chargers — and found they will add up to 88 gigawatts of residential flexibility capacity by 2023.
Residential storage alone is on track to hit nearly 9 gigawatts by that year. Tapping a broader range of devices dramatically enhances the capacity that utilities and aggregators could play with.
Source: Wood Mackenzie Power & Renewables
This combined data set illustrates the broad trajectory of the residential energy space; in practice the capacity may be significantly lower. For instance, home solar acts as a demand reducer during the sunny hours, but in net-metered markets it also floods the wires with exports that utilities must figure out how to absorb.
The smart thermostat population dwarfs the other sources of flexible capacity, at least as measured: The data assumes each thermostat can deliver a 0.8-kilowatt demand reduction for one hour. With smart thermostats heading into 28 percent of U.S. households by 2023, that adds up to 43.6 gigawatts if they all fired up at once for an hour.
In reality, utilization of smart thermostats for grid services lags far behind deployment. Lead report author Fei Wang notes that the potential one-hour demand response capacity from smart thermostats in 2017 was 16 gigawatts, but Energy Information Administration data shows that utility residential demand response programs only achieved 3 gigawatts of peak demand reduction across the entire year.
The rise of connected batteries could change that. Residents may not like the idea of dialing back the air conditioning on a hot day. What if their energy devices could precool their homes and then dial back the AC, while using the battery to negate grid consumption? The demand reduction for the utility would be far greater, and the customer needn’t even know it was happening.
This potential increases as more smart energy devices enter the market. At SPI, SolarEdge showed off products to do just that, like a water heater designed to prioritize surplus rooftop solar generation and minimize grid consumption. The company also sells similar devices for pools and heat pumps in Europe.
Combining batteries and solar with thermostats and EV chargers roughly doubles the flexible capacity available in U.S. homes. Adding in the growing roster of responsive appliances could easily surpass the 88-gigawatt mark.
Strike the right balance of cost vs. value
Of course, this comes at a price.
For the ecoLinx, the tab comes up to $26,000, plus the cost of the panel upgrade to get those snazzy smart breakers. Sonnen wasn’t thrilled when I mentioned the high price at the top of my story.
As Richetta correctly pointed out, Tesla only got to its theoretically mass-market Model 3 by working out the kinks with a luxury sports car. Sonnen is taking that approach, initially marketing to an audience that cares less about cost than most people do, with the hopes of making it more widely accessible in the future.
A much smaller startup has staked a claim on smart-home connected batteries for the Google Home and Alexa crowd. It’s called ElectrIQ, and it recently raised $6 million to scale production of its PowerPod, with a starting price of $8,999. It’s important to note that sonnen has ecoLinx products working in the field; ElectrIQ’s unit is slated for release next year.
Other battery companies are not really talking about the smart home.
At SPI, I sat down with Sunrun and LG Chem, the solar company's biggest battery supplier, and asked whether home automation factored into their product road map.
LG Chem is focusing squarely on battery manufacturing right now, said Linh Tran, director of sales for residential storage at the manufacturer.
Christopher Moris, director of solar-plus-storage and advanced products at Sunrun, noted structural differences between batteries and the consumer smart home. The smart home is intuitive enough for consumers to figure it out themselves; batteries are higher-cost and require considerable explanation for consumers to understand.
To bridge that gap, Sunrun first is tackling consumption monitoring and whole-home backup (its standard offering today is critical load backup), trying to simplify those functions so they can be part of the package without adding considerable expense.
“Because we are offering the product to the 100 percent, we need to design it in a very intuitive way that works for everyone,” Chris said. “The answer is, yes, we do want to get into those directions, but we don't want to do it at the expense of excluding people or otherwise making it difficult for consumers to understand.”
Tesla didn’t have a visible presence at SPI to pose that question to. The company said on an earnings call in August that it had shut down a Powerwall cell production line in favor of Model 3 vehicle manufacturing. It’s unlikely Tesla will expand its home battery’s capabilities when basic production remains a challenge.
Thus, a series of niches has already emerged.
Sonnen appears to sit at the top, offering the most sophisticated home automation for those who can pay for it. If its product reaches market as advertised, ElectrIQ will serve more widely accessible smart devices. LG Chem and Tesla are focused on delivering battery systems at low prices, but could introduce more connectivity down the road.
That means there’s plenty of room for more differentiation in storage products serving the smart home space.
Network your business, not just your devices
These early actors made the right call in partnering with existing smart home platforms rather than building their own.
A home storage startup with tens of thousands of customers has approximately zero chance of competing as a smart home platform with the likes of Google and Amazon.
Sonnen, for instance, hired programmers to integrate ecoLinx with Crestron and Control4, two of the leading control platforms for the high-end home automation market.
That’s probably going to be the model for other storage companies coming into the space: Integrate with existing brands. Partnerships will also put connected devices into the field, especially partnerships between technology vendors and homebuilders.
“Look at the appliances and you see more partnerships happening,” said Wang, the WoodMac grid edge analyst. “Vendors like ecobee and Nest have partnerships with real estate companies, so if they’re building new homes or apartments, they come with these devices.”
Sonnen has a deal with Mandalay Homes to get its units into a 3,000-home Arizona development. ElectrIQ is working on a pilot with Mattamy Homes, and the lead investor in its $6 million round was a real estate-backed VC firm.
Where will batteries fit in the smart home? We're still in an experimental phase. But there's increasing crossover between the two sectors. Look out for more partnerships and integrations on this front.