How Is Solar Energy Stored?

Solar energy storage is often misunderstood.

There’s a lot of information online and it’s often in the news claiming it’s the next big thing in the solar industry.  You might have heard that in places like Hawaii and California it’s even cost effective to install a solar system with storage today. But what does that mean exactly? What exactly is solar plus storage and how does it work for homeowners connected to the utility grid?

Today, let’s look at the different storage applications and what options exist for homeowners who draw power from the utility. This article will help those interested in storage options to understand what’s out there and what would make the most sense for your particular situation.

The typical solar home – Connected to the grid

The vast majority of homes with solar installations are still connected to the utility grid and lack any storage system (called grid-tied solar). This means that, during the day when the sun is shining and the solar panels are producing electricity, the solar power goes into the house and the homeowner can use the electricity he produces. When his solar installation produces more electricity than he is using, the excess electricity is sent into the grid for others to use. Utilities frequently pay homeowners for this excess electricity through a net metering agreement.

Since the system has no storage, when the panels aren’t producing any electricity the homeowner must draw electricity from the grid. In this way the homeowner can only use solar electricity while his solar panels are actively producing power.

This is a typical setup, with no storage system, and it’s by far cheapest solar installation. In all honesty, most people don’t need a storage system, as they are still connected to the utility, and batteries add significant cost that is hard to justify. However, in areas where electricity from the utility is very expensive, solar plus storage might be a viable financial option.

High Utility Rates Make Solar Plus Storage Cost Effective

In some areas where electricity is very expensive, like Hawaii, adding a storage system might be a good option. In fact in Hawaii, where historically they’ve used oil generators for 70% of their electricity and electricity prices are over twice as high as the mainland United States, solar companies are already offering solar plus storage as a cost-effective alternative to utility-sourced electricity.

For homeowners whose utility uses time variant pricing, like Time-of-Use (TOU) rates, adding batteries is also a cost-effective option. Put simply, time-of-use rates are variable rates. When electricity is in high demand, say in the afternoon when everyone is using air conditioning in the summer, prices are higher. If a TOU home owner installed a solar plus storage system, he could produce electricity during the day, save that electricity in the batteries, then use the electricity later when his utility rates are most expensive.

Many large solar companies, like Sunrun and SolarCity, have already begun offering solar plus storage options. In 2015 Tesla, the electric car maker, began manufacturing and selling battery storage for residential solar installations. In fact, from 2014 to 2015, solar plus storage installations grew 243 percent!

As utility prices continue to increase, and the cost of solar continues to decrease we will likely see greater and greater adoption of solar plus storage among homeowners, especially in areas where electricity is already fairly expensive.

Solar Plus Storage is a Smart Choice for Off Grid Systems

For those homeowners who aren’t connected to the grid, solar plus storage represents one of the few options they have, offering the simplest, easiest, and most cost-effective methods of electricity.

Off grid systems are similar to grid-tied solar plus storage systems in that your solar panels are connected to a bank of batteries and you can use the power you create during the day, but also store electricity in the batteries to use at night when your panels aren’t producing. However, there’s obviously no system to feed excess energy into the grid, as the house isn’t connected to any grid.

The size of the solar system and the number of batteries connected depends on energy requirements. If the homeowner has a large off-grid cabin with all electric heat, washer and dryer, dishwasher, he’ll need a lot of solar and a large battery bank – much more than a small cabin that uses electricity for hot water and a few lights.

Battery Choice Depends on Cost

When looking at batteries for solar installations, there are a few different options.

The most prevalent type of battery, which has been in use for decades, is the lead-acid deep-cycle battery. These batteries are the cheapest option, but it does have its limitations. You can only drain the battery so much, only down to about 50% of its capacity. So you can only use about 50% of the battery’s actual capacity. If you use more than that on a regular basis, the battery will become less efficient over time and you won’t be able to charge it to its full potential later on.

With lithium-ion batteries, this isn’t as much of an issue. You can discharge the battery almost to empty without affecting its recharging abilities. This does come at a cost though. Lithium-ion batteries generally cost between $600 and $750 per kilowatt-hour, compared to lead-acid batteries’ $150 per kWh.

As storage systems become more prevalent, solar and battery companies will continue to push batteries to even greater levels of usability as well as lower costs. In fact, it’s already begun. A new player in the solar industry just publicized an extremely innovative product: SolPad, an all-in-one solar plus storage solution due to arrive in 2017. On the back of each solar panel is a solid-state battery, a new technology not even on the market yet, which can withstand the extreme temperatures and weather of rooftops. In addition, the solar panels come with energy management software, so homeowners can manage their energy use more knowledgeably and efficiently.

Commercial and Utility Solar Plus Storage

There are huge savings to be seen from businesses installing solar plus storage. Deployment would be very similar to residential applications: solar panels produce electricity and that electricity is saved in the batteries for use at a later time, usually when electricity is more expensive during times of peak demand.

In regards to utilities, not many solar plus storage power plants have been built yet. For utility applications, the storage is usually exists to account for fluctuations in the electricity production that you get with solar panels.

For example, picture a utility with a large field of solar on a beautiful, crystal clear day. The solar panels are pumping out energy pretty consistently and all that electricity is being moved across the grid and used by local residents. All of a sudden, a cloud rolls in and for 10 minutes those panels are shaded and stop producing power. Uh oh! The utility can’t produce enough electricity to meet all the residents’ needs, as they don’t have any energy storage and it takes time to start up a different power plant to fill that void. But if they had a battery system for the solar installation, the battery would kick on and pump out that stored energy for those 10 minutes, preventing any sort of blackout. When the panels start producing again, the utility simply switches back over to the electricity being immediately created by the solar panels.

Utilities can also use batteries for the times when solar panel production is low but energy use is high – for example, in the afternoon when the sun is setting but everyone gets home and starts turning on air conditioning. When electricity demand is high, utilities typically use short-term “peaker” plants that run on natural gas or even diesel fuel, which are costly to run and not very efficient. If the utility has solar storage however, the batteries could act as the utility’s peaker plant, producing much cleaner energy and in the long run possibly be more cost-effective than a traditional peaker plant.

Solar plus storage is slowly becoming more and more adopted by utilities. In the summer of 2016, the Village of Minster in Ohio became the first municipal utility to adopt solar plus storage. The city entered into a power purchase agreement with a third party to purchase electricity from the 3 MW solar installation coupled with a 7 MW lithium-ion storage system. The resulting cost for the electricity produced by the solar plus storage system is $0.095 per kWh, which is close to the municipal utility’s average electricity rate.

For utilities and homeowners alike, solar plus storage offers many a cost-effective alternative to utility-sourced power. For homeowners looking to pair batteries with their solar system, the right pairing is really dependent on your needs as well as your electricity situation.

Related: Tesla Powerwall II Review

[Photo Credit: Tesla Motors (featuring the PowerWall)]