While selling energy storage is different than solar, independent solar contractors can seamlessly integrate energy storage into their residential solar business.
With energy storage installations growing at breakneck speeds (100% growth in US installed capacity in 2016), solar installers far and wide are exploring how to best incorporate energy storage in their service offering. Because the product and installation costs are dropping steadily for energy storage many industry experts feel it will follow solar’s rapid growth. National installers such as SunPower, Tesla (SolarCity), and SunRun sell energy storage solutions and all signs point to consumer demand increasing. While selling energy storage is different than solar, independent solar contractors can seamlessly integrate energy storage into their residential solar business.
Understand Rate Structures & Consumption
Like PV a good first step in the sales process is to understand rate structure and consumption. The contractor should collect 12 months of utility bills, just like a solar sale. Besides looking at total kilowatt-hour (kWh) consumption per month and total bill, it is important to know the off-peak and on-peak rate deltas and what time of day they occur and in what month; the bigger the delta and the later in the day the peak rate, the more attractive the solar + storage project. An average of more than $0.20/kWh between peak and off-peak will make a storage + solar project pencil. For residential projects, it is not necessary (of course helpful) to have 15-minute interval data and demand charges are not too common in residential tariffs.
Define the Project’s Objective
After understanding rate structure and consumption, it’s important to quickly determine the project’s objective. The three main types of energy storage for residential are off-grid, battery backup, and self-consumption. Self-Consumption will make the most economic sense and it is becoming more attractive in markets like California. In self-consumption, the homeowner charges their battery bank during the day and discharges the bank (either for consumption or export) when the rates are higher. This is also key in markets like Hawaii and Nevada, where net metering has ended and exporting to the grid is either prohibited or doesn’t offer any compensation. With a self-consumption system, you ensure that the solar will be consumed by the house load, thus maximizing the savings model for the customer.
For simple budgetary discussions with homeowners about storage costs, it’s safe to use $800 to $1,000/kWh for lithium and $300/kWh for lead acid. However, this is just the upfront cost. Generally, lithium will cost $.10 per cycle while lead acid costs $.23 per cycle and the lithium has a 10-year warranty whereas lead acid will last about 5-years. It is also easy to expand a system with lithium which is not the case for lead acid. The technology chosen will depend on the project’s objective.
The energy storage system’s size should be decided early in the sales process. Of course, it is ideal to have 15-minute interval data or have the homeowner total their daily load consumption. However, few homeowners know their electric load’s power and collecting 15-minute interval data involves more work. When making the first quote or just discussing numbers, it’s safe to estimate the homeowner’s kWh consumption based on EIA’s state consumption data; homes in the U.S. range from 20 to 35 kWh daily consumption, or 600 to 1100 kWh monthly consumption on average. Having accurate information about both costs and system sizing will help the homeowner quickly decide if the project is worth pursuing.
Don’t Forget Financing
Financing products can make solar + storage an attractive option for homeowners. Leases and PPAs developed by SolarCity played a key role in the proliferation of rooftop solar this decade. For the short-term the best financing option available is GreenSky’s 20-year and 12-year loan; financing the solar + storage eliminates the need for a large upfront investment and makes monthly payments affordable. In California there’s the Self-Generation Incentive Program (SGIP) and combined with the ITC allows homeowners to save money on day one with solar + storage.
Let’s look at a California residential storage example utilizing the SGIP at Step 3, Federal ITC, and GreenSky loan. In the example we are assuming $4.55/w install cost for 8 kW, 48 kWh GS SLR 1000 (5,000 cycles @ 70% Depth-of-Discharge) with Schneider inverter/charger; this system would have a 10-year product warranty. The big assumptions are step 3 SGIP Rebate ($.40/w) and the monetization of the ITC with the SGIP credit in month 18. Homeowners can reamortize GreenSky’s loan and that significantly reduces the loan’s payments.
In this example, the homeowner’s monthly payments for the next 20 years would average $130 which should be lower than their current utility bills if they are in Southern California. However, if the homeowner is not taking advantage of the ITC and SGIP it would be difficult to make the project pencil economically for the homeowner, depending on their current utility bills and consumption of course. Recently CivicSolar hosted a webinar further explaining the SGIP program, co hosted with CalSEA, SimpliPhi and Geli, to explain how installers in CA can take advantage of this landmark solar + storage incentive program.
The savings would depend on the difference TOU price differential. Southern California Edison (SCE) has some of the highest spreads and the TOU-D-A has an average differential of $.24/kWH (winter spread is $.20/kWh and summer is $.32/kWh). In our example of a 48 kWh system @ 70% DOD, this system would save on average $8.08 a day, or $240 a month ($.24/kWh * 48 kWh * 70% DOD). After loan payments, the homeowner would save about $110 a month with this system, or $13,200 for 10 years. However, this is very conservative savings because it doesn’t factor in utility rates increasing (industry standard is about 2% adjusted electricity inflation).
However, this product has a 10-year warranty and it’s a 20-year loan. What happens if this system is cycled every day? After 10 years, the system would have cycled 3650 times, at which point you could switch it over to backup mode and cycle it another 10 years just as backup reserve. Keep in mind energy storage costs will continue to decline and in year 10, when it could come time to replace the energy storage system, replacement costs will be insignificant to the loan’s balance. If this system is used for battery back-up, it will not be necessary to replace the batteries and there will be no additional costs.
Energy storage sales can require a more sophisticated sales proposal. Energy Toolbase’s proposals, which are available to installers, elegantly show the effects of the proposed solar + storage system on a homeowner’s utility bills; however, it is necessary to obtain 15-minute interval data. These advanced energy storage systems are pretty much plug-and-play, so overall the design and installation process will be seamless as well. Solar + Storage permitting process in California is straightforward since AHJs and IOUs are familiar and comfortable with its applications. CivicSolar can help model your systems with Energy Toolbase, just reach out to your dedicated rep to get a full proposal built for your project.
Energy storage’s demand will only increase. Costs are decreasing rapidly, technology is improving, and utilities are making rate structures less economic for solar alone. However, independent contractors have sufficient resources to not have to add new sales team or installation crew to keep up with this demand and have a solar + storage offering.