Solar Plus Storage: What It Is And How To Sell It
Updated: Oct 18, 2022
Solar energy and battery storage go together like peanut butter and jelly or wine and cheese. Battery storage technology enables the solar power industry to grow more quickly and provides an increasingly vital role in the clean energy mix. Offering storage options to your solar customers helps you to grow your business and increase your revenue.
What Is Solar Energy Storage?
Solar energy is an intermittent power supply because the sun doesn’t shine 24/7. Between cloudy weather and nighttime hours, the sun doesn’t shine quite a bit of the time. Yet, our homes and businesses still rely on electricity to run. Renewable energy storage capabilities allow solar photovoltaic systems to store excess power.
By design, most solar power systems without batteries do not supply power when the grid is down. Having a solar battery bank allows the solar system to operate independently of the power grid. The two most widespread lithium batteries used with solar energy systems are lithium nickel manganese cobalt oxide (NMC) and lithium iron phosphate (LFP). Now, numerous manufacturers offer advanced lithium solar batteries, including Tesla, LG Chem, SimpliPhi, Blue Planet and Sonnen. Lead-acid batteries are decreasing in popularity in the solar industry because they require more maintenance and have a shorter lifespan.
Types Of Energy Storage
There are two main types of solar power systems with battery storage, depending on their setup with the utility company.
Grid-Tied Solar Systems
These solar power systems with battery banks can either feed surplus power to the grid or charge the batteries. Thus, at night, these customers can either get power from the batteries or the electric grid. For this reason, such systems are referred to as hybrid solar systems. Most residential and commercial solar systems with storage are grid-tied systems.
Off-Grid PV Systems
Off-grid PV systems are not connected to the electric grid. Therefore, they need adequate energy production and storage capabilities to meet the power needs of the home or business or else a backup generator. Typically, these help power rural homes or businesses where it’s too costly to extend the power grid.
Why Is Solar Battery Storage Growing In Popularity?
As lithium-ion battery technology advances and prices fall, solar plus storage is increasingly appealing to a broader audience. What might have been unaffordable to many households just 5 or 10 years ago is now feasible. As battery capabilities grow, they are becoming more appealing than a backup generator in many markets. In states without net metering laws, batteries enable homeowners to store energy instead of receiving credits on their electric bills.
Also, some recent high-profile power outages have concerned home and business owners about the power grid’s reliability. On the West Coast, wildfires have led to blackouts due to public safety power shutoffs. The 2021 Texas power crisis left 4.5 million households without power at its peak and many without safe drinking water. Even the COVID-19 pandemic has prompted some to become more concerned with self-sufficiency and resiliency. Understanding your customers’ concerns and needs makes it easier to design and sell a system that will pique their interest.
Benefits Of Storage
There are several ways your customers will benefit from adding energy storage capabilities to their solar panel systems. Keep in mind that some benefits vary by location due to programs offered by the local utility company and state incentives.
Energy Security
Having batteries enables the home or business to be resilient in the face of power outages and even prevent costly property damage in some cases. During blackouts, these customers can rely on batteries to power critical power loads. For businesses, batteries enable them to reduce the downtime and productivity losses from blackouts. As an installer, it’s helpful to give customers guidance on selecting those critical loads to maximize their value from the solar electric systems while staying within the design confines of the system.
The Power To Choose
Some utility companies offer time-of-use rates depending on the time of day, day of the week and season. These customers then pay a higher rate to consume power during times of peak demand. This means that a kilowatt-hour of energy doesn’t cost the same amount throughout the day or the year. In utility districts with time-of-use pricing, your customers can pull power from the batteries during times when electricity rates are highest, resulting in utility savings.
Energy Storage In Areas Without Net Metering
In states like Hawaii, without net metering programs, batteries allow solar system owners to store excess power because they will not get compensated by the utility company at the retail rate for surplus electricity. Having a solar battery enables these system owners to save energy for later use.
Incentives And Programs
It’s relatively costly to add energy storage capabilities to a solar array. Thankfully, government incentives can reduce the total system cost, boosting the project’s return on investment. In many cases, these programs make a project financially viable when it might not have been otherwise.
Self-Generation Incentive Program (SGIP)
The new California Public Utility Commission (CPUC) program is available for both residential and non-residential projects and is intended to boost emergency preparedness with backup power. With rebates ranging between $850 and $1,000 a kilowatt-hour, the rebate program can dramatically reduce the cost of installing solar power storage. The SGIP has two categories to determine the dollar value of the eligible rebate. In some cases, the CPUC rebate covers nearly 100% of the cost of the battery bank.
When installing battery storage systems in California, it’s critical to determine if your potential customer qualifies for this incentive. Meeting the program requirements can significantly boost the chance of making a sale.
Storage Incentive Tax Credit/Federal Investment Tax Credit
The federal solar tax credit, also known as the investment tax credit (ITC), applies to solar systems with batteries. The tax credit is a percentage of the total system cost. Thus, solar systems with batteries can qualify for a larger tax credit because the additional cost of the batteries increases the total system cost. The tax credit is currently in effect at 30% through the end of 2032 and then will decrease to 26% for systems installed in 2033.
State-Level Incentive Programs
Some states, especially in the Northeast, have programs that reduce the net cost of installing battery storage systems. In some cases, installers must be approved contractors for their customers to qualify for an incentive.
The Maryland Energy Storage Income Tax Credit enables residential and commercial taxpayers to benefit from installing energy storage capacity with an income tax credit.
In New York, commercial customers may qualify for funding from the New York State Energy and Research and Development Authority (NYSERDA).
The Solar Massachusetts Renewable Target (SMART) Program has an adder for solar systems with battery storage. Eligible residential customers can earn payments of hundreds of dollars a year or thousands of dollars over 10 years. Commercial customers can earn payments for 20 years. The value of the incentive depends on the size of the solar system and the battery’s energy capacity.
Solar Battery Warranties
Many battery manufacturers offer product warranties. An end-of-warranty capacity rating guarantees that the battery bank will hold a certain percentage of the original capacity for the warranty period. A throughput warranty relates to the total energy the battery is expected to deliver throughout its life and is measured in megawatt-hours (MWh) for residential projects. The throughput warranty is intact until the battery has provided that amount of electricity.
So, Is Solar Battery Storage Worth It?
Lower equipment costs and increased storage capabilities have made solar batteries more appealing than ever before and one of the fastest-growing segments in the solar PV industry. When available, time-of-use pricing from the utility and government incentives boost the returns customers will enjoy. As the solar battery storage market expands, solar installers have an exceptional opportunity to upsell customers by adding storage.
To learn more about reducing soft costs and streamlining your solar design and permitting with GreenLancer, schedule a consultation today.