RESEARCH PROVIDED BY
July 2015
U.S. SOLAR-PLUS-STORAGE MARKET Drivers, Economics And Outlook
EES Reception
Ravi Manghani Senior Analyst, Energy Storage GTM Research
www.gtmresearch.com -2-
About Greentech Media
www.gtmresearch.com -3-
About GTM Research
GTM Research, a division of Greentech Media, is the leading source of intelligence on the transformation of the U.S. electricity sector. We focus in three key areas: solar power, energy storage, and grid edge technology. GTM Research's analysis also underpins Greentech Media's webinars and events.
REPORTS CONSULTING SUBSCRIPTIONS
www.gtmresearch.com
The State of U.S. Solar-Plus-Storage
-4-
1
Agenda
Non-Residential Segment 2
Utility-Scale Segment 3
Utility-Scale Segment 4
Outlook 5
The State of U.S. Solar-Plus-Storage
www.gtmresearch.com
Solar-Plus-Storage Deployments and Installation Share in the U.S.
-6-
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0
1
2
3
4
5
6
2011 2012 2013 2014
% of Solar Installations w
ith Storage (%) So
lar-P
lus-
Stor
age
Dep
loym
ents
(MW
)
Solar-Plus-Storage Deployments (MW) Solar-Plus-Storage as % of Solar Installations
Source: GTM Research
www.gtmresearch.com
Behind-the-Meter Incentive Programs and Pilots
-7-
California PUC added advanced energy storage as a qualified technology for the Self-Generation Incentive Program in 2009. 2015 base incentive level for energy storage is $1.46/W and is set to decrease by 10% annually. In 2014, New Jersey BPU issued
a competitive solicitation for a renewable electric storage incentive. The program budget was $3 million and awarded to 13 storage projects totaling 8.75 MW paired with renewable generation. 2015 round of funding will likely total $6 million. In winter of 2015, several bills
introduced to establish tax credits for grid-connected and off-grid storage systems; PUC ordered Hawaiian Electric to streamline interconnection requirements for customer-sited energy storage with solar. Stem has 1 MW pilot program underway.
APS 2 MW solar-plus-storage; $1 million rebates for pilot program, residential non-volumetric charges that could impact storage
U.S.: DOE $15 million funding behind-the-meter solar and storage integration
In 2014, Con Edison and NYSERDA initiated a Demand Management Program to achieve 125 MW of peak demand reduction in summer. Battery storage has a base incentive level of $2.10/W and thermal storage of $2.60/W.
Source: GTM Research
www.gtmresearch.com
Battery and System Costs Will Continue to Drop
-8-
$1,400
$1,000
$700 $600
$500
$2,000 $1,816
$1,632
$1,300
$1,100
$0
$500
$1,000
$1,500
$2,000
$2,500
2010 2011 2012 2013 2014
Cos
t ($/
kWh)
Battery Cost ($/kWh) Installed Commercial System Cost ($/kWh)
$429/kWh
$250kWh
Certain Vendor Who’s Name We Shall Not Speak
Source: GTM Research
www.gtmresearch.com -9-
Solar-Plus-Storage Benefits Vary in Duration and Frequency
Discharge Duration
Freq
uenc
y of
Use
DR Revenues DG Electricity Sales
Renewables Smoothing
Ancillary Services
Resiliency
Power Quality
Fuel Costs
Peak Demand Charges
Time-of-Use Shifting
Occ
asio
nal
Freq
uent
R
are
Long Medium Short Customer-site application Front-of-meter application Both sides of meter
Source: GTM Research
Non-Residential Segment
www.gtmresearch.com -11-
Primary Drivers of Non-Residential Adoption – TOU Shifting and Demand Reduction
Discharge Duration
Freq
uenc
y of
Use
Peak Demand Charges
Time-of-Use Shifting
Occ
asio
nal
Freq
uent
R
are
Long Medium Short Customer-site application Front-of-meter application Both sides of meter
Source: GTM Research
www.gtmresearch.com -12-
Lifetime Commercial Solar-Plus-Storage System Economics
-$6
-$4
-$2
$0
$2
$4
$6
$8
$10
Revenue/Savings Costs Total Value
Syst
em E
cono
mic
s fo
r Lar
ge O
ffice
- 45
0 kW
So
lar,
375
kW/7
50 k
Wh
Stor
age
(USD
Milli
ons)
Energy Savings Demand Charge Savings ITC Credit
State Storage Incentive System Cost (Excluding benefits) O&M Cost
Battery Replacement Cost Inverter Replacement Cost Interest Payment
Total Tax Payment Total System Value
