Solar and storage falling prices could create new rules for the grid

Batteries have received so much attension for its price drop that it’s outstripping predictions. For instance, a 2014 report from Rocky Mountain Institute provided several battery price projections, including one projection from Bloomberg. Bloomberg projected batteries crossing the $300 per kilowatt-hour threshold in 2022. Three years later, Bloomberg shared that batteries reached that price point in 2016. In 2017, battery pack prices fell  another 30%.
 

Dropping costs impacts the grid 

Storage prices and forecasts are clues to utilities that customers can leverage batteries and solar energy for much control of their energy bills. Energy storage increases the value of rooftop solar installations. It gives resiliency to utility outages, avoiding new utility fees. The collective decision of California customers provide grid services. State residents and businesses  host almost  6 gigawatts of solar. Electric cars could contribute far more. If these cars were connected to the network to charge their batteries, “The 1.5 million electric cars California expects by 2025 would have a maximum energy demand of about 7,000 megawatts, more than double the capacity needed to substantially smooth the current afternoon rise in peak energy demand.”

Batteries can replace fossil fuel generators when it comes to stabilizing the grid. The  grid requires a delicate balancing act of supply and demand. One technological advantage of battery storage is that the batteries act quickly and almost instantaneously. Batteries supply surges of power to maintain the grid’s voltage and frequency steady cheaper than power plants and turbines operating on standby. 
 

Big shifts for everyone 

Big shifts in market rules and decreased costs for gas competitors have  reduced financial opportunity in the Mid-Atlantic grid yet batteries bring value to their customers and grid. In addition to the Mid-Atlantic and California, additional markets are likely to open. A directive from the Federal Energy Regulatory Commission requires grid operators to adopt rules of energy storage and permitting firms to combine smaller storage projects into large ones. If customer-sited distributed energy resources can obtain the financial compensation for their value, customers will probably take these opportunities to decrease their energy prices. 

Locally produced power from solar-plus-storage can undercut the traditional utility model  in a few ways. Increased value. If the cost of delivering electricity to the end user is 10 cents per kilowatt-hour, a typical utility’s prices are split between generation (about 3 cents), transmission (about 3 cents), and distribution (about 4 cents). Power made at the power plant is worth far less than energy delivered to the customer’s home or business.  Distributed energy resources deploys quicker (by months rather than years) while price decreases around the time. This is much more productive than  it takes to coordinate and finance a centralized power plant on its own.

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