The Evolution of Residential Energy Storage

In the world of residential energy storage, what’s old is new again.

When solar energy for residential properties first became popular toward the end of the 20th century, an overwhelming majority of systems ran on batteries. 

But in the early 2000s, governmental policies including net metering, tax credits, and other local incentives de-emphasized the importance of batteries during solar installs. 

Now the industry is coming back the other way – with policies like net metering on their way out and the importance of grid independence on the rise, people want longer-lasting batteries with both environmental and economic advantages. 

“It’s just the cyclical nature of things,” said John Cromer, Director of Product at Fortress Power. 

“We’ve gone from every system with batteries, to no or very few systems with batteries. Now, we’re going back to everyone having batteries.” 

The Early Days of Residential Energy Storage

In the late 20
th century, people using solar energy in their homes primarily had one of two motivations: 

  • Their lack of access to the electric grid demanded alternate means of generating power 
  • Distance from the grid made it cheaper to generate power using solar and batteries 

In these cases, giant, lead acid battery banks allowed the customer to go off grid. It suited the purposes of the few consumers, but batteries needed frequent replacement because lead acid batteries are not designed to be discharged below half of their total capacity. 

When this happened, it greatly reduced the battery’s lifespan. Surely, there were better solutions, but the questions wouldn’t be answered for some time due to policy changes. 

The Net Metering Era 

In the mid-00s, two things happened to change the tide against battery storage:

  • The government started offering a solar investment tax credit (ITC)
  • More importantly, the advent of net metering

The solar ITC’s impact on the industry as a whole can’t be overstated, as the Solar Energy Industries Association reports growth by a factor of 200 times since its 2006 installation. 

Net metering, on the other hand, is a policy that allows customers who generate their own power from solar to sell the unused electricity back to the power company or grid.  Net metering is a billing system crediting these consumers for the energy they add back to the grid. 

A solar system can generate more energy during daylight hours than a home uses. With net metering, that home’s meter will run backwards, providing a ‘credit’ against the times when electricity usage exceeds the system’s production. This results in very low or sometimes almost non-existent electric bills. 

But the hidden cost? A battery-less system operating for only one-third of the day must sell back more than two-thirds of its power to the grid at near-retail pricing in order to fully offset the electric bill. 

Net metering, the policy which commonly provides that near retail value for electricity sold back to the grid, changed the direction of the solar industry permanently – and for the better.  

But with customers now focused on generating energy for profit or at the very least, bill reduction, the emphasis on battery backup disappeared.  

Now that’s all changing due to advances in technology, changes in policy, and a new prioritization of solar users’ main objectives.  

“Net-metering is one of the best policies we have to promote the transition to a clean electric grid,” Cromer says. “But net-metering doesn’t fit into utility business models, which turns renewable ownership into a game of political football.  

“Other options are now in play, such as the recent expansion of the investment tax credit to apply to grid-charged batteries. There’s also the increasing availability of time-of-use rates, which maintain system economics, delivers backup power to the customer, and avoids the controversy of net metering all together.” 

The Present and Future of Residential Energy Storage

Over time, arguments against net metering from utility companies took their toll such that the policy is rapidly disappearing in many U.S. states. Time-of-day rate structures – in other words, peak hours – figure to continually increase in popularity due to the prevalence of electric vehicles. 

Increased demand upon the electrical grid’s capacity led to rolling blackouts as recently as last summer in California. Understandably, customers with outdated solar energy systems were disappointed when they found themselves unable to power their homes for the duration of such outages. 

Solar batteries protect the home during these times. In some markets, the electric grid is remarkably stable but not every region is so fortunate. Combine aging infrastructure, unreasonable demands on the grid, and difficulty of access and you’re left with customers frustrated by the incompleteness of their solar array.  

The period of time from the mid-00s until now – what we’re calling the net metering era – saw people in the nation’s most populous state (California) adjusting from a reliable grid structure to today, when they must secure their homes against the reality of regular power outages. Residents also are trying to lower an ever-increasing electric bill.  

At the same time, markedly stringent regulations for certifications have rendered generators all but obsolete in the Golden State – but it’s just as well. Time-of-use rate structures serve to reduce the economic viability of generators as well. 

“Policy is finally moving beyond net-metering, and there is a happy path where both the utility and the customer benefit,” explained Cromer. “But the industry needs to rethink its approach to system design, de-emphasizing the size of the solar array and prioritizing the size of the battery bank.  

“This is actually great news for installers, because there is once again low-hanging fruit to pick. Installers can see a benefit selling small solar arrays or even battery-only systems where rooftop solar is not an option. This is a larger market than traditional net-metering,” Cromer explains. 

The writing is on the wall – very soon, no solar energy system will be complete without a battery. 

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