Note: This blog is the third in a four-part series examining the evolution of U.S. solar companies.
In this blog, part of a series highlighting key trends among U.S. solar PV companies that offer a glimpse of what a post-30% Investment Tax Credit (ITC) world will look like, I will discuss storage and utilities.
Energy storage, primarily in the form of batteries, has been on the horizon for a number of years, but U.S. solar companies are now moving forward with strategic partnerships and storage offerings in certain market segments.
SunEdison will use more than 1,000 flow batteries from Imergy Power Systems for its solar microgrid projects in India. In March, The company announced it was acquiring the project development team, four existing projects, and a reported 100 MW of projects in the pipeline of Solar Grid Storage. Solar Grid Storage is a Pennsylvania-based startup that packages lithium-ion batteries and inverters to provide demand reduction, backup services, peak shaving, and grid stabilization services such as frequency regulation. Similarly, SunPower and Sunverge announced an exclusive agreement to provide solar and storage solutions available in the residential and utility segments in the United States and Australia. SolarCity and Tesla have also announced a strategic energy storage partnership for residential, commercial, and government customers in the United States and in remote communities around the world. It is expected that there will be many more announcements to come.
Due to increasing competition and the expiration of the U.S. federal ITC at the end of 2016, U.S. solar companies will need to continue to evolve their offerings. SunEdison, SolarCity, First Solar, SunPower, and others have all demonstrated a commitment to continuous innovation of their technology and business models, which will result in sustained growth for these and other U.S. solar companies in the future.
One of the most critical issues in the U.S. market today, and after the expiration of the ITC, is how net metering policies will be adjusted within each utility service territory. Here, there is no one-size fits all answer. It will be a fight that will continue to play out differently in each region. Thus far, Arizona has been ground zero for net metering policy fights, with neighboring New Mexico following suit, and California expected to release an update soon. Utilities are increasingly proposing fixed fees on solar PV customers, ranging from $5 to $50 per month, significantly affecting the value proposition to residential solar PV customers. In addition to this, many utilities are also considering providing distributed solar as a service themselves. In some cases, such as APS, they are doing both at the same time.
Solar Electric Power Association put together a great map of where utilities are offering solar PV programs of their own. The map illustrates the variety or business models being employed–ranging from pure utility ownership, to financing, to energy purchases, and other customer programs. Clearly, the concern among U.S. solar PV companies is that monopolies have an unfair advantage due to their status, but utilities also have a point that they enable solar PV to be utilized in such great volume because of the stabilizing and backup role they will play now and increasingly in the future. That is why more than a dozen value-of-solar analyses are being conducted across the country and U.S. solar companies will need to continue to adapt.
For more information on the most recent regulatory updates affecting distributed solar PV, check out North Carolina State University’s recent report on the topic.