The Coming Home Energy Management (R)Evolution
Every holiday season, some friend or family member will invariably ask some version of this question: “What’s new and exciting in solar?” For several years now, my stock response is that the most exciting development in solar is the development of advanced battery technologies.
For anyone who has been in the industry for more than a minute, this is somewhat ironic. Throughout the 2000s, solar professionals spent an inordinate amount of time touting the benefits of batteryless, grid-direct solar power systems. Now, after we collectively spent more than a decade explaining why batteries are neither required nor practical, what is old is suddenly new again—with good reason. While advancements in battery technologies have much to do with the current resurgence in solar-plus-storage systems, this is not the whole story.
Here, I consider some other factors working in concert to drive consumer interest in and demand for home energy storage systems. Most notably, changes in the bulk power system and its operating parameters have pushed homeowners to consider the resiliency benefits of residential solar-plus-storage solutions. At the same time, electrical hardware and software developments are pulling the residential energy storage system (ESS) market forward by enabling intelligent home energy management solutions that solve important problems for installers and customers alike.
Greening the Grid to Combat the Extreme Weather Threatening the Grid
The bulk power distribution system is undergoing a quiet revolution. I say quiet because the average ratepayer likely has no idea that wind and solar currently account for more than 70% of new power generating capacity in the US. The general public is likely also unaware that the largest US market for solar is now Texas—a state that has never offered meaningful solar incentives and, last I checked, is not run by liberals but rather in service to a deregulated market that favors the lowest energy cost.
Grid parity for renewables is not a thing of some far-distant future but has in fact already arrived. The blind spot in public perception speaks to the fact that the average consumer is generally oblivious to how power is generated, transmitted, distributed and consumed. As long as lights work at the flip of a switch, most homeowners give little thought to how power is generated and delivered.
Unfortunately, power interruptions in the US are increasing both in frequency and duration. According to the latest data published by the US Energy Information Administration (EIA), 2020 was the worst year on record for power outages in the US, as the average electric customer experienced “just over eight hours of power interruptions.”
Due to an extremely disruptive Atlantic storm season, the average customer in Louisiana spent more than 60 hours without electricity in 2020. In 2021, our household—along with some 4.5 million other customers in Texas—did its part to drive up the national outage average, as we shivered through three days without electricity during Texas’ worst winter storm in a century. Meanwhile in California, record fire seasons have led to an increase in utility-initiated Public Safety Power Shutoffs.
Common sense and science point clearly to the culprit behind increasing grid outages. Historically powered by burning fossil fuels, our aging grid infrastructure is now bedeviled by the floods, heatwaves, wildfires, droughts and storms that climate models have long predicted would accompany increased levels of atmospheric carbon dioxide and associated rising temperatures. Since it is no longer possible to reverse these ill-effects in the short term, collectively we now require resilient systems that are capable of withstanding service interruptions.
Resilient Power Systems Start at Home?
In the wake of the Texas Blackout, interest in solar and solar-plus-storage soared. This trend is nothing new to companies serving markets where power outages are frequent or long-lived. If your company sells solar-plus-storage systems or generators, disasters are good for business. If your company sells both, as is the case with Generac, its market value may have quadrupled since January 2020.
While generator companies have been buying ESS technologies for several years—see Aggreko, Briggs & Stratton, Generac and Wärtsilä—these strategic acquisitions have not changed the fundamental dynamics in the residential backup power market. Specifically, portable or whole-home generators continue to dominate the residential backup power market writ large.
While fossil fuel-powered generators exacerbate the reliability problems that customers are trying to solve, generators remain a relatively lower-cost way to create a resilient nanogrid as compared to solar-plus-storage solutions. This is especially true if a client’s primary goal is whole-house backup. The MSRP for a 10kW Generac home backup generator with a transfer switch less than $3,700. By comparison, the hardware for a functionally equivalent solar-plus-storage solution could easily run $20,000 or more.
This upfront cost delta is an insurmountable hurdle for the average homeowner. While many potential customers want whole-home backup, the fact remains that very few can afford to backup all of their loads with a solar-plus-storage system. As a workaround, many installation contractors size solar generator systems to fit a budget, in some cases with the understanding that the customer will actively manage the home’s loads during an outage. The problem with this approach is that most homeowners lack a sophisticated understanding of their home’s energy and power requirements.
No matter how well your sales and operations personnel explain the limitations of a new backup power system, there is a chance that the client will overload the inverter or rapidly discharge the battery in a real-life backup power situation. When this happens during a grid failure, customers do not blame themselves or their own behavior—they blame the backup power system or the installer.
Splitting residential loads off into a dedicated backup load panel is one way to limit the power and energy demand on the inverter and battery. The problem with this approach is that it is highly cost-inefficient, as installing a new panelboard and rewiring circuits requires a significant investment in time and materials. In many cases, customers are unable to identify every circuit that they want to backup on the first try, in which case multiple site visits may be required for project completion.
Smart Home Technologies will Facilitate Resilient Nanogrids
Fortunately, there is—or will soon be—a better way to build resilient nanogrids at home. One of the most important keys for scaling the residential solar-plus-storage market has nothing to do with advancements in solar or stationary energy storage technologies. From a strictly technical perspective, solar and advanced batteries are proven technologies capable of being mass-produced and deployed at scale. The problem that is holding back the market is the customer—or more specifically, the customer’s uncontrolled loads.
Building more resilient homes capable of weathering severe weather events and grid outages does not necessarily require backup power systems capable of supporting a whole house. Looking back on our experience during the Texas blackout, a modest amount of energy storage capacity would have made a meaningful difference in terms of our quality of life.
Our connectivity would have effectively been uninterrupted if we had been able to power a modem and router and charge our phones and laptops. Our convenience power needs would have been met if we had been able to energize a few receptacle and lighting circuits. We would have had hot water to combat the bone-chilling cold if we had simply been able to supply voltage to a gas-fired on-demand water heater controller, which is an entirely inconsequential load.
Powering life-changing loads during an emergency does not necessarily require a high-powered inverter or a large-capacity battery. However, it does require a home energy system capable of managing loads intelligently. With these enabling technologies, solar-plus-storage contractors can effectively sell solutions that fit the customer’s budget, first and foremost. Once installed and commissioned, artificial intelligence and machine learning will granularly manage the customer’s loads based on the available resource.
The hardware and software that will support home energy management are rapidly maturing. On the hardware side of the equation are legacy brands such as Eaton, which has developed a line of wifi-enabled smart breakers, and smart panel startups such as SPAN. On the software side of the equation are companies such as Energy Toolbase, with its suite of ESS monitoring and control products, as well as Lumin and naak, with their home-as-a-grid smart energy system. Spanning both worlds are inverter companies such as Enphase, Generac, Sol-Ark and SolarEdge, some of which are developing holistic roof-to-interconnection solar-plus-storage solutions.
While a wifi breaker or relay may not seem all that exciting in and of itself, it is a gamechanger when coupled with an intelligent controller capable of learning site loads and managing on-site energy resources. The ability to manage a home’s loads during backup power operation will facilitate the wide-scale adoption of solar-plus-storage systems, allowing renewable-powered systems to increasingly displace fossil-fuel generators. From where I sit this holiday season, this smart home ecosystem for distributed energy independence and resilience constitutes perhaps the most promising development in the solar industry today.