$7.8 million
-$4.1 million
$3.6 million
Energy Savings $2.3 million Demand Charge Savings $4.5 million ~ Double that of Energy Savings
Source: GTM Research
Residential Segment
www.gtmresearch.com -14-
Primary Drivers of Residential Adoption - TOU Shifting
Discharge Duration
Freq
uenc
y of
Use
Time-of-Use Shifting
Occ
asio
nal
Freq
uent
R
are
Long Medium Short Customer-site application Front-of-meter application Both sides of meter
Source: GTM Research
www.gtmresearch.com -15-
Hawaiian Electric Case Study
Customer Profile
Customer Type Large Residential
Utility Hawaiian Electric (HECO)
Tariff Schedule TOU-R
Year of Installation 2018
Scenario 1 - Today Full Retail NEM Weighted Avg. Electricity Price: $0.38/kWh Optional Time-of-Use Pricing
Scenario 2 - Theoretical
PV Export Price Drops to $0.16/kWh
Source: GTM Research
www.gtmresearch.com -16-
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Export (kWh)
Export - Solar Only Export - Solar Plus Storage
Reduce Export
Avoid Peak Prices
$0
$50
$100
$150
$200
$250
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
1 -
Rev
enue
/Sav
ings
($
)
First Year Revenue/Savings on Excess Solar Generation
NEM Revenue (Current) FIT Revenue (Proposed) w/o Storage FIT Revenue (Proposed) w/ Storage Storage Savings (Proposed)
How Residential Energy Storage Actually Works
Source: GTM Research
www.gtmresearch.com -17-
Storage Can Improve Residential Solar Economics in Lower Export Tariff Scenario - Hawaiian Electric Company
21%
13% 13%
0%
5%
10%
15%
20%
25%
Solar - Current NEM Solar - Proposed Tariff Solar-Plus-Storage - Proposed Tariff
Unl
ever
ed In
tern
al R
ate
of R
etur
n (%
)
Source: GTM Research
Utility-Scale Segment
www.gtmresearch.com -19-
Primary Drivers of Utility-Scale Adoption – Renewable Smoothing and Electricity Sales (TOU)
Discharge Duration
Freq
uenc
y of
Use
DG Electricity Sales
Renewables Smoothing
Occ
asio
nal
Freq
uent
R
are
Long Medium Short Customer-site application Front-of-meter application Both sides of meter
Source: GTM Research
www.gtmresearch.com -20-
Utility-Scale Solar-Plus-Storage Explored in Five Flavors
Mandates and Utility
Procurements
Capacity Needs
PPAs or Auction
Mechanisms Technical
Requirements
Co-Location with Benefits
Anahola Solar Farm, Kauai, HI 6 MW on 12 MW PV
Three 4 MW Projects at PG&E-Owned Solar Sites
in CA (AB 2514 RFO)
TBD Salinas, Puerto Rico
3.6 MW on15.5 MW PV
Jacumba, San Diego, CA 10 MW with 20 MW PV
Source: GTM Research
Outlook
www.gtmresearch.com -22-
Annual U.S. Solar-Plus-Storage Market to Reach 769 MW by 2020
5 5 4 4 22 71 91
195
407
769
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
0
100
200
300
400
500
600
700
800
900
2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E
Percentage of Solar-Plus-Storage Installations /Total Solar Installations
Sola
r-Plu
s-St
orag
e D
eplo
ymen
ts (M
W)
Utility-Scale Deployments (MW) Total Deployments (MW) % of Behind-the-Meter Solar-Plus-Storage Installations % of Utility-Scale Solar-Plus-Storage Installations
Source: GTM Research
www.gtmresearch.com
Annual California Solar-Plus-Storage Market to Reach 422 MW by 2020
-23-
0 3 1 3 9 34
52
98
205
422
0%
2%
4%
6%
8%
10%
12%
0
50
100
150
200
250
300
350
400
450
500
2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E
Percentage of Solar-Plus-Storage Installations /Total Solar Installations
Sola
r-Plu
s-St
orag
e D
eplo
ymen
ts (M
W)
Behind-the-Meter Deployments (MW) Utility-Scale Deployments (MW) % of Behind-the-Meter Solar-Plus-Storage Installations % of Utility-Scale Solar-Plus-Storage Installations
Source: GTM Research
www.gtmresearch.com
Annual U.S. Solar-Plus-Storage Market to Cross $3.1 Billion by 2020
-24-
$346 $104 $59 $52
$246
$643 $554
$1,025
$1,817
$3,135
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E
Annu
al S
olar
-Plu
s-St
orag
e M
arke
t Siz
e (M
illion
$)
Behind-the-meter (Million $) Utility (Million $)
Source: GTM Research
RESEARCH PROVIDED BY
Thank You!
Ravi Manghani Senior Analyst, Energy Storage
GTM Research [email protected]