Most Americans buy residential batteries like the Tesla Powerwall or LG Chem as a backup system for peace of mind when the lights on the block suddenly go out. These batteries prevent you from fumbling around in the dark for a flashlight or banging up your shins on a bookcase. In addition, revenue streams are emerging in the U.S. that would allow residential backup batteries to pay for themselves over time. While the current utility market is different from state-to-state, residents of New England are already generating revenue by allowing utility companies to access their stored electricity during peak energy demand hours. Not only do these practices decrease energy costs for the backed up residents, but it also reduces the cost of electricity across the entire grid. How is this possible? Well, to understand how residential backup batteries generate revenue, first we need to grasp the concept of peak electricity demand.
Most of the electricity a residential American uses occurs at the end of the workday when the lights are flicked on, shoes are kicked off, and the TV is turned up. Maybe dinner bubbles on the electric stove or a load of laundry tumbles in the drier. The reality is, most Americans use the most electricity at about the same time, and this puts a huge strain on the grid, resulting in blackouts, blown transformers, and big electrical bills. Due to high demand, the cost of electricity goes up. A watershed government study, State of Charge, reviewed the cost of electricity in Massachusetts over 3 years. They found that “Over the last three years from 2013 – 2015 on average, the top 1 percent most expensive hours accounted for 8 percent ($680 million) of Massachusetts ratepayers’ annual spend on electricity. The top 10 percent of hours during these years, on average, accounted for 40 percent of annual electricity spend, over $3 billion.” The study then goes on to suggest that energy storage would be a “game-changer for the electrical sector” in both residential and commercial capacities.
The State of Charge study suggests that utility companies could tap into the energy in these batteries to help balance the grid during peak demand time frames. This action would make the existing grid more efficient, reducing carbon emissions and lowering the cost of electricity for everyone. At the same time, the residential batteries would still be able to provide the safety and “resiliency” the average consumer currently purchases them for. In Vermont, the utility company, Green Mountain Power, is providing discounts for residential battery systems, so that they can remotely access the battery to balance the grid during peak demand. “This technology benefits everyone,” Kristin Carlson, of Green Mountain Power, told This Old House. “Even the customers who don’t add batteries benefit from lower electricity costs, because we have lower peak demand.” Meanwhile, in California, the San Diego start-up Orison sells residential batteries that simply plug into wall outlets and stores cheap energy to be used instead of energy pulled from the grid during peak energy demand hours. These batteries are compact and functional enough to be installed in apartments and other locations residents don’t have the ability to renewable energy generators.
Sonnen, a German-based luxury residential battery company, was recently acquired by Shell, and Sonnen is bringing the lessons it learned in the German utility market to the United States. Germans are allowed to use their home batteries to bid into the national electricity grid, and Sonnen developed sonnenFlat to provide energy to residents while allowing the company to play the utility market. In the US, Sonnen has already developed a “virtual power plant” in the form of an all-electric complex in Utah. The Soleil Lofts “incorporate over 600 individual Sonnen ecoLinx batteries, totaling 12.6 megawatt-hours of solar energy storage that is managed by Rocky Mountain Power, the local utility, to provide emergency back-up power, daily management of peak energy use and demand response for the overall management of the electric grid” Sonnen shared in a press release.
Sonnen’s newest battery, the sonnenCore, is a cost-effective residential battery that is designed to participate in the grid. “We intend for the battery to be installed indoors; we intend this battery to be used for grid services. It’s designed to be cycled every day to the benefit of the grid,” Adam Gentner, VP of premium products and projects for Sonnen, told Greentech Media. “With the ability to begin to extract value from the battery, we’re going to get closer to that [return on investment].” As the utility industry becomes more focused on efficiency and renewable energy, these residential batteries might be the secret to turning entire neighborhoods in the US into innovative power plants, and the days of eyebrow-raising electric bills could come to an end.