Energy Storage White Paper Document

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Energy Storage White Paper Document www.eaton.com Sustainability without sacrificing lifestyle: The rise of residential energy storage Boosting consumption of self-generated electricity, providing peace of mind in a grid event, increased use of renewable energy, and reduced grid dependency are just some of the benefits associated with home energy storage systems. This whitepaper explores the drivers, trends, consumer expectations and market challenges, influencing the residential energy storage market. Eaton – Home Energy Storage 2 Table of content Introduction 4 I. Drivers for energy storage 6 II. Ingredients for a residential energy storage market 10 III. Benefits of solar-plus-storage 16 IV. Home energy storage as a grid resource – a future benefit 18 V. Sizing solar-plus-storage for optimizing self-consumption 20 VI. Operational and performance expectations of home energy storage systems 25 VII. Conclusion 31 Eaton – Home Energy Storage 3 Introduction How do we as consumers put a value on something – how do we rationalise that our use or operation of an acquired asset or object is commensurate with our initial investment? Such a question is best left to the experts that study the psychology of consumer behaviour. Nevertheless, it is often asked in relation to residential energy storage systems. These appliances, consisting of batteries, inverter and software controls, which are designed to store surplus solar electricity, have attracted more attention as subsidies for solar photovoltaic (PV) systems continue to decrease. The value of solar PV can be simply appreciated. A good quality, well maintained solar PV system should operate for 20 years. When feed-in tariff (FiT) rates were higher, payback in year eight or nine confirmed a worthwhile investment. When trying to place a value on energy storage systems, it is hard to get away from the simplistic, black and white economics bequeathed by the subsidy-enabled solar PV market. Price reduction is a powerful force when it comes to unlocking new demand and increasing the customer base, and energy storage is not immune to this dynamic. Everyday assets and objects within the budgets of middle-income earners all had their early adopters once. Eaton – Home Energy Storage 4 Energy storage has arrived at the right time. Ethical and sustainable considerations influence the purchasing decisions of many more consumers than was the case a decade ago. Additionally, consumers today are more technology-savvy than ever before. Early adopters of home energy storage systems naturally expect these technology-driven products to make a comfortable and secure, yet sustainable, lifestyle entirely possible. Today, a solar-plus-storage system is likely to be the third largest investment by a household, following a house purchase (mortgage) and a car. Arguably it is crucial these systems are sold and installed by quali- fied and certified installers, to ensure the product meets the household’s energy requirements and is properly and safely installed and commissioned. In 2016 solar PV installed capacity exceeded 100 GW in Europe, supplying 4% of the 28 EU states’ electricity demand = annual power consumption of The Netherlands Eaton – Home Energy Storage 5 I. Drivers for energy storage Eaton – Home Energy Storage 6 I. Drivers for energy storage The modern energy system is in a state of flux. Regulations and policies in place to curb the effects of climate change have led to efforts to reduce greenhouse gas emissions from the biggest emitting sectors, including energy and transportation. In Europe member states have been buil- ding renewable energy capacity to meet the EU Energy & Climate package directive - 20% - 20% (‘20/20/20 directive’), which includes 20% renewables in the region’s energy mix by 2020. Renweables in energy mix energy in Renweables Energy consumption Green house gas levels +20% Picture 1 The 20-20-20 EU policy by 2020 Eaton – Home Energy Storage 7 Incorporating distributed renewable energy sources challenges the traditional electricity system model, which is based on centralised generation. Electricity is generated by large thermal power stations and is transported to the end user, via the transmission and distribution network. As penetration of irregular, intermittent solar and wind generation increases in grids, voltage issues start to occur and network stability is affected. Installing more wires to accommodate excess renewable energy generation is costly. Curtailment, the practice of switching off renewable energy generators so they cannot send power to the grid, solves the immediate issue but results in wastage of renewable electricity. Electrochemical energy storage has the potential to address many of these problems and challenges. Batteries for stationary storage applications are able to store energy in capacities from a few kilowatt hours (kWh) to many megawatt hours (MWh), which can be dispatched within seconds, or dispensed over several hours. Several battery chemistries are suited to these tasks, but