Energy storage in the home has always been something of a holy grail for those who love renewable energy. Solar panels on your roof could power your home during the day, and any excess could be saved in a battery for later use. Heck, even an electric car could be powered with solar energy generated at home.
The realities of the market are that residential energy storage never really made much sense. Net metering meant solar customers could export solar electricity to the grid at the price they pay for electricity, meaning there was no need for energy storage, and the economics of a battery that cost thousands of dollars never really made sense in the past. But that may be changing as net metering rules are changed across the country and energy storage finds value for the grid.
Powerwall shown on the side of a home. Image source: Tesla.
The new rental Powerwall
Tesla (TSLA +3.93%) and Green Mountain Power are launching a program that will allow customers to get a Powerwall to back up power to their home for only $15 per month. That makes the price of a Powerwall -- which starts at $5,500 for the battery itself and costs around $7,000 for full installation -- much more affordable for consumers.
It may not seem logical that Green Mountain Power would allow a customer to rent a Powerwall with a 467-month, or 39-year, payback, but they can do it because the rental fee isn't the only value stream. Using utility data and Tesla's GridLogic, the utility and Tesla will be able to provide value to the grid by reducing peak demand or filling supply gaps when sun isn't shining or wind isn't blowing. And that will be cheaper than installing new power generation capacity.
This is the bleeding edge of energy storage
Long term, this could be a model that makes sense for residential energy storage, as long as utilities and regulators create a framework that will allow customers and solar or energy storage companies to generate value from batteries in the home. Tesla has been the most aggressive moving into this market so far, but SunPower (SPWR +0.00%) and Sunrun (RUN +5.87%) are exploring the space as well.
SunPower has been testing energy storage in homes for years and is installing 4 MWh of battery storage with Sunverge Energy in Con Edison's territory in New York. SunPower's management has said in the past that it will expand its energy storage offerings soon, giving customers the option to maximize value or self consumption.
Sunrun's energy storage offering called BrightBox is currently for backup power, but the company has talked about integrating more with utilities. Long term, I think the company will look at energy storage as a standard add-on to a solar lease, allowing the company to generate value from both energy production and smart energy storage programs.
The storage revolution is coming
As the cost of batteries for the home comes down, changes to net metering slowly makes exporting solar energy to the grid less economical, and as utilities find ways to generate value and compensate energy storage, I think the energy storage business will become a big part of our energy picture. Within a few years, it may be standard to include energy storage with solar systems. Tesla is moving that way and competitors like SunPower and Sunrun are looking to provide solar-plus-storage as well. Maybe this model Tesla is testing will provide a financial path forward for everyone.
