With extreme weather set to stress the grid, solar and energy storage companies may see a boost

Published Sat, Jun 26 20218:57 AM EDT

The Pacific Northwest is bracing for a heatwave that's expected to shatter record-high temperatures, potentially stressing an electrical grid that's already under intense pressure. This month, grid operators from California to Texas have asked consumers to curb usage just when it's needed most, and with rolling blackouts and total outages becoming more frequent, some are taking matters into their own hands by way of residential energy storage. Back-up generators were once the only option. Now, solar companies offer batteries paired with a residential solar system, and consumers turning to them as a way to ensure power resiliency could be a big opportunity ahead. "You can definitely see the inflection that's being caused when consumers are exposed to these types of scenarios — these situations that put their home at risk of losing power or where they have already lost power," said Michael Grasso, executive vice president and chief market and growth officer at Sunnova . With more and more extreme weather events making the headlines, companies including Sunnova forecast a jump in battery sales. Sophisticated software systems also allow customers to effectively utilize their batteries while the grid is running as normal. In states where there's time-of-use pricing, for example, the battery can be charged when electricity prices are low, and then power the home when prices are high. Additionally, in some states net metering — or when solar energy owners are credited for power they add to the grid — can make having a solar system with storage a particularly attractive option. Extreme weather stresses the grid For the heat wave descending on the Pacific Northwest, the National Weather Service Seattle said in a tweet that "it's not so much a matter of what temperature records we will break. Really, what WON'T be broken?" The National Weather Service Portland called the expected temperatures "unprecedented," saying the heat wave is expected to break several "daily, monthly and possibly all-time records." The temperatures pose a risk for the millions without air conditioners, and could also lead to a spike in power demand. Exacerbating issues is that more than three-fourths of the West is currently in a severe drought, based on data from the U.S. Drought Monitor, straining hydroelectric power plants. Extreme weather conditions aren't limited to the West Coast — Texas suffered a major power crisis in February that plunged millions of customers into the dark, while tornados and hurricanes have interrupted grid services elsewhere in the country. Demand for backup systems unsurprisingly jumps in areas that are directly impacted, but the frequency of grid stresses is also prompting users in other areas of the country to take preemptive action. Economic benefits also act as a catalyst for adoption. "The unfortunate fact is that our current power system was designed for yesterday's weather, and now we're dealing with tomorrow's weather," said Jason Burwen, interim CEO at Washington-based trade group Energy Storage Association. Extreme weather is "pushing past the limits of the existing power system," he said, adding that it's put a lot of "households and businesses in a position where they suddenly feel like they need to have more control of their fate." Analysts at Goldman Sachs recently noted that residential storage's rate of adoption has exceeded their expectations. Penetration is significantly below the already small foothold rooftop solar has secured across the U.S., but many view this as indication of a huge growth opportunity ahead. Goldman estimates that first quarter battery deployments jumped 155% year over year due to declining costs, greater solar adoption as well as consumers looking for grid reliability. The firm anticipates the market showing robust growth this year, and hitting $1 billion for the first time in 2022. Creating a nanogrid In order for a solar system to operate normally when the central grid goes down there needs to also be on-site storage. Rooftop panels won't function by themselves if service is cut since to protect utility workers repairing wires, power can't be flowing back onto the grid. If you have storage you can continue to power your home by disconnecting from the grid and forming a nanogrid. If it's sunny the panels will continue to produce electricity as normal, but if it's not producing enough, or it's night, the stored energy in the battery can be harnessed. Multiple batteries can be hooked up to the same system, and no two configurations are the same given differing house sizes and usage rates. Given the many variables, opinions differ around just how long systems can stay operational. Joe Osha, senior energy analyst at Guggenheim, said that it's important for customers to manage expectations. "It's not the case that you just put one of these things in and then you're instantly bullet proof," he noted. He said that while systems can be extremely sophisticated, generally speaking the energy storage will power a couple of critical loads — the fridge and a few lights, for example — rather than the entire house operating as normal. Sunnova's Grasso said the company's dealers work with customers prior to the installation to understand what exactly the power needs are, and then size the system appropriately. He said an average configuration would give a customer between 10 to 12 hours of power and not at heavily reduced capacity. But ESA's Burwen said the exact specifics around how long the system can run isn't the most important point — ultimately users just want assurance that they can power key parts of their home. "For a lot of folks they just want to make sure that they can manage through whatever is thrown at them without, for example, having to throw out all of their food," he said. Energy storage system costs vary widely, but Grasso said a standard battery runs about $15,000, which is on top of the roughl