SolarCity to Offer Energy Storage Systems

California-based SolarCity plans to offer lithium-ion battery systems from Tesla Motors with its software in an effort to wed solar and storage in a system that will provide businesses not only with potential backup power when the grid goes down but also help them reduce an increasingly onerous utility fee. So reports Forbes and The New York Times.

The combined system, called DemandLogic, will automate the storage and usage of energy throughout the day, including during peak times for which utilities charge an additional fee. The system was developed using a $1.8 million grant in 2010 from the California Public Utilities Commission to explore adding battery storage to rooftop solar arrays.

SolarCity will follow its past sales model, offering customers long-term contracts for solar energy and storage without having to pay upfront cost of equipment and installation. CEO Lyndon Rive says it aims to enter into 30 megawatts to 50 megawatts’ worth of energy storage agreements next year.

SolarCity is promoting the system as a way for business to reduce the demand charges that utilities impose for energy usage during peak demand. It is initially marketing the energy storage system in three regions where those charges are particularly high: parts of California served by Pacific Gas and Electric and Southern California Edison; areas of Massachusetts served by NSTAR; and in parts of Connecticut served by Connecticut Light & Power.

The idea behind that rollout is to show a clear link between using a solar-storage system and energy savings. SolarCity guarantees its service will shave about 20% of the demand charge, and the company says it will gear the system so that energy savings outweigh storage costs. The solar contract maxes out at 20 years, while the storage contracts could last 10 years, which corresponds to expected life of the battery system.

Rive says that, short of freeing businesses from the grid, the system will help keep the grid stable as the number of solar customers increases. A SolarCity press release notes that grid outages are increasing, and the rise in demand charges is outpacing the increase in overall energy use.

Sam Jaffe, a senior research analyst at Navigant Research, sees potential in the marriage of solar and storage, but he feels the mix of rates, demand charges and equipment costs will need to be precise. If the system is geared to qualify for a 30% federal tax credit, he adds, it would be seen as more cost-effective.

SolarCity has been offering a battery option to residential customers, but the focus there is more on backup rather than energy savings, the reverse of its commercial marketing strategy. Of its 300 residential customers, about 100 have opted for a battery system. At this time, energy storage is limited to homes in California for about $10 a month.

To read the Forbes article cited in this story, click here

To read the New York Times article, click here

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