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How does distributed solar energy integrate well with energy storage technology?
- May 21, 2018 -

Distributed solar and energy storage technologies play a key role in reducing greenhouse gas emissions, increasing grid flexibility, and improving access to energy. A series of dynamic development trends will gradually determine the development and application of distributed solar energy and energy storage technologies, and whether it can achieve its potential value. The main findings of this research report include the following aspects:

• Several advantages of combining distributed solar energy and energy storage technologies

Solar energy and energy storage technology have their own advantages. Solar power can achieve zero carbon emissions without additional costs. Energy storage technology provides backup power, FM, and other grid services. Combine the two to obtain further advantages. In particular, it can realize continuous power supply at night, increase the output during the available power generation time, and improve the flexibility of the power grid. In distributed communities and rooftop systems, the combination of solar energy and energy storage technology can also reduce pressure on the distribution network and postpone or reduce infrastructure investment. At the macro level, energy storage and solar power generation can increase the penetration of solar facilities without major changes, thereby reducing carbon emissions. The combination of energy storage technology and solar power generation can also serve as a fast channel for electrification in emerging markets.

• Different ways to combine photovoltaic and energy storage by combining mature markets and emerging markets

► In mature markets, the main driver of the combination of distributed solar energy and energy storage technologies is cost savings and reduced dependence on the grid. From a cost perspective, the main driver of consumers or communities investing in this technology is to reduce electricity bills. Photovoltaic power generation is the leading technology, and through the energy storage, the utilization rate of solar power generation can be increased, thereby increasing economic benefits.

► In emerging markets, the main driving force of the combination of these two technologies is to solve the problem of grid power supply instability. After consumers purchase energy storage systems, they can enjoy uninterrupted power. Solar power generation can support energy storage systems to extend the power supply time and further increase the value of energy storage systems.

► The imbalance in the development of these two technologies is already evident. Some areas in Germany, Japan, and the United States have rapidly adopted rooftop PV systems due to economic considerations, but in most cases they are not equipped with energy storage systems. India, on the other hand, has established a mature supply chain for lead-acid batteries, helping end users solve the problem of unstable power supply without solar power facilities.

• The regulatory mechanism is both an obstacle to roof solar energy and energy storage and a driving factor

If the market is to grow in the future, it must address the regulatory obstacles that lead to market prejudice against solar energy and energy storage, such as grid access fees, lack of electricity sales mechanisms for non-power plant projects, and self-consumption taxes for distributed generation. Wait. The net electricity metering deduction method is a case worth studying. Although it strongly promotes the adoption of distributed solar energy technology, it also reduces the economic benefits of energy storage technology.

• Energy storage costs are more important bottlenecks than solar energy costs

The cost of solar power technology has dropped significantly in the past two decades and will continue to decline. At the same time, in the total installation cost of residential photovoltaic installations, the labor costs and regulatory regulations have become more and more important. In terms of energy storage, whether it is possible to reduce costs is less certain, because the technical cost of the battery itself is greater than the labor cost. The estimate of Bloomberg New Energy Finance's "doubling of energy storage capacity and cost reduction of 15%" is based on only a few short years of experience, because the market for electric vehicle batteries is only a short time ago. If solar energy and energy storage technology are combined to become a viable alternative for mature markets and emerging markets, energy storage technology still needs to significantly reduce costs.

• The global electric vehicle market can shape the future of a combination of solar and energy storage technologies

Lithium-ion batteries are becoming the world's leading energy storage technology complementary to solar energy, but lithium batteries still need to expand industrial scale in order to achieve cost reduction. One of the main driving factors is the increase of electric vehicles, which are usually used for lithium batteries. The proportion of car batteries in the global lithium battery market is increasing, but the current growth rate is not yet clear. If trade barriers cause fragmentation of the electric vehicle industry, the advantages brought by economies of scale will also be reduced.

• The combination of solar energy and energy storage technology is not the only choice

Although energy storage technology can increase the overall value of solar energy, it is not the only one. Other options include improving the accuracy of renewable energy forecasts, improving demand response capabilities, and adding emerging technologies such as flexible loads, heat storage technologies, and electrical energy conversion. Most notably, low-cost natural gas can provide low-cost, highly-flexible electricity that complements solar energy, which reduces the attractiveness of energy storage technology. In emerging markets, the use of lower-priced coal to produce part of the electricity to increase the reliability of the grid may also undermine the value of combining distributed solar energy and energy storage technologies.