The utility industry views the growth of distributed solar PV as a "disruptive challenge" to its traditional line of business. Policy think tanks wonder if a "utility death spiral" may result if utilities continue to resist renewables in the midst of an eroding customer base. This week, a new report by Rocky Mountain Insitute and the accounting firm CohnReznick took the discussion a step further with a new phrase ("grid defection") and a detailed analysis of five discrete regions in the U.S. (Hawaii, California, Kentucky, Texas and New York) to identify when (not if) solar PV and storage combinations will disrupt existing utility business models.
The full report is well worth a read, but Greentechmedia provides an excellent summary of the key findings and takeaways. The article notes that companies like Solar Grid Storage are reaching out to solar developers to form partnerships, providing a great illustration with a project we completed with New Jersey's Advanced Solar Products:
Advanced Solar Products is now working with other commercial facilities to integrate lithium-ion batteries with solar, and plans to make solar-storage systems a bigger part of the business going forward. "We see this as a thing that's going to develop more and more, and we want to take the lead in development," said Rawlings.
And it's not just emergency backup that makes storage attractive. Now that fast-responding systems like flywheels and lithium-ion batteries can get paid for frequency regulation services in PJM or help reduce onsite demand charges for commercial facilities, storage is emerging as a viable economic alternative.
In one case, Advanced Solar Products was able to pay for a commercial storage system and inverter through frequency regulation payments -- actually making the cost of a hybrid solar-storage system lower than solar alone.
"That, to us, seemed magical, and it told us we could provide this service for a low cost," said Rawlings.
Now that storage is moving beyond simple emergency applications, that "magical" alternative -- while still very site- and market-specific -- is emerging as a potential threat to utilities.
If you've been following our site, you know that our PowerFactor™ system is a prime example of this emerging sector unlocking significant new value for consumers and the grid overall. That's why we feel that solar+storage is also an opportunity for utilities - to play a key role as a partner in creating a more efficient, cleaner and resilient grid.
RMI and CohnReznick echo this entiment to end their report release on a positive note:
The important next question is how utilities might adjust their existing business models or adopt new business models—either within existing regulatory frameworks or under an evolved regulatory landscape—to tap into and maximize new sources of value that build the best electricity system of the future at lowest cost to serve customers and society.
The conversation certainly continues, so stay tuned! In the meantime, if you are a solar developer or installer interested in learning more about how we can help you offer solar+storage to your customers, contact us for more info.