due to significant investments in manufacturing lithium-ion cells to meet electric vehicle demand, energy storage using lithium-ion batteries is becoming affordable for residential energy consumers. Eaton – Home Energy Storage 8 Picture 2 PV production vs. End user consumption. Residential, or home, energy storage systems are compatible with solar PV because they store the majority of the panels’ output, which occurs through the middle of the day, for the household’s demand during evenings and early mornings. Eaton – Home Energy Storage 9 II. Ingredients for a residential energy storage market Eaton – Home Energy Storage 10 II. Ingredients for a residential energy storage market A residential solar PV market In most instances a regional solar PV market Feed-in tariffs (FiTs) introduced to encourage gets going through installing ground-mounted residential rooftop demand compensate the solar PV farms, because it is a relatively easy PV system owner with a fixed price for every way to develop and build significant amounts kWh unit of electricity exported to the grid of renewable energy capacity. that is above the retail electricity price, provi- ding a reasonable payback for investors. However, those governments committed to FiT payments are reducing as these integrating more renewables into the energy compensation schemes have largely done mix in the long-term have also nurtured their their job of encouraging PV demand, which rooftop solar PV potential, on residential, as has in turn led to the technology becoming well as commercial and industrial, roof spa- more affordable. In many markets installing ce. only solar PV and exporting output to the grid makes less economic sense. Eaton – Home Energy Storage 11 Picture 3 Average charging and discharging times of energy storage batteries with PV installation. Countries with a significant base of installed residential solar PV are suitable markets for energy storage. For both existing PV system owners that have recouped their investment through FiT repayments and new solar PV customers, it makes economic sense to couple PV and energy storage to optimise the amount of solar generated electricity that can be consumed by the household. The established installer industry serving the residential solar PV market, is well-placed to promote, sell and install energy storage systems. Eaton – Home Energy Storage 12 Subsidies help, but are not critical Of any EU state Germany has gone furthest to facilitate a residential solar-plus-storage market, by reducing FiT rates to curb investments in solar PV systems alone, while providing grants and interest free loans to help homeowners purchase energy storage systems for retrofitting with existing solar PV, or as part of a new solar PV installation. German consumers also pay some of the highest retail electricity prices in Europe, which acts as an incentive in itself to maximise energy self-sufficiency. High bills and compensation for PV-plus-energy storage investments has resulted in one of the largest residential energy storage markets in the world. Germany accounts for approximately 75 % of Europe’s residential energy storage demand, with the UK, Italy and France accounting for most of the remaining 25 %. GERMANY is one of the key markets for residential energy storage with 100 MW installed > 65,000 individual systems Eaton – Home Energy Storage 13 A combination of a mature residential solar market, with lots of retrofit opportunity, plenty of sunshine, and tax reductions applied to solar PV and solar-plus-storage sys- tems over the first 10 years of operation, means Italy is emerging as an attractive mar- ket for residential energy storage. Legend Cases 0.059 to 0.111 8 0.111 to 0.133 8 0.133 to 0.163 8 0.163 to 0.218 8 0.218 to 0.309 6 Data not available 1 Data from 2016 Picture 4 Electricity prices by type of user. (EUR per kWh) This indicator presents electricity prices charged to final consumers Eaton – Home Energy Storage 14 Since 2009 EU retail electricity prices for domestic consumers have risen by an average of €0.16/kWh to Rising energy bills €0.21/kWh in 2016 On average retail electricity prices are expected to continue to increase for many European households. Since 2008, across Europe prices, on average, have risen by a third, according to data from the European Commission. During this time the market for distributed clean energy generation has grown and with it de- mand for tools and technologies that provide visibility to energy usage and habits and provide consumers with greater control over energy consumption. average solar PV module prices In 2017 Falling technology costs are as low as €0.30/watt Both solar PV modules and lithium-ion batteries are subject In solar PV module prices to what economists call the ‘experience curve’. 2012 were around €0.40/watt The high-tech industries that make these goods get better at making them, the more they produce, by enhancements to In lithium-ion (li-ion) batteries manufacturing techniques and processes and development of 1990 better performing raw materials.
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