Editorial

Behind-the-meter energy storage: An emotional or financial decision?

Compelling value propositions boost customer adoption

Energy storage fills a critical role in electricity delivery in a new paradigm of renewable energy. While solar and wind can displace carbon-emitting forms of energy supply, storing energy will be critical when renewable generation is not prolific. Energy storage can play a role in balancing supply with demand on the electric grid, and opportunities for grid-connected, behind-the-meter residential and non-residential energy storage are growing.

Storage complements interest in renewable energy

The dual arrangement of generation and storage, or renewable and storage pairings  have become an increasing phenomenon in the residential market segment. Most early adopters of residential energy storage are emotionally motivated, Brett Simon, Senior Energy Storage Analyst, wrote in a report examining the economics of residential solar-plus-storage in the U.S., however, the economic cases for these dual systems are few and far between.

U.S. Solar-Plus-Storage Market Outlook, 2018E - 2023E

Source: U.S. Energy Storage Monitor, Q2 2018 / GTM Research and Energy Storage Association

Customers are motivated by multiple incentives

The most prominent emotional motivation is a sense of security – and it isn’t limited to the residential sector.

“Customers gain increased peace-of-mind as storage can provide backup in the event of a grid outage," said Simon, "a use case that has gained increased prominence as homeowners, business owners, and municipalities grapple with questions of how to prepare for inevitable electricity disruptions from natural disasters."

Concerns about resilience and back-up power are especially compelling in the non-residential sector (includes deployments in education, healthcare, manufacturing and military contexts) where assurance of day-to-day operations is critical. “Behind-the-meter energy storage gives retail electricity customers the opportunity to take control of their energy consumption,” Simon said, “and this is coupled with financial incentives.”

The value of energy storage adoption and its use on the grid can be reflected on customer energy bills in various ways. “Storage systems can help address time-of-use rates and demand charges, consequently reducing customer electricity bills. Behind-the-meter storage, both residential and non-residential types, also provides a way to increase solar self-consumption, a particularly important value stream given reductions in net energy metering compensation across the U.S.”

U.S. Residential Market, 2013 - 2018 (MWh)

Source: U.S. Energy Storage Monitor, Q2 2018 / GTM Research and Energy Storage Association

The blossoming of these opportunities is contributing to the growth of the energy storage market – especially evidenced in states with friendly incentives, as in California with its Self-Generation Incentive Program (SGIP). SGIP encourages the installation of energy technology on customer sites. To date, over 60 megawatts of energy storage dot the state of California, making it a leader in energy storage deployment in the U.S.

Falling costs provide additional lever for adoption

The potential for future non-residential systems will also depend in part on the price trends of system components. Mitalee Gupta, Energy Storage Analyst, noted that the falling cost of batteries and balance-of-systems have had a multiplied downward effect on the overall cost of large-scale energy storage systems — further enhancing energy storage's potential to provide financial gain.

Whether emotional or financial, the continued growth of residential and non-residential energy storage deployments will align with the development of enticing value propositions to energy customers in the residential and non-residential sectors, and adoption will depend on the formulation of business models and rate structures that appropriately identify and compensate the value of energy storage.

Learn More about our Energy Storage Service

The Energy Storage Service will help you uncover the revenue streams and business opportunities most relevant to your project. The service provides a combination of in-depth market analysis and engagement with key players. Our team tracks and analyses deployments and company landscape to deliver comprehensive insight into the economics and trends that are shaping the energy storage market. 

  • 24

    Gigawatts of energy storage projects tracked globally

  • Quarterly

    Delivery of U.S. Energy Storage Monitor on a quarterly basis

  • 12+

    in-depth market reports delivery annually

  • Unlimited

    access to our energy storage analysts

Deployments, financing, business models and forecasts

Energy Storage Service

Learn More