How Energy Storage Can Make Decentralized Electricity Work in America

Posted on May 14th, 2014 by


The Renewable Energy Era will rank alongside the Information Age and the Industrial Revolution as one of the great milestones in human history.  Like those before, this latest revolution will proceed one battle at a time.

Some may wonder, for instance, whether conflict is inevitable between U.S. utilities and rooftop solar advocates. Both face huge challenges they perceive as coming from the other. One example is the rising debate over the policy of “net metering,” especially where solar is widespread, but even in states with less than one percent solar penetration. Utilities argue that rising solar adoption will cause technical problems to the grid and unfairly shift infrastructure costs to non-solar ratepayers. Solar stakeholders counter that the true societal benefits of solar energy far outweigh the costs for the entire ratepayer group by contributing to cleaner air, better public health, greater local employment, higher tax revenues, and other benefits traditionally excluded from the analysis.

While the U.S. seems mired in debate over distributed generation, mature solar markets like Germany and Japan are solving grid-integration issues and overcoming limitations associated with renewable energy. These countries are investing to commercialize energy storage solutions. Global companies like Kyocera, BMW, Bosch and Panasonic are also focusing R&D on energy storage technologies, and the list of new companies entering the storage space keeps growing. It’s only a matter of time before a cost-effective solar energy storage technology is deployed ubiquitously in our homes and neighborhoods.

It should therefore be no surprise that Japan and Germany — which spearheaded the rapid reduction in solar PV prices, beginning in the 1990s — are now making energy storage viable for residential, commercial and large-scale use. It is actually ironic to see two nations that welcome government participation in the marketplace working so hard to decentralize their electricity supply by encouraging private homeowners and business owners to participate in the market. In terms of cost and development, energy storage technology seems to be where solar PV was about five years ago.

Incentive programs keep emerging to mitigate today’s relatively high cost of storage. In May 2013, Germany began subsidizing up to 30% of the cost of storage batteries to accompany PV generation systems. Japan also recently began its first subsidy program for solar storage using lithium-ion batteries. Japan’s program covers two-thirds of the cost of qualifying systems, up to $10,000 for individuals and $1 million for commercial users, to meet peak power demand by storing daytime-generated solar energy for night-time use. These programs in two of the world’s largest markets will help reduce the price of lithium-ion batteries, and subsequently enable wider deployment of this promising technology.

Sound familiar?

Japan began its PV incentive program in 1994; Germany ramped up solar capacity in 2000 with its innovative feed-in-tariff (FiT) program. The result has been a very competitive market and huge price reductions for installed PV. Energy storage could follow the same path, with Japan and Germany both working in similar ways to reduce costs. In addition, a growing electric vehicle market promises to help make storage-coupled PV cost-effective in record time.

While Europe and Asia support renewable policies and storage, we cannot ignore that utilities and policymakers there are likewise challenged to find political and economic solutions acceptable to utilities, consumers, and the renewables industry. Perhaps we should study their solutions, as California did in the early years of PV adoption. California adapted the Japanese model of upfront rebates for small PV projects, and the German FiT model of paying solar customers based on their actual power production (in kWh) for larger systems. Variations of these two efforts led to America’s most successful PV incentive program to date: the California Solar Initiative.

We now need to look at policies and business models that will allow utilities and the renewables industry to thrive under a new set of assumptions — decentralized electricity using energy-storage technology.

Make no mistake — energy storage is a global reality today, and is only getting cheaper, both on the customer side of the meter and in large-scale generation. We can ignore it and hope it goes away, or embrace it as an opportunity to reduce our carbon footprint, encourage innovation and allow more local investment in the growing solar market. Doing this will require utilities, regulatory commissions and elected officials to work together with the renewables industry. We can expand clean energy locally by accepting utility companies as partners in the technology and in the market alike.  We can make this work. The bottom line is this: We have challenges, but our common goals are greater. We can find a solution for every challenge if we look honestly for a win-win outcome.

The opinions expressed in this article are solely those of the author, Cecilia Aguillon. Cecilia is director of market development and government policy for Kyocera Solar, Inc., recognized as a world-leading supplier of solar electric energy products since 1975.

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One Person has left comments on this post

» mf said: { May 15, 2014 - 10:05:38 }

Cecilia should do some extra reading on the disaster that German energy policies have become. According to the Germans, not according to the detractors. It is an example of how not to introduce green energy.

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